Public Choice 86: 279-307, 1996. © 1996 Kluwer Academic Publishers. Printed in the Netherlands. An examination of the structure of governance in California school districts before and after Proposition 13" THOMAS A. DOWNES Department of Economics, Northwestern University, Evanston, 1L 60208-2600, U.S.A. Accepted 18 April 1994 Abstract. This paper explores the structure of governance in California school districts. Two alter- native models are considered, the decisive voter (benevolent dictator) model and a model that al- lows for rent-seeking behavior on the part of district decision makers. A formal test between these two models is proposed and implemented. The decisive voter model is found wanting as an expla- nation of school district decision making both before and after the passage of Proposition 13. There is, however, some evidence that the constraints imposed on some districts by Proposition 13 have forced decision makers to act in a manner more consistent with the preferences of their constituents. I. Introduction Bureaucracy vitiates the most basic requirements of effective organization. It imposes goals, structures, and requirements that tell principals and teachers what to do and how to do it - denying them the discretion they need to exercise their expertise and professional judgement, and denying them the flexibility they need to develop and operate as teams (Chubb and Moe, 1990: 187). This quote from John Chubb and Terry Moe's controversial book Pofitics, Markets, and America's Schools (1990) is representative of what has become a commonly held view of America's public schools. It is relatively easy to find support both in the popular press (e.g., Freedberg, 1989) and the economics literature (e.g., Lott, 1987) for this view that the structure of American public education permits the inefficient use of tax dollars.1 * Much of the work on this paper was completed while the author was a Alfred P. Sloan Doctoral Dissertation Fellow. Many thanks to Dave Green, Tom MaCurdy, Dave Starrett, Ann Velenchik, Therese McGuire, and Bo Honor6 for the considerable assistance they have given me on this paper. Also thanks to seminar participants at Stanford University and the University of Washington and to participants in the State and Local Public Finance group at the NBER Summer Institute for their many helpful suggestions. As always, all remaining errors are the author's.