Category: Economics

The Role of the Government in K-12 Education Using the Test of Market Failure

Equity and efficiency concerns are one of the main reasons for government intervention in the provision of public services. A market failure is one of the problems that arise while providing the latter. It is defined as a situation whereby market operations fail to offer a Pareto efficient allocation of resources (Hoxby, n.d.). The monopoly power is one of the causes of a market failure. In this case, there are only a few suppliers resulting into low competition. In line with this, the government is responsible for providing K-12 education that can be explained in terms of a market failure.

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One of the governments roles is education funding (Center for Public Education, 2008). However, it has faced both melancholic politics and opposition to boosting spending. It is marked by the time when the education system in America persists to deteriorate. A number of free market ideologues are advocating for education privatization, criticizing government spending. K-12 education is a model of positive externality. Education markets benefit the society by reducing poverty levels, mitigating crime rates, and enhancing research and development (Hoxby, n.d.). However, such benefits are not mirrored in the market price. This kind of market failure results in the under-provision of education. With reference to this, it will be hard for private markets to work alone in a K-12 context. Therefore, the government involvement is necessary as it subsidizes education ensuring adequate provision, as well as the maximization of spillover benefits (Theobald & Malen, 2013).

Another role of the government is ensuring fair distribution of education. To achieve this, the government may decide on the elimination of private schools. It means that only government-operated schools will remain. The policy can enhance equity by enabling students from underprivileged families to have easier access to education. Nevertheless, the procedure of increasing taxes to fund such schools and its ineffectiveness implies that education provision must take place in the production frontier (Center for Public Education, 2008). The government should also participate in K-12 education in order to improve its efficiency. It is particularly important when market operations fail to offer an equitable allocation of resources. The latter is one that is positioned on the production frontier curve.

With reference to the provision of secondary education, student enrollment decisions are formulated by their families by weighing benefits and costs. Benefits encompass amplified consequent earnings, enhanced skills and knowledge that do not only benefit the family, but also society in general. On the other hand, costs involve school fees. Considering that benefits outweigh costs, underprivileged families may decide to make loans in order to send their children to secondary schools. With the inability to access funds, talented children from poor families are not privileged enough to attend secondary schools. Thus, they become a burden to society. In this case, the government involvement in supporting secondary schools in terms of funding is paramount. Unlike primary education, the provision of secondary education faces many inequities and inefficiencies, particularly due to the prices involved.

Our Process

The inability to raise funds to support secondary education is an example of a market failure. Therefore, the government must intervene with the aim of overcoming the latter. For instance, it should enhance equity and efficiency by providing loans to poor families, which cannot afford secondary school fees. In a nutshell, private markets will not be efficient in taking control of K-12 education. The government should get involved to satisfy the needs of society.

Wealth Redistribution in Public K-12 Education

As compared to other countries, the U.S. uses huge amounts of money to support public K-12 education. It spends more than $115,000 per student, but this has not been translated to improved performance (Hoxby, 2015). The U.S. public education system is the most costly throughout the globe. However, students exhibit moderate performance in global tests in science, mathematics, and language arts. Actually, it illustrates that the level of students performance in such countries as the Slovak Republic that uses approximately $53,000 per student is similar to that in the USA (Hoxby, 2015). Since 1970, per-student expenditures on K-12 education have increased by almost 80% (Hoxby, 2015). Finance systems in the majority of government-operated schools have been amended with the purpose of diverting more money to poor students. It has narrowed diversities in funding, improving education efficiencies. Both disadvantaged and well-off students have equal access to public education.

Approximately a half of the education expenses in the USA are funded by the state. The redistribution of expenditures is shared and differs from one state to the other. State aid helps school districts scale up their education services, particularly those with high numbers of students from poor backgrounds. The redistribution of funds is done using methodologies, which target more money at public schools with high concentrations of low-income students and low rates of taxable wealth (Center for Public Education, 2008).

The federal government provides federal aid to public K-12 schools. It offers emergency education support to states, especially after the global financial crisis. For instance, federal aid reached $39 billion in 2009, provided by the State Fiscal Stabilization Fund (Ebel & Petersen, 2012).

Wealth redistribution in public K-12 education should not be expanded. The reason is that the current redistribution is fair enough as it endeavors to ensure efficiency and equity. Focusing more on poor students ensures that both the advantaged and underprivileged have equal opportunities to access education. Furthermore, the state and federal governments invest a lot of money in public education that is not reflected in achievement levels. Though the amount of per-student expenditure has recently increased significantly, an achievement level has been stagnant. In this regard, the underlying issue causing such stagnancy should be determined, while school districts should focus on enhancing performance levels to match education expenses.

Effects of the Overall Education Improvement on the State and Local Budgets

Educational improvement can be achieved through various ways. Important reform initiatives can be embarked on to prepare students better in the future. However, such reforms can be implemented by increasing funding only. Initiatives can focus on early childhood education and training teachers to enhance their knowledge and skills. Producing workers with appropriate skills, who have the capacity of mastering novel technologies while adapting to the complexities of the economy, requires additional funding to ensure the implementation of extra reforms (Center for Public Education, 2008).

However, such improvements can impinge upon the local and state budgets. The reason is that they require funding additional to the current local and state expenditures. It burdens the government, which is required to expand the tax base in order to service the increased costs of improving education. One way in which the tax base can be expanded encompasses parcel taxes. This kind of tax is approved by voters, which allow districts in various states charge non ad valorem taxes (Center for Public Education, 2008). A parcel tax involves paying a flat rate on every parcel instead of the appraised value of the whole property. By increasing such taxes, local governments can have additional funds at their disposal to support educational reforms and programs. Considering that districts are required to outline the usage of additional revenues, parcel taxes can improve education enhancing efficiency. California is among the states employing parcel taxes to support education programs (Beetham & Sharpe, 2013). Increasing an income tax is another way in which the government can expand the tax base. By increasing such a tax by a small percentage, the government can obtain extra money to be used to fund reform programs. An income tax is one of the major sources of government revenue. Therefore, voters and politicians should vote for tax increments.

Our Benefits

Strategies Used to Address Declining Educational Quality Overall and Suitable Funding Methods

Both the federal and state governments should focus on improving the quality of education in the USA. One way of achieving this is raising the level of teaching (Hoxby, 2015). It can be achieved by paying higher salaries in order to attract and retain qualified professionals in schools. Low salaries drive away excellent tutors who look for other job opportunities with higher salaries. Such increments can be funded through tax increases. Pay incentives can be based on performance to ensure that educators do their best in a classroom. Such incentives serve as a motivation driver, increasing productivity and eventual performance. Reducing income tax exemptions can also be used to fund pay incentives. Another strategy is investing in teacher training to enhance their skills and knowledge. Educators who are more proficient been proven to be more productive. The most suitable method for funding teacher training is a tax increment.

These strategies have been successful in various states. For instance, in California, the Senate Bill 813 provides minimum teachers salary provisions (Hoxby, n.d.). Districts are encouraged by the legislature to boost minimum salaries. Besides, they are compensated on the basis of their contribution to the incentive program. Most districts in the state have embarked on these initiatives in order to enhance education achievements among students. Certainly, performance-based incentives and teacher training inspire teachers, who in turn do their best in their vocation. Therefore, if adopted in all states, such strategies can work towards improving educational achievements in America.

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