On September 2015, Nir Barkat, mayor of Jerusalem, the poverty-stricken capital of Israel, quarreled with Ron Huldai, mayor of Tel Aviv, the central city in the major metropolitan area of the country. Barkat accused Huldai of cynicism towards social justice, since the latter spoke out against a program of differential budgeting, introduced by the Ministry of Finance and referred to him as "the mayor of Israel’s wealthiest city". The counter-accusation that Huldai presented was that Barkat is fighting other cities instead of joining their common goal to demand more funding for national services from the government. Haaretz newspaper, one of the leading daily newspapers in Israel, commented on this debate in an editorial describing the proposed differential budgeting program as "a small step toward distributive justice in Israel," and emphasized the impact of local government wealth on quality of living by stating that "Commercial municipal tax pretty much determines the level of services residents get in the realms of education, welfare, culture and environmental protection".
Additional expenditure on education varies between municipalities in a manner that schools in wealthier municipalities receive higher levels of funding. But to what extent does the extra funding matter? It might be the case that additional funding doesn't matter at all or matters a lot, but both situations cannot justify differential budgeting, if not even justify the complete opposite. Only in the case that the extra money helps poorer communities and doesn't help wealthier communities can differential budgeting be justly advanced. The justification for differential budgeting lies in the form of the relation between additional funding and students' performance.
Expenditures on Education
Municipalities in Israel are categorized by the Central Bureau of Statistics according to their socio-economic level on a scale of 1-10 (the lowest socio-economic level is marked 1 and the highest socio-economic level is marked 10). This scale reflects the wealth of residents, taking into account the local unemployment rate, average salaries, car ownership and other economic factors. Expenditures on education per student per year - can be divided to governmental expenditure (vGovernment), municipal expenditure (vMunicipal) and the non-governmental expenditure, that is mostly parents' payments (vParents). Data analysis show that, indeed, wealthier cities spend more money on education. The question remains, what is the impact on students' performance.
Only Up to a Certain Point
Visualization of the panel data reveals the hypothesized curved relation between cumulative expenditure on education and students' performance. The correlation between the variables is strong and positive at the outset, but as levels of expenditure rise their impact on the percentage of students eligible for a matriculation certificate weakens. When cumulative expenditure on education reaches 10,000 ILS per student per year, the correlation starts to disappear. Beyond 15,000 ILS per student per year one can notice a slight drop in students' performance, suggesting that additional expenditure beyond this point is completely redundant, since eligibility rates go down, not up. This visualization confirms that the available data can support the research hypothesis that cumulative expenditure on education has an impact on students' performance, but only up to a certain point, from which additional expenditure is at least unhelpful.
Local politicians should take interest in the results of this research, showing that municipal expenditure on education can improve a certain outcome of the local education system, but they should also be aware of the fact that more money can do so only up to a certain point. On the national level, this research also has an important implication, that differential budgeting should be considered as a cure for inequalities in education. Some governmental expenditure was found to be of no use in improving students' performance, so it might be a better place to start than rethinking the allocation of municipal budgets. Differences between cities were found to be more dominant than differences within cities along the years, so there is much to be said on the city-specific effects that were not tested in this research, but the implication for residents is that they can expect better education by moving to a different city, rather than by influencing their municipality to increase levels of expenditure on education per student.