BUDGET-CONSTRAINED FRONTIER MEASURES OF FISCAL EQUALITY AND EFFICIENCY IN SCHOOLING

Equality and efficiency are key issues in educational reform. Here the authors analyze the efficiency and equality consequences of various s chool finance reforms using a cost-indirect output distance function. This function readily models multiple-output production under conditio ns of budgetary constraint, and provides a natural measure of performa nce that is closely related to Farrell-type measures of efficiency. Th e analysis suggests that despite school district inefficiency, finance reforms can affect student achievement. However, any potential gains in output from redistribution are dwarfed by the potential gains from increased efficiency. More strikingly, the analysis demonstrates that budgetary reforms designed to equalize expenditures could actually inc rease the inequality of student achievement.