Public Finance for Rural Schools: Connecting Institutions to Collective Preferences

The persistent urban-rural divide creates a host of economic disadvantages and interstate inequalities, including but not limited to underfunded public education. This paper examines why rural areas have lower levels of public... [ view full abstract ]

The persistent urban-rural divide creates a host of economic disadvantages and interstate inequalities, including but not limited to underfunded public education. This paper examines why rural areas have lower levels of public good provisions compared to urban and suburban areas-- specifically on education. The amount spent per pupil is consistently higher in urban areas (approximately 1000 dollars per year) than in rural communities, even when other economic and social factors are comparable. This paper will highlight institutional dynamics driving public opinion in rural areas, where individuals do not collectively demand more from government but rather reject more spending on public goods. Aside from ideology, I argue that rural residents rationally express lower preferences for public spending on education, due to fewer abilities to bear the additional taxes associated with the increased spending. I argue that the case of financing public education tests the notion that preferences are influenced by current financial arrangements and place-based challenges, leading to rational underinvestment. Through a comparative case study of two rural US communities, this paper will deepen our understanding of the feedback loop between the institutional arrangement around funding public goods and how this maps into collective outcomes, specifically failures to secure additional funding through supplemental taxes. Understanding institutions is essential for understanding how institutions impact the public. The first objective of this study is to describe the development of public finance institutions for education in rural places. Directed content analysis of public financial records will build a detailed description of the arrangement of public institutions in each selected rural community. Historical and contemporary local context, national reforms, demographic changes, and political representation will be explored as factors that influence the arrangement of institutions. The second objective of this study will be to specify the connection between current public provisions and individual preferences for education finance. An analysis of failed supplemental levies (communities voting against additional taxes for schools) will highlight the ways in which institutional arrangements constrain additional funding and drive public preferences. Case studies will be analyzed and compared to describe the ways in which the development of institutions for public finance may influence public preferences for taxation and spending in rural areas. The objective of this research is to bring forth insights about collective decision-making in places riddled with changing economic, social, and political dynamics that create challenges for the public financing of public goods. Most importantly, a focus on rural preferences, compared to those of the suburban and urban residents, has historically been overlooked in the political science and public policy literature. It was only after the 2016 presidential election that these regions of the country began to receive increased attention. The goal of this study is to move beyond current attention on voting patterns to bring attention to the long-term structural trends differentially impacting rural communities in the US. This paper aims to improve our understanding of unique dynamics that motivate individual preferences and ultimately, impact policy outcomes and the design of funding for public goods in rural areas.