State Fiscal Capacity Issues

Just as localities differ in their ability to raise funds for services, states also vary in their capacity. For example,

the pictures of desperate family poverty in the Deep South that President Lyndon Johnson showed the nation

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in the mid-1960s bore no resemblance to anything that most New England families had seen in their states. In

truth, most middle- and upper-class Americans could not relate to that type of abject deprivation. If that level of

indigence existed in homes, what conditions existed in the schools these children attended? What resources

did their teachers have? How much money was the PTA able to raise for these schools?

Variance exists in states’ fiscal capacity. Just as the late 19th century measured capacity as property

values, states today can calculate per capita property values. Likewise, it is possible to calculate per capita

income, and also to adjust for cost of living standards across states. Each piece of information provides

another part of the puzzle in determining state capacity. And using multiple variables in determining capacity

gives a better indication of wealth than using a single measure.

Variance also exists in how state capacity is measured. Some states measure capacity on a capita or

total population basis. Other states calculate capacity according to how many

students are enrolled in public schools. In the first instance, it is argued that government services must be

provided for all the population—not just for public school students. In the second instance, it is argued that for

education purposes, the number of students enrolled in public schools should be the measure of capacity.

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