Indiana University SPEA Edward J. Bloustein School of Planning and Public Policy University of Pennsylvania AIR American University

Panel Paper: The Predictability of Local and State Education Funding: Evidence from Ohio School District Revenue Forecasts

Friday, November 13, 2015 : 10:15 AM
Johnson II (Hyatt Regency Miami)

*Names in bold indicate Presenter

Travis St. Clair, University of Maryland and Stephane Lavertu, The Ohio State University
School district officials have long argued that their inability to forecast district revenues accurately undermines the delivery of public education. This study, which employs 2008-2014 panel data on the revenue forecasting of Ohio school districts, is the first to examine districts’ ability to forecast both local and state sources of revenue. The analysis indicates that a typical district’s error in forecasting state and local revenue one year into the future hovers around 2.6-3.5 percent of total revenue; that this one-year forecasting error is somewhat greater for state funding (primarily unrestricted grants) than it is for local revenues (primarily property tax receipts); and that such error is associated with sudden declines in district expenditures and student achievement. The analysis also reveals that, as the time horizon of forecasts increases, error in local revenue forecasts increases far more quickly than error in forecasting state funding, which suggests that centralized state funding might have facilitated long-term strategic planning for the typical Ohio district. Finally, the analysis indicates that revenue volatility is a weak proxy for district forecasting error.

Full Paper: