Policy interaction in the public finance of successive levels of education

This dissertation is motivated by the premise that government policies for two levels of education—primary/secondary (K-12) and post-secondary—may interact in ways that are not obvious when research focuses on one level in isolation. This interaction has been recognized in the education literature and is now an active area of state policy, with the advent in at least 24 states of "P-16" policy initiatives that view public education systems as connected from pre-kindergarten through the bachelor's degree. Anecdotally, reports of competition between the two sectors in the state budgetary arena are common. However this potential interrelationship has not been widely explored in the public finance literature.;The core of the dissertation consists of three essays: the theoretical essay (C. 4) explores a model of the provision and subsidization of successive levels of education that includes both state and local levels of government, a novel approach to public finance modeling of education policy. The first empirical essay (C. 5) uses a time-series cross-section dataset covering 1984 to 2001 and forty-seven states to investigate the effect of changes in the funding landscape for K-12 education on states' balance of support between K-12 and higher education. Results support a hypothesized interaction between centralization of the K-12 finance system and the effect of a State Supreme Court finding of unconstitutionality on the prioritization of public resources devoted to higher and K-12 education over time within states. The positive relationship between centralization and relative support for higher education in the absence of a court mandate suggests that a complementary relationship obtains between the two sectors. After an unconstitutionality decision occurs, this positive effect appears to be cancelled out. The second empirical essay (C. 6) focuses more closely on the relationship between demographic factors, particularly state population aged 65 and over, on relative state support for K-12 and higher education. The results suggest that for the study period, an increase in the elderly population is associated with a decreased level of state support for both levels of education in a given state, with the greater decrease occurring in K-12 funding.;Keywords. K-12 education, higher education, school finance, public finance, panel data.