School districts across the United States are often forced into situations where limited public funds must be distributed among multiple districts. These are often reliant on distribution rates negotiated by district leadership and elected officials. An example of this is Georgia’s 1% Education Local Option Sales Tax (ELOST). The tax is collected at the county level, is limited to capital expenditures, and is subject to countywide referendum after a five-year sunset period. This frequently requires county and municipal districts to establish distribution of these sales tax funds. This study analyzes the district-level factors that influence those decisions.

The primary driver of this distribution is the proportion of students served by a particular district, but there are additional determinants. This study finds three key components for school districts to maximize receipt of shared revenue, specifically as applied to Georgia’s municipal school districts.

First, districts must have a comprehensive understanding of the stability of their own budget. Overreliance on a single source jeopardizes the long-term sustainability of their revenue streams and allows a “shock” to drastically affect the budget. Second, districts should acknowledge volatility of particular revenue streams. This includes fluctuating grants and state funds, property tax revenue influenced by property values, and sales taxes reliant on consumer spending. Finally, school district leaders must foster a healthy working relationship with fellow districts.

Because revenue sharing among multiple jurisdictions is a zero-sum game, there is potential for aggressive interjurisdictional competition. Achieving an amicable balance to protect budget stability and revenue volatility concerns is critical. When negotiating revenue distribution, there are common regional interests that should be identified and reflected in the distribution plan.