Analyzing who gains and who loses: The case of school finance reform in New York State

Do better models lead to better decisions? This case study assesses three computer-based models designed to examine the distributional effects of a single school finance reform in the state of New York. The three models-a tactical simulation model, an econometric model, and a system dynamics simulation model-differ from each other in terms of five classes of assumptions applied to the analysis. Within a political decision-making environment, the simpler tactical simulation model (essentially a data base management system) produces the most useful results because it requires few assumptions on the part of analysts. However, this class of models also fails to analyze more complex interactions within the school finance system and hence tends to lock decision makers into a myopia defined by one-year projections. The net effect of introducing computer-based models into the decision-making process is to make school finance decision making more myopic. For politically based decisions about distributional impacts, the availability of more sophisticated models does not appear to lead to more sophisticated decision-making processes.