This interview, which has been edited for length, is also available as a Land Matters podcast. 

When he was elected in 2017, Randall L. Woodfin became the youngest mayor to take office in Birmingham in 120 years. Now 40 and nearly a year into his second term, Woodfin has made revitalization of the city’s 99 neighborhoods his top priority, along with enhancing education, fostering a climate of economic opportunity, and leveraging public-private partnerships. 

In a city battered by population and manufacturing loss, including iron and steel industries that once thrived there, Woodfin has looked to education and youth as the keys to a better future. He established Birmingham Promise, a public-private partnership that provides apprenticeships and tuition assistance to cover college costs for Birmingham high school graduates, and launched Pardons for Progress, which removed a barrier to employment opportunities through the mayoral pardon of 15,000 misdemeanor marijuana possession charges dating to 1990.  

Woodfin is a graduate of Morehouse College and Samford University’s Cumberland School of Law. He was an assistant city attorney for eight years before running for mayor, and served as president of the Birmingham Board of Education. 

ANTHONY FLINT: How do you think your vision for urban revitalization played into the large number of first-time voters who’ve turned out for you?  

RANDALL WOODFIN: I think my vision for urban revitalization—which, on the ground, I call neighborhood revitalization—played a significant role in not just the usual voters coming out to the polls to support me, but new voters as well. I think they chose me because I listen to them more than I talk. I think many residents have felt, “Listen, I’ve had these problems next to my home, to the right or to the left of me, for years, and they’ve been ignored. My calls have gone unanswered. Services have not been rendered. I want a change.” I made neighborhood revitalization a priority because that’s the priority of the citizens I wanted to serve. 

AF: With the Infrastructure Investment and Jobs Act and the American Rescue Plan Act bringing unparalleled amounts of funding to state and local governments, what are your plans to distribute that money efficiently and get the greatest leverage? 

RW: This is a once-in-a-lifetime opportunity to really supercharge infrastructure upgrades and investments we need to make in our city and community. This type of money probably hasn’t been on the ground since the New Deal. When you think about that, there’s an opportunity for the city of Birmingham citizens and communities to win.  

We set up a unified command system to receive these funds. In one hand, in my left hand, the city of Birmingham is an entitlement city and we’ll receive direct funds. In my right hand, we have to be aggressive and go after competitive grants for shovel-ready projects. 

With our Stimulus Command Center, what we have done is partner not only with our city council, but we’ve partnered with our transportation agency. We have an inland port, so we partner with Birmingham Port. We partner with our airport as well as our water works department. All of these agencies are public agencies who happen to serve the same citizens I’m responsible for serving. For us to approach all these infrastructure resources through a collective approach, that’s the best way. We have an opportunity with this funding to supercharge not only our economic identity, but also to make real investments in our infrastructure that our citizens use every day. 

AF: The Lincoln Institute has done a lot of work aimed at equitable regeneration in legacy cities. What in your view are the key elements of neighborhood revitalization and community investment that truly pay off? 

RW: This is how I explain everything that happens from a neighborhood revitalization standpoint. I’ll first share the problem through story. The city of Birmingham is fortunate to be made up of 23 communities in 99 neighborhoods. When you dive deep into that, just consider going to a particular neighborhood in a particular block. You have a mother in a single-family household where she is the responsible breadwinner and owner. She has a child or grandchild that stays with her. She walks out onto her front porch, she looks to her right, there is an abandoned, dilapidated house that’s been there for years that needs to be torn down. She looks to her [left], there’s an empty lot next to her. When she walks out to that sidewalk, she’s afraid for her child or her grandchild to play or ride the bicycle on that sidewalk because it’s not bikeable. That street, when she pulls out from the driveway, hasn’t been paved in years. The neighborhood park she wants to walk her child or grandchild down to hasn’t had upgraded, adequate playground equipment in some time. She’s ready to walk her child or grandchild home because it’s getting dark, but the streetlights don’t work. Then she’s ready to feed her child or grandchild, but they live in a food desert. These are the things we are attempting to solve for.  

One is blight removal, getting rid of that dilapidated structure to the right of her. We need to go vertical with more single-family homes that are affordable and market rate so [we don’t have] “snaggletooth” neighborhoods where you remove blight, but now you have a house, empty lot, house, empty lot, empty lot. 

That child, we have to invest in that sidewalk so they can play safely or just take a walk. We have to pave more streets. We have to have adequate playground equipment. We have to partner with our power company to get more LED lights in that neighborhood, so people feel safe. We have to invest in healthy food options so our citizens can have a better quality of life. These are the things related to neighborhood revitalization that I frame and address to make sure people want to live in these neighborhoods. 

AF: What are your top priorities in addressing climate change? How does Birmingham feel the impacts of warming, and what can be done about it? 

RW: Climate change is real. Let me be very clear in stating that climate change is real. We’re not near the coast and so we don’t feel the impact right away that other cities do, like Mobile would in the state of Alabama. However, when those certain weather things happen on the coast in Alabama, they do have an impact on the city of Birmingham. We also have an issue of tornadoes where I believe they continue to increase over the years and they affect a city like Birmingham that sits in a bowl in the valley. Around air quality, Birmingham was a city founded from a blue-collar standpoint of iron and steel and other things made here. Although that’s not driving the economy anymore, there’s still vestiges that have a negative impact. We have a Superfund site right in the heart of our city that has affected people’s air quality, which I think is totally unacceptable. Addressing climate change from a social justice standpoint has been a priority for the city of Birmingham and this administration. What we are doing is partnering with the EPA for our on-the-ground local issues. 

From a national standpoint, Birmingham joined other cities as it relates to the Paris Deal. I think this conversation of climate change can’t be in the isolation of a city and unfortunately, the city of Birmingham doesn’t have home rule. Having the conversations with our governor about the importance of the state of Alabama actually championing and joining calls of, “We need to make more noise and be more intentional and aggressive about climate change” has been a struggle. 

AF: What about your efforts to create safe, affordable housing, including a land bank? 

RW: I look at it from the standpoint of a toolbox. Within this toolbox, you have various tools to address housing. At the height of the city of Birmingham’s population, in the late ’60s, early ’70s, there was about 340,000 residents. We’re down to 206,000 residents in our city limits. 

You can imagine the cost and burden that’s had on our housing stock. When you add on homes passing from one generation to the next and not necessarily being taken care of, we’ve had a considerable amount of blight. Like other cities across the nation, we created a land bank. This land bank was created prior to my administration, but what we’ve attempted to do as an administration is make our land bank more efficient. Then driving that efficiency is not just looking toward those who can buy land in bulk, but also empowering the next-door neighbor, or the neighborhood, or the church that’s on the ground within that neighborhood to be able to participate in purchasing the lot next door to make sure, again, that we can get rid of these snaggletooth blocks or snaggletooth neighborhoods, and go vertical with single-family homes. 

Another thing we’re doing is acknowledging that in urban cores, it’s hard to get private developers at the table. What we’ve been doing [with some of our ARPA funds] is setting aside money to offset some of these developer costs to support not only affordable but market-rate housing within our city limits, to make sure our citizens have a seat at the table so they can feel empowered, if they choose to want to actually have a home, that there’s a path for them. 

AF: Finally, tell us a little bit about your belief in guaranteed income, which has been offered to single mothers in a pilot program. You’ve joined several other mayors in this effort. How does that reflect your approach to governing this midsize postindustrial city? 

RW: The city of Birmingham is fortunate to be a part of a pilot program that offers guaranteed income for single-family mothers in our city. This income is $375 over a 12-month period. That’s $375 a month, no strings attached, no requirements of what they can spend the money on. 

Every city in this nation has its own story, has its own character, has its own set of unique challenges. At the same time, we all share similar fates and have similar issues. The city of Birmingham has its fair share of poverty. We don’t just have poverty, we have concentrated poverty, [and] guaranteed income is another tool within that toolbox of reducing poverty. Birmingham has over 60 percent of households led by single women. That is not something I’m bragging about. That is a fundamental fact. A lot of these single-family mothers struggle. 

I think we all would agree, no one can live off $375 a month. If you had this $375 additional funding in your pocket or your homes, would that help your household? Does that help keep food on the table? Does it help keep your utilities paid? Does it help keep clothing on your children’s backs and shoes on their feet? Does it help you get from point A to B to keep your job to provide for your child? 

This is why I believe this guaranteed income pilot program will be helpful. We only have 120 slots, so it’s not necessarily the largest amount of people, but I can tell you over 7,000 households applied for this. The need is there for us to do every single thing we can to provide more opportunities for our families to be able to take care of their families.  

Anthony Flint is a senior fellow at the Lincoln Institute, host of the Land Matters podcast, and a contributing editor to Land Lines. 

Image courtesy of Anthony Flint. 

This article is excerpted from a forthcoming Lincoln Institute Policy Focus Report, Rethinking the Property Tax–School Funding Dilemma, and from a Lincoln Institute working paper, “Effects of Reducing the Role of the Local Property Tax in Funding K–12 Education.” 

The massive shutdown of K–12 schools sparked by the COVID-19 pandemic has no precedent in U.S. history. By the end of the 2019–2020 school year, at least 50.8 million public school students had been affected by school closures (Education Week 2020). Although schools closed during the 1918 influenza pandemic, fewer children attended school then and schools were not as integral to daily life (Sawchuk 2020). This time, almost overnight, the national education system shifted dramatically. Teachers were required to adapt lessons to virtual meeting platforms. The forced rapid transition to online methods led to learning loss or unfinished learning for many students. The pandemic exacerbated existing disparities and created new challenges for students of color, English language learners, and students with disabilities. 

The pandemic also sparked a temporary shift in national education funding as the country experienced one of the deepest economic downturns in its history. Vigorous federal fiscal policy helped make it the shortest recession in the country’s history as well, and as part of this economic rescue effort, Congress funneled hundreds of billions of dollars to education. These funds came via the March 2020 CARES Act; a second infusion sent to state and local governments in December 2020; and the American Rescue Plan Act of March 2021, which contained another $350 billion for state and local governments plus about $130 billion specifically for K–12 education. Altogether in the first year of the pandemic, the federal government provided an unprecedented amount of aid for public K–12 education, equivalent to about $4,000 per student (Griffith 2021). 

Although this lessened the fiscal impact of the pandemic in the near term, it did not permanently alter the federal government’s traditionally modest role in funding K–12 education. Public schools are typically supported by a combination of state aid and local funding. The property tax has been the single largest source of local revenue for schools in the United States, reflecting a strong culture of local control and a preference for local provision. 

An Ideal Local Funding Source

Property taxation and school funding are closely linked in the United States. In 2018–2019, public education revenue totaled $771 billion. Nearly half (47 percent) came from state governments, slightly less than half (45 percent) from local government sources, and a modest share (8 percent) from the federal government. Of the local revenue, about 36 percent came from property taxes. The remaining 8.9 percent was generated from other taxes; fees and charges for things like school lunches and athletic events; and contributions from individuals, organizations, or businesses. 

In many ways, the property tax is an ideal local tax for funding public education. In a well-structured property tax system, without complex or confusing property tax limitations, the tax is both visible and transparent. Voters considering a local expenditure, such as for a new elementary school, will have clear information on benefits and costs. The property tax base is immobile; by contrast, shoppers can easily avoid a local sales tax by driving a few miles and businesses can avoid liability for local income taxes by relocating office headquarters. 

The property tax is also a stable tax, as evidenced by its performance relative to the sales tax and income tax each time the economy falls into a recession. Since state governments rely predominantly on sales and income taxes, states often cut aid to schools in recessions in order to balance their budgets. This means that in most recessions public schools increase their reliance on property tax revenues to make up for declining state school aid (see figure 1). 

But the property tax as a source of school funding has not been without controversy. In the 1970s, public recognition that disparities in the relative size of local tax bases can lead to differences in the level and quality of public services ignited a national debate about the importance of equal access to educational opportunity. As the single largest source of local revenue, the property tax became the main target in this debate, giving rise to proposals that sought to reduce schools’ reliance on local property taxes and increase the state share of education spending to mitigate educational disparities. Between 1976 and 1981, the local property tax share of national education revenues declined from approximately 40 percent to 35 percent (McGuire, Papke, and Reschovsky 2015). But in the three decades since, the role of the local property tax in school funding has remained remarkably stable, never deviating much from that 35 percent. 

In recent years, increased public concern about rising inequality has amplified the debate about ensuring equal access to educational opportunities and adequate funding to address the needs of all students, especially those in traditionally disadvantaged groups. Some suggest that an increase in state aid would accomplish this goal, but there are conflicting results in the literature as to whether centralizing school funding by substituting state aid for local property tax increases or decreases per-pupil spending and equity. With the pandemic forcing a reconsideration of school funding formulas, including those based on enrollment (see sidebar), the following excerpted case studies of Michigan, California, and Massachusetts offer examples that may be helpful to places considering the best way to provide an adequate and equitable education for all. Massachusetts relies heavily on the property tax to fund schools, while California and Michigan rely heavily on state aid (see table 1). 

SCHOOL ENROLLMENT AND FUNDING FORMULAS  

When the pandemic thrust students across the country into remote and hybrid learning, many public schools lost enrollment. For the 2020–2021 school year, enrollment was down 3 percent nationwide compared to 2019–2020. Declines were uneven across states and student groups, with the largest drops among pre-K and kindergarten students and among low-income students and students of color (NCES 2021). Since state aid for public schools is linked to the number of students attending or enrolled, a slump in attendance or enrollment can reduce that revenue. In response to these enrollment declines, many states adopted short-term policies to hold school districts harmless. Delaware and Minnesota, for example, provided extra state funding for declining districts. Many states, including New Hampshire and California, used prepandemic enrollment to calculate state aid (Dewitt 2021; Fensterwald 2021). Texas announced hold-harmless funding to districts that lost attendance if they maintained or increased in-person enrollment, in an effort to bolster in-person learning. All of these provisions are temporary, and states are waiting to see if enrollment will recover in 2022–2023. If it doesn’t, the data suggest that reduced funding for schools with the highest enrollment declines will disproportionately affect Black and low-income households (Musaddiq et al. 2021). These fiscal and equity concerns are causing educators to rethink the measurement of attendance and enrollment, and its link to funding. 

Michigan: A Tax Swap 

Michigan voters passed a proposal in 1994 that reduced reliance on the local property tax, shifting much of the state’s school funding to the sales tax and other taxes while restructuring state aid to schools. Research suggests this shift led to increased spending in the short term that improved some educational outcomes, but also resulted in a distribution of funds that did not reach the students who most need support.  

Michigan voters had considered and defeated a series of proposals to restructure property taxes and school funding before approving Proposal A in 1994, which reduced reliance on the property tax and raised the sales tax to pay for that property tax relief. This “tax swap” greatly increased state education aid in the year of implementation and for some years after, changed the basic state aid formula, and changed the way state education aid is targeted. 

The state raised the sales tax from 4 to 6 percent, depositing the revenue into the School Aid Fund. It obtained additional revenue from the income tax, real estate transfer tax, tobacco taxes, liquor taxes, the lottery, and a new state government property tax known as the State Education Tax. Local property taxes levied for school operating costs, which had averaged a rate of 3.4 percent before Proposal A, were eliminated; the state mandated a 1.8 percent local property tax rate on nonhomestead property, and all property became subject to the 0.6 percent State Education Property Tax.  

State aid under Proposal A explicitly targeted low-spending districts. Increases in state funding were phased in over time, with substantial increases for low-spending districts, without reducing the funding of initially high-spending districts. In addition, school districts were allowed only limited options for supplementing education spending (Courant and Loeb 1997). 

Because Michigan’s tax swap was enacted so long ago, we can observe the impacts of three recessions on state aid and local property tax funding. During the 1990–1991 and 2000–2001 recessions, reliance on state aid decreased while reliance on the local property tax increased. In the Great Recession, reliance on state aid decreased and reliance on the local property tax decreased slightly. The fact that the property tax was less effective as a backstop in the Great Recession is likely due to uniquely restrictive property tax limits in the state. 

Michigan’s property tax is subject to all three main types of property tax limits: rate, levy, and assessment. In addition, one provision of the levy limit is particularly restrictive: not only does it require reductions in tax rates when the property tax base grows rapidly (“Headlee rollbacks”), but unlike most state levy limits, it prohibits increased tax rates without an override vote when the property tax base grows slowly or declines. This had a very constraining effect on property tax revenues during the Great Recession, when property values declined (Lincoln Institute 2020).  

Although real per-pupil education revenue increased at a faster rate just after passage of Proposal A, beginning with the recession of 2000–2001, real state aid declined for many years, leading to slower growth or declines in total real per-pupil revenue and in educational expenditures per pupil (see figure 2). An empirical study to analyze the impacts of Proposal A on revenue and spending in K–12 education concludes that “the reform increases the level of school revenue and spending at the state level only in the first two years of the reform; the reform eventually decreases it two years after and onwards” (Choi 2017, 4).  

Importantly, a tax swap may not create a more equitable school finance system. The school finance restructuring in Proposal A did reduce the disparities in school spending per pupil among school districts (Wassmer and Fisher 1996). This equalization was primarily accomplished by using state aid to raise per-pupil spending of the lowest-spending districts and placing some restrictions on spending on the highest-spending districts. But Michigan’s Proposal A was not designed to target aid to the children or the school districts most in need. It targeted additional school aid to previously low-spending school districts, which tended to be middle-income and rural.  

An evaluation of the equity and adequacy of school funding systems across the United States concluded that resources in Michigan’s highest poverty districts are severely inadequate (Baker et al. 2021). Thirty-seven percent of students attend districts with spending below the amount required to achieve U.S. average test scores.  

The recovery from the COVID recession, along with the massive influx of federal funds for education, may yet enable a turnaround in Michigan’s K–12 education system. In her 2022 State of the State address, Governor Gretchen Whitmer said her next budget would include the largest state education funding increase in more than 20 years (Egan 2022). 

California: Shifting Control 

California’s school finance narrative illustrates the tension between school funding equity goals and property tax reduction goals, providing a cautionary tale of the danger of diminishing local funding and the unintended consequences of assessment limits. In its pursuit of educational equity, California shifted funding away from local governments at the cost of local control. In taxpayers’ quest to control property tax increases, they traded horizontal equity for predictability.  

Prior to 1979, California school districts raised over half of their revenue locally and school districts exercised control over their budgets and property tax rates. School finance litigation that began in the early 1970s drove legislation that began to erode this local control, shifting authority for property tax revenue distribution to the state in an attempt to equalize school district revenues. This series of cases, known as Serrano v. Priest, was motivated by concerns that the disparities in wealth among school districts created by dependence on local property taxes discriminated against the poor and violated California’s equal protection clause. 

During the same period, dramatic growth in property tax values without an offsetting decrease in property tax rates incited a tax revolt that culminated in the passage of Proposition 13 in 1978. This citizen-initiated constitutional amendment fundamentally changed the nature of property tax assessments and imposed strict limits on growth in assessed values and property tax rates. Among other things, Proposition 13 limited growth in assessed values to 2 percent per year and capped cumulative property tax rates at 1 percent of assessed value.  

Combined with the assessment limit, the rate limit provided certainty to taxpayers about how much property taxes could increase in the future—but stripped local governments and school districts of their ability to control spending levels and budgets. 

Proposition 13 also instituted acquisition value assessment, under which properties are reassessed only when sold. This provides a strong incentive for taxpayers to remain in their homes and contributes to the state’s housing affordability crisis. Proposition 13 also prevented local governments and school districts from exceeding the limits in order to raise funds for local priorities, except for voter-approved bond measures. It required a two-thirds majority vote by both houses of the California legislature to increase any state tax and required a two-thirds majority vote of the electorate for local governments to impose special taxes. 

In 1978, school district tax collections accounted for 50 percent of school district revenue; in 1979, they made up only a quarter of total revenue. The state aid share of school district revenue, supported mostly by state income taxes, climbed from 36 percent in 1978 to 58 percent in 1979. 

In 1986, the California Court of Appeal held that the state’s centralized school finance system complied with the state constitution. The court found 93 percent of California students were in districts with wealth-related spending differences of less than $100 per pupil as prescribed by the courts in 1976. While the reforms satisfied the court, making per-pupil spending more consistent among school districts has not definitively improved or equalized educational outcomes. 

Together, the court rulings and Proposition 13 altered the school finance landscape in California and inspired a wave of property tax revolts and school finance litigation across the United States. The school finance reforms in California successfully constrained revenues, but at the cost of local control and to the detriment of education quality. School districts lost control over their primary revenue source, per-pupil spending fell below the national average (see figure 2), and academic achievement and public school enrollment declined (Brunner and Sonstelie 2006; Downes and Schoeman 1998). 

California’s test scores continue to suffer. National Assessment of Educational Progress (NAEP) scores for California show that its students continue to perform below the national average, although the gaps have narrowed since 2013, when California enacted the Local Control Funding Formula (LCFF) school finance reforms (see figure 3). Among other reforms, the LCFF targets aid to high-need districts through concentration grants and gives districts more discretion over how they spend state funds. 

One analysis suggests that California’s reforms played a major role in the rapid decline in public school enrollment in the 1970s and a partial role in the rapid growth in private school enrollment during the same period (Downes and Schoeman 1998). 

Persistent efforts to amend the state constitution to eliminate acquisition value assessment for nonresidential property provide evidence of long-term dissatisfaction with Proposition 13 among some Californians. Referred to as a “split roll,” such proposals are often debated but rarely make it to the ballot. Voters narrowly defeated one such proposal, Proposition 15, in November 2020. Proposition 15 would have returned certain commercial and industrial real property to market-value assessment while preserving acquisition value assessment for residential properties and most small businesses. 

Massachusetts: Targeted Aid 

Massachusetts’ case indicates that targeting state aid to the school districts that need it most and linking accountability standards to increased school aid can produce strong academic results. The state was also able to reduce reliance on the property tax while improving its property tax system. However, recent years show that even strong school finance systems can backtrack and should be reevaluated periodically. 

In 1980, Massachusetts enacted a property tax limit known as Proposition 2½. The two most important components of Proposition 2½ limit the level and growth of property taxes: they may not exceed 2.5 percent of the value of all assessed value in a municipality, and tax revenues may not increase more than 2.5 percent per year. Because K–12 schools are part of city and town governments in the state and not independent governments, as in some states, Proposition 2½ directly affects schools. 

One might expect that reducing reliance on the property tax in a state that does not allow local governments to levy either sales or income taxes might heavily constrain local government revenues. But local governments were lucky in the timing of the enactment of Proposition 2½. The tax limitation came into force at the beginning of a period of significant economic growth in the state popularly termed the “Massachusetts Miracle.” This enabled the state to increase aid to localities, which cushioned the tax limitation’s impact. 

Also important is the fact that Proposition 2½ was not a constitutional amendment, but a piece of legislation that could be modified by the legislature—and was. Altogether, Proposition 2½ had “a smaller impact than either its supporters had hoped or its detractors had feared” (Cutler, Elmendorf, and Zeckhauser 1997). Although not perfect, Proposition 2½ is less restrictive and less distortionary than many property tax limits in other states (Wen et al. 2018). 

During the 1980s, the state also reformed its property tax system by moving to assessing properties at full market value. Before this reform, most properties, especially residential ones, were assessed at far less than market value, with high-income properties receiving preferential treatment. Proposition 2½ created an incentive to move to the full value because of the 2.5 percent cap on the property tax levy. 

As the state was coming out of a deep recession in the early 1990s, the quality of its public schools had caused broad dissatisfaction. The Massachusetts Business Alliance for Education published Every Child a Winner in 1991, calling for “high standards, accountability for performance, and equitable distribution of resources among school districts” (MBAE 1991). The highest court was considering an equity lawsuit that had been filed in 1978, and the state Board of Education published a report highlighting some schools’ shortcomings (Chester 2014). 

In 1993, a pivotal year, the state legislature passed the Massachusetts Education Reform Act (MERA) and the state’s highest court ruled in McDuffy that the state was not meeting its constitutional duty to provide an adequate education for all students. MERA had a number of important components, including a large increase in state aid for education (from $1.6 billion in 1993 to $4 billion in 2002), and a new school funding formula targeted to districts that needed it most. Another component of MERA was curriculum standards and accountability. In 1998, the MCAS (Massachusetts Comprehensive Assessment System) was administered for the first time to measure student achievement. 

In a second school funding lawsuit, Hancock v. Driscoll, settled in 2005, the Supreme Judicial Court concluded that “a system mired in failure has given way to one that, although far from perfect, shows a steady trajectory of progress” (Costrell 2005, 23). One measure of Massachusetts’ achievement is the improvement of state scores on NAEP tests (see figure 3). Although the original intention was to reevaluate and, if need be, revise the state’s school funding formula periodically, that did not happen. Furthermore, after several years of growth in state school aid, cuts came in 2004, then again in 2009 after the onset of the Great Recession. 

In 2015, a Foundation Budget Review Commission was established to review the state’s school aid system (Ouellette 2018). The commission concluded that local governments were bearing a disproportionate share of the cost of educating children and that several elements of the foundation aid program, such as the way health insurance costs were taken into account, were outdated.  

In 2019, the legislature passed and Governor Charlie Baker signed the Student Opportunity Act (SOA), which provides $1.5 billion in additional school aid better targeted to low-income students. This revised school aid system was designed to be phased in over seven years. In 2020, the state delayed the funding increases because of pandemic-related economic uncertainty. However, in 2021, the legislature fully funded the act for the first time (Martin 2021).  

Finding the Right Combination 

Neither state aid nor the property tax on its own can provide adequate, stable, and equitable school funding. But the right combination can provide all three. Just as weaving requires lengthwise and crosswise threads (the warp and woof), so a sound school finance system requires a well-designed property tax and well-designed state school aid. 

The system of state and local funding should provide sufficient funding so that all children, no matter their race, ethnicity, or income, can receive an adequate education. When designed properly, state aid can ensure that all school districts can provide an adequate education and weaken the link between per-pupil property tax wealth and per-pupil education funding—without sacrificing the benefits that come from a stable property tax base and local control of public schools. 

Daphne Kenyon is a resident fellow in tax policy at the Lincoln Institute. Bethany Paquin is a senior research analyst at the Lincoln Institute. Semida Munteanu is associate director, valuation and land markets at the Lincoln Institute. 

Lead image by skynesher via Getty Images.

REFERENCES 

Baker, Bruce, Matthew Di Carlo, Kayla Reist, and Mark Weber. 2021. The Adequacy and Fairness of State School Finance Systems, School Year 2018–2019, Fourth Edition. Albert Shanker Institute and Rutgers University Graduate School of Education. December. 

Brunner, Eric J., and Jon Sonstelie. 2006. “California’s School Finance Reform: An Experiment in Fiscal Federalism.” Economic Working Papers 200609. Hartford, CT: University of Connecticut. 

Chester, Mitchell. 2014. Building on 20 Years of Massachusetts Education Reform. Massachusetts Department of Elementary and Secondary Education. 

Choi, Jinsub. 2017. “The Effect of School Finance Centralization on School Revenue and Spending: Evidence from a Reform in Michigan.” Proceedings, Annual Conference of the National Tax Association (110): 1–31. 

Costrell, Robert M. 2005. “A Tale of Two Rankings: Equity v. Equity.” Education Next, Summer: 77–81.  

Courant, Paul N., and Susanna Loeb. 1997. “Centralization of School Finance in Michigan.” Journal of Policy Analysis and Management 16 (1): 114–136. 

Cutler, David M., Douglas W. Elmendorf, and Richard Zeckhauser. 1997. “Restraining the Leviathan: Property Tax Limitation in Massachusetts.” Working Paper 6196. Cambridge, MA: National Bureau of Economic Research. 

Dewitt, Ethan. 2021. “School Enrollment Decline Persists Despite Return to Classrooms.” New Hampshire Bulletin, November 24. 

Downes, Thomas A., and David Schoeman. 1998. “School Finance Reform and Private School Enrollment: Evidence from California.” Journal of Urban Economics 43 (418–443). 

Education Week. 2020. “The Coronavirus Spring: The Historic Closing of U.S. Schools (A Timeline).” July 1. 

Egan, Paul. 2022. “Whitmer Budget to Propose Billions Extra for Schools, Five Percent Boost in Per-Pupil Grant.” Detroit Free Press. February 6. 

Fensterwald, John. 2021. “Projected K–12 Drops in Enrollment Pose Immediate Upheaval and Decade-long Challenge.” EdSource, October 18. 

Griffith, Michael. 2021. “An Unparalleled Investment in U.S. Public Education: Analysis of the American Rescue Plan Act of 2021.” Learning in the Time of COVID. Washington, DC: Learning Policy Institute. 

Korman, Hailly T.N., Bonnie O’Keefe, and Matt Repka. 2020. “Missing in the Margins 2020: Estimating the Scale of the COVID-19 Attendance Crisis.” Bellwether Education, October 21. 

Lincoln Institute. 2020. “Towards Fiscally Healthy Michigan Local Governments.” Cambridge, MA: Lincoln Institute of Land Policy, October. 

Martin, Naomi. 2021. “Low-Income Students Are Receiving ‘Game-Changer’ Student Opportunity Act Funding.” Boston Globe. July 17. 

MBAE. 1991. “Every Child a Winner.” Boston, MA: Massachusetts Business Alliance for Education. 

McGuire, Therese J., Leslie E. Papke, and Andrew Reschovsky. 2015. “Local Funding of Schools: The Property Tax and Its Alternatives.” In Handbook of Research in Education Finance and Policy, 392–407. New York, NY: Routledge. 

Musaddiq, Tareena, Kevin Stange, Andrew Bacher-Hicks, and Joshua Goodman. 2021. “The Pandemic’s Effect on Demand for Public Schools, Homeschooling, and Private Schools.” Working paper 29262. Cambridge, MA: National Bureau of Economic Research. 

NCES. 2021. “New Data Reveal Public School Enrollment Decreased 3 Percent in 2020–2021 School Year.” Blog post. National Center for Education Statistics. July 26. 

Ouellette, John. 2018. “Two Decades into Education Reform Effort, Commission Calls for Substantial Changes to Funding Formula.” Municipal Advocate: 29 (2). 

Sawchuk, Stephen. 2020. “When Schools Shut Down, We All Lose.” Education Week. March 20.  

Wassmer, Robert W., and Ronald C. Fisher. 1996. “An Evaluation of the Recent Move to Centralize the Funding of Public Schools in Michigan.” Public Budgeting and Finance 16 (Fall): 90–112. 

Wen, Christine, Yuanshuo Xu, Yunji Kim, and Mildred E. Warner. 2018. “Starving Counties, Squeezing Cities: Tax and Expenditure Limits in the U.S.” Journal of Economic Policy Reform 23(2): 101–119. 

Perched at the mouth of the Chesapeake Bay, the city of Norfolk, Virginia, has long relied on its proximity to water as a source of economic strength, from its history as a key port in the 18th and 19th centuries to its current role as the site of the world’s largest naval station. Miles of beaches and a downtown riverfront trail draw tourists and residents alike. But the location of this low-lying coastal city makes it especially vulnerable to the effects of climate change, including sea-level rise, flooding, and increasingly powerful and frequent coastal storms. 

To address these risks, leaders in Norfolk have put climate adaptation at the center of their long-term planning. In 2018, the city revised its zoning to codify resilience standards and nudge new development toward higher ground. A new study by Smart Growth America (SGA) will examine the economic impacts of that zoning change, including its effects on the municipal budget and projected effects on property values. The research—which will be led by Katharine Burgess, vice president of land use and development, and supported by the Lincoln Institute—will also include a national scan to identify and categorize other resilience zoning initiatives and develop a list of complementary policy approaches, addressing topics such as anti-displacement, housing affordability, and environmental justice. The team hopes those findings will serve as a resource for policy makers in cities across the United States. 

The study by SGA is one of seven projects the Lincoln Institute is supporting through a call for research on the intersection of land-based climate change adaptation, property values, and municipal finance. Over the next year, each project will explore the fiscal impacts that various climate adaptation approaches—such as green infrastructure, floodplain buyouts, and rezoning—have on the places that implement such approaches. 

“The findings of these research projects will illuminate fiscal dimensions of land-based adaptation measures and help communities identify more effective and equitable strategies to advance their climate goals,” said Amy Cotter, director of climate strategies at the Lincoln Institute. “We hope this research will help inform and change public policy, and ultimately change practice.” 

In addition to SGA’s study of resilience zoning in Norfolk, the following projects will receive support from the Lincoln Institute: 

• Erwin van der Krabben, professor of planning and property development at Radboud University in the Netherlands, will lead a team studying the current and prospective role of land-based financing mechanisms in urban climate adaptation, comparing cases from the United States, the United Kingdom, and the Netherlands. 
• Researchers from the South Africa–based consulting firm PDG will investigate the effect of stormwater infrastructure projects on property values and municipal fiscal health in Cape Town, which experiences persistent flooding exacerbated by climate change. 
• Resources for the Future will examine the effects of eliminating federal incentives for development in U.S. coastal areas at risk from climate change, analyzing the long-term effects of the Coastal Barrier Resources Act of 1982 and quantifying the program’s net impact on local property tax revenues. 
• A team from the Universidad de Costa Rica will conduct a comparison of the property value impact of municipal and national land use regulations for flood mitigation in the Quebrada Seca-Río Bermúdez watershed, located in the Heredia Metropolitan Area, using a dataset of 1,697 real estate listings and simulations of recent flood events. 
• Texas A&M University researchers will examine the effects of floodplain buyouts on nearby tax-assessed property values in the Houston metro area, with the goal of offering suggestions for municipalities on the appropriate scale, pace, and clustering of buyouts to minimize negative impacts on neighboring property values. 
• Jeffrey Cohen, professor of finance at the University of Connecticut and research fellow at the Federal Reserve’s Institute for Economic Equity, is leading a team that will study the current and projected impacts of green infrastructure on housing prices in shoreline areas of New Haven, Connecticut, and consider the potential of property assessment as a tool to encourage and finance additional green infrastructure projects. 

To learn more about current Lincoln Institute requests for proposals, fellowships, and other research opportunities, visit our research page. 

Katharine Wroth is the editor of Land Lines. 

Image: Low-lying Norfolk, Virginia, is taking steps to build climate resilience. Credit: Jupiterimages via Stockbyte/Getty Images.

Randall Woodfin, Birmingham’s “millennial mayor” and rising star in Alabama politics, has launched an urban mechanic’s agenda for revitalizing that post-industrial city: restoring basic infrastructure on a block-by-block basis, setting up a command center so federal funds are spent wisely, and providing guaranteed income for single mothers. 

“This is a once-in-a-lifetime opportunity to really supercharge infrastructure upgrades and investments we need to make in our city,” Woodfin said, referring to the Infrastructure Investment and Jobs Act and the American Rescue Plan Act, which are bringing unparalleled amounts of funding to state and local governments. “This type of money probably hasn’t been on the ground since the New Deal.” 
 
Woodfin talked about neighborhood revitalization, housing, climate change and other topics in an interview for the Land Matters podcast. An edited version of the Q&A will appear in print and online as the Mayor’s Desk feature in the next issue of Land Lines magazine. 
 
When he was elected in 2017, Woodfin was the youngest mayor of Birmingham in over a century. Now 40 and nearly a year into his second term, he’s made revitalization of the city’s 99 neighborhoods a top priority, along with enhancing education, fostering a climate of economic opportunity, and leveraging public-private partnerships. 
 
In a city battered by population and manufacturing loss — including iron and steel industries that once thrived there — Woodfin looked to education and youth as keys to a better future. He set up Birmingham Promise, which provides apprenticeships and college tuition assistance to local high school graduates. He also established Pardons for Progress, a mayoral pardon of 15,000 misdemeanor marijuana possession charges dating back to 1990, that had been a barrier to employment. 

Woodfin is a graduate of Morehouse College and Samford University’s Cumberland School of Law. He was an assistant city attorney for eight years before running for mayor, and served as president of the Birmingham Board of Education as well. 
 
Too many Birmingham residents have been living in areas where they are constantly reminded of decline, Woodfin said — stepping out of their house and seeing a dilapidated house next door and a broken streetlight out front. Playground and park equipment is out of order, and many live in food deserts. The answer, he said, is to “triple down” on efforts to create new housing and other infrastructure and eradicate blight, to address “snaggletooth” blocks where “you have a house, empty lot, house, empty lot, empty lot.” 

Chipping away at concentrated poverty through physical improvements improves quality of life for thousands, and will help the entire city rebound, Woodfin says.  

More near-term, Woodfin said he embraced the concept of guaranteed income because as a practical matter, a few hundred dollars a month could help single mothers fend off “the monotony of concentrated poverty.” 
 
“I think we all would agree, no one can live off $375 a month,” he said. But if households had that additional money, “does that help keep food on the table? Does it help keep your utilities paid? Does it help keep clothing on your children’s back and shoes on their feet? Does it help you get from point A to B to keep your job to provide for your child? 

“This is why I believe this guaranteed income pilot program will be helpful. We only have 120 slots, so it’s not necessarily the largest amount of people, but I can tell you over 7,000 households applied for this,” he said. “The need is there.” 

The Lincoln Institute’s Legacy Cities Initiative is developing a community of practice for the equitable regeneration of post-industrial cities, like Birmingham, that have been hit hard by manufacturing and population loss. Strategies to maintain good municipal fiscal health for these and all cities include one that Woodfin is making a priority: keeping better track of intergovernmental transfers, such as the billions in federal funding that is currently on the way. 

You can listen to the show and subscribe to Land Matters on Apple Podcasts, Google Podcasts, Spotify, Stitcher, or wherever you listen to podcasts. 

Anthony Flint is a senior fellow at the Lincoln Institute of Land Policy, host of the Land Matters podcast, and a contributing editor of Land Lines.

Photograph courtesy of Anthony Flint. 

Further reading: 

Everything you need to know about Birmingham’s millennial mayor 

Seven Strategies for Equitable Development in Smaller Legacy Cities 

How Smarter State Policy Can Revitalize America’s Cities 

The Empty House Next Door: Understanding and Reducing Vacancy and Hypervacancy in the United States 

American cities need to pursue creative new strategies as they rebuild from the COVID-19 pandemic and work to address longstanding social and economic inequities. Too often, however, cities face stiff headwinds in the form of state laws and policies that hinder their efforts to build healthy neighborhoods, provide high-quality public services, and foster vibrant economies in which all residents have an opportunity to thrive, according to a new Policy Focus Report by Center for Community Progress Senior Fellow Alan Mallach from the Lincoln Institute of Land Policy and the Center for Community Progress.  

With a massive infusion of funds from the American Rescue Plan into cities and states, advocates for urban revitalization have an unprecedented opportunity to engage with state policy makers in creating a more prosperous, equitable future, Mallach writes in the report, From State Capitols to City Halls: Smarter State Policies for Stronger Cities. “If there’s one central message in this report, it’s that states matter—and that those who care about the future of our cities need to direct far greater attention to them,” he writes.  

Based on a detailed analysis of the complex yet critical relationship between states and their cities, the report illustrates how state policies and practices affect the course of urban revitalization, from the ways cities raise revenues to the conditions under which they can finance redevelopment. The report provides a rich picture of how state laws and practices can help or hinder equitable urban revitalization, drawing upon examples and strategies from across the country and highlighting the recurrent city–state tug-of-war that both must move beyond to work together for mutual benefit.  

The report also breaks down what goes into successful revitalization, and how leaders can use legal and policy tools to bring about more equitable outcomes. Mallach recommends five underlying principles that should ground state policy related to urban revitalization: target areas of greatest need, think regionally, break down silos, support cities’ own efforts, and build in equity and inclusivity.  

“This report is thorough, relevant, and timely—and it provides a critical perspective on the importance of building capacity to ensure stronger alignment between state and local policy makers to improve equity and inclusion,” said Sue Pechilio Polis, the director of health and wellness for the National League of Cities. “A detailed accounting of all of the ways state laws impact municipalities, this essential report will be a must read for state and local policy makers.”  

“As this Policy Focus Report details, state governments must be true partners with their cities in order to realize meaningful, equitable revitalization across the board,” said Jessie Grogan, associate director of reduced poverty and spatial inequality at the Lincoln Institute. “By deliberately incorporating equity into economic growth and community work across locations and sectors, leaders at every level can foster truly progressive change.”  

From State Capitols to City Halls offers specific state policy directions to help local governments build fiscal and service delivery capacity, foster a robust housing market, stimulate a competitive economy, cultivate healthy neighborhoods and quality of life, and build human capital, all with the goal of bringing about a more sustainable, inclusive revival in American cities and towns. The report’s recommendations offer a practical roadmap to help state policy makers take a fresh look at their own laws and further more effective advocacy for substantive change by local officials and non-governmental actors.  

“We all deserve access to stable jobs, affordable housing, and green spaces, but unfortunately our systems aren’t built to guarantee that for future and even current generations,” said Massachusetts State Senator Eric P. Lesser, who chairs the Gateway Cities Caucus and the Economic Development Committee. “This report takes a thoughtful look at how we as policy makers can have a direct impact on building inclusive cities for all. From State Capitols to City Halls: Smarter State Policies for Stronger Cities provides real tools to support our communities, break down policies that breed inequality, and give everyone a fair shot at a high quality of life.”  

While successful strategies will vary from state to state, Mallach stresses that all policy makers must remember that every state is fundamental to its cities’ futures as places of equity and inclusion. “In the final analysis,” he notes, “states play a central, even essential, role in making revitalization possible—or, conversely, frustrating local revitalization efforts. This report should encourage public officials and advocates for change to make states more supportive, engaged partners with local governments and other stakeholders in their efforts to make our cities stronger, healthier places for all.” 

The report is available for download on the Lincoln Institute’s website: https://www.lincolninst.edu/publications/policy-focus-reports/state-capitols-city-halls
 

Image: USA/Alamy Stock Photo