Unbiased Analysis of Today's Healthcare Issues

How the Recession Changing Tiebout Sorting

Written By: Jason Shafrin - Apr• 27•11

Typically tiebout sorting works like this:

Sharofsky does know — very well — about another Cherry Hill [NJ] institution: its stellar public schools. He’s president of the Cherry Hill Teachers Union. Those teachers can brag that 95 percent of the students they teach go on to college. Not bad in one the state’s largest and most diverse suburban districts. Teachers’ salaries here average $54,000 a year and can go up to $100,000. Families — like Sharofsky’s — move to this suburb, right across the bridge from Philadelphia, for the education.

To support their schools, Cherry Hill residents pay some of the highest property taxes in the nation. According to the Tax Foundation, the town is among the top 10 communities with the highest tax burden relative to home value — in 2009, about $5,600 a year for the median homeowner.

With the state taking a bigger cut, will there be less Tiebout sorting? I would guess so.  In fact, because of the recent contraction in the economy and resulting squeeze on state budgets, the state of New Jersey is not letting Cherry Hill residents keep as high a share of their tax payments. Governor Chris Christie gave millions of Cherry Hill’s surplus money to schools whose budget was even more in need.  Thus, Cherry Hill is a less attractive option if it has high taxes, but the quality of the schools regresses.

In California most education funding is funneled directly from the state, even if some funds are raised through local property taxes.  Is there less Tiebout sorting in California than other States?

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