The categorization of current and a prediction of future counties' financial expectancies from state sources subject to the hold-harmless provision of South Carolina's Education Finance Act of 1977

South Carolina established their desire for an equal education for all public school students in accordance with individual needs, regardless of available resources. The finance act legislated in 1977 was not thoroughly researched to determine the long-range effects of all provisions. The purpose of this study was to examine one such provision, the "hold-harmless" clause, and to project its effects. The "hold-harmless" clause held that no district could receive fewer funds from state sources for the support of public education than the district received in the previous year. This clause guaranteed the same funds as the previous year plus an inflation rate, regardless of decreased need such as declining enrollment or increased ability to support education from local sources.

This study proposed to answer the following questions:

1. How many districts may South Carolina anticipate being incorporated into "hold-harmless" by 1984?

2. What additional funds will be obligated from the state treasury due to "hold-harmless" by 1984?

The population for this study included the 92 school districts of South Carolina. Eight year historical data on 14 socioeconomic variables were collected and analyzed by multiple regression in an attempt to establish the most efficient variable(s) to predict assessed valuation, an indicator of a district's ability to support education. As a district's ability to support education increases or as need

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iv decreases, state support should decrease. A second data set was formulated containing predicted values of the necessary variables to compute the state allocation formula through 1984.

Analysis of the 14 socioeconomic variables showed population was the best indicator of assessed valuation in a district. Computation of the formula through 1984 projected 66 districts will become categorized as "hold-harmless," the pivotal figure being the decreasing pupil population in these districts.

The findings revealed that 7l districts will be afforded protection under the "hold-harmless" clause of the 1977 Education Finance Act by 1984. These include the 66 districts projected by the writer plus five districts identified by the South Carolina State Department of Education. These additional five districts are experiencing an increased ability to support education locally due to industrial or population growth.

A second finding was that the additional cost to the state as a result of the "hold-harmless" clause will approximate $9,146,609 in 1984 and will have totaled around $20,000,000 between 1980-1984. majority of this cost by 1984 ($16,8l7,335) will be incurred because of declining pupil populations in many states.