INSTITUTIONAL STRUCTURE AND EDUCATION SPENDING

This article provides an empirical comparison of the level of educatio n spending under three different institutional structures of spending control. From least to most centralized, these are local control of sp ending with overlapping jurisdictions, local control with nonoverlappi ng jurisdictions, and state (or provincial) control. A model of educat ion expenditure determination under each regime is derived and estimat ed (using Canadian data), and spending levels under the three regimes are simulated and compared. The results indicate that spending behavio r differs significantly across regimes and that the institutional stru cture of spending control is an important determinant of the level of education expenditures. The local control regime with nonoverlapping j urisdictions yields the lowest level of total education spending, but the provincial control regime has the lowest operating expenditures. T he local control regime with overlapping jurisdictions has the highest level of both total and operating expenditures. These results suggest that the relationship between decentralization and spending is not ne cessarily monotonic.