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3. Upward and Downward Leveling.

Undoubtedly the most controversial issue related to the school

finance crisis is whether the states, in seeking a more equal expenditure per pupil from district to district, will find it necessary to lower high per pupil expenditure rates in wealthy districts, or raise low rates in poorer districts. In some states the spread between per pupil expenditures from district to district is extremely great.

As a practical matter any attempt to raise all of the schools in

a state to the per pupil expenditure level of the highest expenditure districts will undoubtedly require much greater expenditures for education or a reallocation of priorities. This issue will become a subject requiring major policy decisions.

On the other hand, wealthy school districts will not be willing to give their children less than they have had in the past. "Leveling down" the per pupil expenditures is a political hot potato which few legislators will want to handle. The most critical problem arises when the people of a state cannot or will not raise the levels of all of their schools to those of the top schools.

Associated with this issue is the question whether the courts will permit states to create systems for local school districts to exercise any degree of "local leeway" for school enrichment or individuality in financing their school programs.

4. The Future of Local Control.

If states move to a system of greater or full state funding what impact will the centralization of funding sources have upon the local school district? Many contend that the funding source tends to become the source of control and authority. Traditionally, the

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authority for school operation has been kept close to the people.

Can local control continue in the face of increased state financial involvement?

On the other hand, there are those who ask if local control is essential or would necessarily be lost with state funding? The State of Hawaii operates a very creditable educational system centralized in a statewide administration. A case could be made for the proposition that greater state involvement in education makes for elimination of inefficient districts and duplication in the name of local administration and control. There is some evidence that where states have assumed rather substantial financial support for education there has been no major reduction in the level of local decision making authority.

Other proponents of greater state funding contend that if the state took more of the fiscal problems from the local district, those responsible for the actual operation of the schools would have more time to devote to the educational objectives of the children.

5. Collective Bargaining Activity.

Allied with the question of local control is the question of how collective bargaining and salary negotiations could be handled if the primary responsibility for school finance were transferred to the state. Speculation has it that such a process would eventually lead to statewide salary schedules and to teachers bargaining directly with state legislatures. It is difficult to imagine how a local school district could be effective in conducting collective negotiations unless it has substantial authority over fiscal allocations. With the growing

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strength of teachers organizations and school employee unions, this

issue can become of great importance as legislatures seek new systems for school finance.

6. School District Organization.

The question of the appropriate structure and governance system for public schools has been before state legislatures for many years. Many local school districts are too large to be effective and others are too small to be efficient. In many states programs of consolidation have reduced the large numbers of independent local school districts. In other states only very modest efforts have been made toward effective reorganization.

As state legislatures assume a larger role in school finance, they will ask if the number of school districts can be reduced or if the existing districts can be organized more efficiently. It is conceivable that Serrano-type decisions will encourage legislators to reduce the number of separate school districts to spread the existing tax base over a wider geographical area and provide greater equalization. It is recognized, however, that some states may be unable to reduce or materially change local school attendance areas because of state size or geography and sparsity of population.

7. Impact on Postsecondary Education.

The Serrano-type decisions may well have a major impact upon community colleges and other postsecondary educational institutions. Although the California court did not directly address itself to postsecondary education, there are several implications to be considered.

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In many states, and particularly in California, there is a strong similarity between the financing plan of the community colleges and that declared unconstitutional for financing elementary and secondary schools. Following this parallel, it is possible that if the community college financing plan were challenged on the same basis as the Serrano case, that pim would also fall.

On the other hand, it can be argued that because community colleges generally have a substantially larger district than do elementary and secondary school districts, there is not as great a variance in the taxable wealth of the college districts. Many community college districts include both poor and wealthy property in terms of assessed valuation. Under such circumstances it is possible that the Serrano rule would not apply. Also, the voluntary nature of community college attendance may place these institutions under a set of requirements different from the Serrano issue.

Another possible impact upon the colleges would be a major change in the state school financing pattern. If the state moved to a full funding program with a statewide property tax or some similar system, it is possible that the community college districts would come under increased state influence.

Other state public higher educational institutions would not escape the Serrano influence if the state moves to a more complete state funding system. Public higher education has been operated over the years on the basis of statewide funding. If the state finds itself assuming elementary and secondary educational financing programs on a statewide basis, there will be increased competition between higher

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education and the local schools for the state's educational dollars.

The local schools, being closer to their elected representatives, could offer strong competition for available money.

8. Property Tax Relief.

At the outset the Serrano decision was hailed widely as welcome relief for the property taxpayer. As the euphoria disappeared, it became clear that the courts did not do away with the property tax nor find the property tax to be unconstitutional. Obviously, a state legislature can levy a statewide property tax unless prohibited by its state constitution. Furthermore, it is recognized that school taxes

are not the only taxes collected on local property. Many non-educational needs such as roadways, police protection, fire protection and utilities, must be met whether or not a new school finance system is adopted or not. The great need for additional money for other public services could quickly absorb any reduction in school property tax levies. It does not necessarily follow that Serrano-type cases will cause any substantial change in the property tax level now assessed on real property.

9. Capital Outlay, Construction and Bonding.

Most of the Serrano-type cases have not gone into the question of expenditures for school construction or other capital outlays. However, in the Rodriguez case in Texas, the court enjoined the defendants from giving any force and effect to sections of the Texas Constitution and Education Code related to the financing of education, including the minimum foundation school program act. Since the education code also includes provisions for construction and capital outlay, the effect of