Explanations for States Adopting Limits on Educational Spending

Abstract

It is not obvious why voters choose to constrain themselves by imposing term limits on politicians or spending limits when they can throw an official out of office if he or she spends too much or makes other decisions that displease them. Between 1976 and 1983, voters in nearly a third of the states adopted spending limits on school districts. This paper tests a number of untested hypotheses about why some states adopt spending limits and others do not. The novel results suggest that spending limits are adopted in states in which (1) voters can easily place initiatives on the ballot, (2) house prices are outstripping income, (3) the electoral mechanism is less effective in getting rid of politicians who selected the wrong tax rates, (4) there is excessive state spending due to common-pool problems found in large legislatures, and (5) schools are less efficient due to little competition among school districts.