This report argues, using Arizona as an illustration, for a market-based school funding paradigm characterized by per-pupil allocations that follow each student to the school of their choice. The report explains what is wrong with the current system, compares the market-based approach to others that have been proposed, and demonstrates how per-pupil funding works in the real world. It argues that the absence of a link between school facilities and educational quality has led to undisciplined costs that will ultimately lead to unsustainable debt. The debate over standards should focus on dollars, not facilities, with the role of the state being as fund provider and letting public school officials to make decisions about facilities. It suggests that the best way to establish the per-pupil dollar standard is to determine how much funding it takes to entice private providers of public education to enter the market. It argues that this dollar amount would allow the vast majority of existing school districts to build new facilities and renovate old ones on a pay-as-you-go basis. Finally, it suggests that public schools should be allowed to seek funding beyond the state provided amount on a voluntary basis.
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