This paper expands on the school finance literature by using a political fragmentation index to calculate how political power affects educational spending in Virginia, USA. The methodology allows the comparison of different political voices relative to each other and the consideration of the role of the distribution of political power. Political fragmentation is considered across several different dimensions, including race, age, income and political parties. Using a demand for local public goods model, it is found that, along with traditional demand variables, the interest-group pressures dominated by the primary beneficiaries (teachers and students) increase educational spending while higher income and a larger percentage of African-Americans in the population reduce educational spending.

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A public choice model is used to explain the decline in the sum of AFDC and food stamp transfers that occurred about the time the food stamp program was introduced. The theoretical results suggest that the decline may be due to an increase in the marginal cost of income redistribution that results from the negative income tax feature of the food stamp program and the increase in federal tax that is required to finance the program.