Panel: New Evidence on the Effects of School Finance Reform on Student Outcomes

Friday, November 7, 2014: 8:30 AM-10:00 AM
Cimarron (Convention Center)

*Names in bold indicate Presenter

Panel Organizers:  Joshua Hyman, University of Connecticut
Panel Chairs:  Susanna Loeb, Stanford University
Discussants:  Thomas Downes, Tufts University and Lesley Turner, University of Maryland

The Effect of School Finance Reforms on the Distribution of Spending, Academic Achievement, and Adult Outcomes
Kirabo Jackson1, Rucker Johnson2 and Claudia Persico1, (1)Northwestern University, (2)University of California, Berkeley

School Finance Reform and the Distribution of Student Achievement
Jesse Rothstein, University of California, Berkeley and Diane Whitmore Schanzenbach, Northwestern University

The school finance reforms implemented over the past four decades caused some of the most dramatic changes in the structure of K–12 education spending in U.S. history. An extensive literature established that, with some exceptions, early school finance reforms indeed led to increases in the relative and absolute funding of low-income students' school districts. It is less clear whether the changes in spending dues to these early reforms affected student achievement, with some studies finding a positive effect of spending increases on achievement and others finding no effect. At least two decades have passed since the earlier school finance reforms were implemented. Educational attainment, earnings, and other important long-run measures that determine quality of life are the litmus test for whether increases in school spending improve the welfare of students. Yet no studies have examined the long-run effects of these earlier school finance reforms on student outcomes during adulthood. Further, the most recent school finance reforms, those implemented since the late 1990’s, are different from earlier reforms in that they shift their argument from "equity" to "adequacy" of school funding. Although examining long-run effects is ultimately important, policymakers attempting to gauge the effectiveness of current policies cannot wait decades for these long-run effects to emerge. It is important to understand the shorter-run effects of these more recent school finance reforms and how they compare to those of the earlier reforms. Yet there is little evidence about the effects of these recent reforms on student achievement. This panel includes three new papers that fill these gaps in the literature by providing evidence on 1) the long-run effects of the earlier school finance reforms on student outcomes during adulthood, and 2) the shorter-term effects of the more recent school finance reforms on student achievement. Both contributions are important and policy relevant. These papers not only advance our understanding of whether and how these dramatic changes in school financing affected students, but also more generally whether “money matters” in schools - whether increases in school spending translate into increases in student achievement, educational attainment, and earnings. The panel represents a diverse approach to examining the effects of school finance reforms. Two of the papers use nationally representative data to examine the effects of school finance reforms implemented across many states. The other paper uses administrative data containing the universe of public school students in a single state – Michigan - to examining the long-run effects of the school finance reform in that state alone. The panel brings together leading experts from schools and departments of education, public policy, and economics to discuss the evidence presented in these three papers and how it compares and expands our understanding relative to the earlier literature examining school finance reforms that began over two decades ago.
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