An analysis of the effects of local discretionary levies on the fiscal equity of a state foundation finance system

The purpose of this quantitative study was to analyze the effects of local discretionary levies on the fiscal equity of a state foundation finance system. The research included an analysis of the equity of the 1996--97 Florida Education Finance Program (FEFP) as discretionary levies were applied. The FEFP included revenue from an equalized foundation component and three nonvoted discretionary levies, i.e., capital outlay/maintenance, discretionary current operating, and supplemental discretionary. Not all levies were equalized by the state.; The effects of the discretionary levies on the equity of the FEFP were measured using the statistical constructs of resource accessibility, wealth neutrality, and tax yield. The results of the study indicated that additional revenues from the discretionary levies had slight disequalizing effects as indicated by resource accessibility measures. The disequalizing effect was the greatest when the capital outlay/maintenance revenue was applied. Calculations of the coefficient of variation indicated that although the effect on resource accessibility was nominal, the increase in standardized variability was most evident when the capital outlay/maintenance revenues were introduced.; Additional revenues from the discretionary levies had slight disequalizing effects on equity as indicated by the correlation coefficient and coefficient of determination. Wealth neutrality and equity decreased as the three discretionary levies were added to the base revenue. However, calculations of the regression coefficient, McCloone index, and Gini coefficient indicated that additional revenues from the discretionary levies had little effect on equity and wealth neutrality.; Taxpayer equity calculations indicated minimal disequalizing effects when the strength and magnitude of the relationship between the tax rate and the per pupil revenues were measured after the discretionary millage was applied. The positive correlation coefficient indicated that increasing tax rates were associated with increasing per pupil revenues. The regression coefficient was consistently minimal, indicating little effect on the equivalence of tax yield.; In summary, a trend toward disequalization emerged as the three discretionary levies were applied individually and in combination. The application of the capital outlay/maintenance levy had the greatest disequalizing effect. If the trend were to continue, further use of discretionary levies would have an even greater effect on the equity of the FEFP.