Discussion of Dorata & Phillips “Determinants of School Fund Balance”

1. Discussion of Dorata & Phillips “Determinants of School Fund Balance” Cameron M. Weber PhD Student in Economics and Historical Studies, New School for Social Research Adjunct Professor, Tobin School, SJU

2. Dorata & Phillips Discussion Paper is of ‘community service’ or ‘public service’ nature where authors examine governance and audit environment for public primary and secondary education for 123 school districts on Long Island. Authors examine governance and audit effects on Fund Balance and find that the better the governance environment the lower is the Fund Balance (cumulative surplus of revenues over expenditures).

3. Dorata & Phillips Discussion The total Fund Balance for the school districts increased 120% between 2005 and 2011. During the same period Real GDP per capita in the USA increased from $42,612 to $42,620, or, less than 1/10 of 1%. http://www.measuringworth.com/datasets/usgdp/result.php The authors find that this represents an “enormous magnitude of overpayment of taxes by innocent taxpayers” (p.11) and that school districts have shifted “from fund balance available for reductions in the tax levy to fund balance set aside for unknown contingencies or for specific future spending needs” (p.4).

4. Dorata & Phillips Discussion Is the objective of the paper clearly stated? Yes Is the literature review focused on the objective of the paper? Yes Is the methodology used reasonable and well explained? Yes Is the data sufficient for the analysis performed? Yes Is the interpretation of the data reasonable? Yes

5. Dorata & Phillips Discussion Findings: Existence of Budget Committee CPAs on Board of Education Outside Members on Audit Committee => Fund Balance ↓ Length of Business Superintendent Tenure Change in External Auditor = > Fund Balance ↑ Question for authors: Why would a change in auditors lead to an increase in Fund Balance?

6. Dorata & Phillips DiscussionLiterature Comparison and Practicality Roger D. Rada. 1988. “A Public Choice Theory of School Board Member Behavior”, Educational Evaluation and Policy Analysis, Vol, 10, No. 3, pp. 225-236. Rada 1988 laments lack of public choice analysis relating to public school governance. Dorata & Phillips remedy this and apply empirics to public choice theory to explain self-interested behavior in the public school bureaucracy. Dorata & Phillips state, “And efforts by educators to address school problems have been so poorly communicated that many Americans have, in effect, thrown up their hands. This, in turn, has allowed special interest groups to seize control of what should be a broad public discussion on how best to improve the schools and serve the needs of students” (p.13). Question: Who exactly are these “special interest groups” and are they not the same self-interested “educators”?

7. Dorata & Phillips DiscussionLiterature Comparison and Practicality Herbert Walberg. 2007. School Choice: The Findings. Washington, DC: Cato Institute. Walberg 2007 researches local voucher programs in Milwaukee and Cleveland, and nation-wide programs in Chile, the Netherlands and Sweden and finds that families are happier with the quality of their children’s education when there is competition.

8. Dorata & Phillips DiscussionLiterature Comparison and Practicality Dorata and Phillips cite Orosz 2002 and recommend “citizen-involved budget committees” to establish trust between “the community and the agency’s budget proposals” (p.13). However this does not address the issue of improving the quality of education nor how school competition directly involves parents in a decentralized self-interested manner. Dorata & Phillips could expand their analysis to include school districts with public-funding of private or quasi-public schools and compare these with public school only-districts to analyze the effect of competition on Fund Balance and school district behavior in competitive districts versus non-competitive districts.