School Spending, Educational Inputs, and Student Performance
*Names in bold indicate Presenter
In 2014, total spending for primary and secondary schools in the United States was $668 billion, which was 3.9 percent of the country’s total economic output and over $13,000 per student (NCES 2019). While scholars now generally agree that higher levels of school spending are positively associated with improved student outcomes, researchers are still unsure what types of investments (for example, teachers or school capital) improve student performance and how large the investments need to be. This panel proposal includes four studies that examine the effects of financial inputs in schools on school fiscal behavior and student academic outcomes. All four papers use causal identification strategies, exploiting within-unit changes, either increases or decreases, in school funding. Most previous evidence on the impacts of school spending on student outcomes exploit court-mandated school finance reforms. While well-identified, these reforms lead to large, state-wide shifts in the distribution of resources. This panel focuses on the examining the effects of more common financial decisions of local governments, such as increasing taxes or acquiring additional external funding for schools, on school fiscal behaviors and student academic outcomes.
The first two papers of our panel use variation that results from elections (tax elections and participatory budgeting elections, respectively) to identify the effects of increases in school funding on fiscal performance and student outcomes. Both studies exploit election-induced regression discontinuities to examine the effects of plausibly exogenous increases in school funding near the winning threshold. Abott, Lavertu, Kogan, and Peskowitz use school district tax elections to estimate the impact of funding increases on operational spending and education outcomes. Abott et al. find that tax election winners increased instructional expenditures and experienced improved student outcomes. Rothbart, Schwegman, and Shybalkina examine the effects of capital spending on school budgets and student outcomes using participatory budgeting elections in New York City. Participatory budgeting is a process by which community members vote on how to spend a portion of the City’s capital discretionary budget. Rothbart et al. use a regression-discontinuity framework to exploit the PB vote as an instrument for capital spending.
The last two papers examine how external constraints (tax and expenditure limits and the Great Recession, respectively) impact school spending and student outcomes. As a result, both papers are among the first to estimate the impact of spending reductions on school fiscal behavior and student outcomes rather than spending increases. Phuong and Zhang examine how a property tax levy law in New York State affects education inputs, including total spending and different expenditure categories. They find the levy reduced instructional expenditures and more severely affected high-need school districts. Buerger and Lofton examine the impact of the Great Recession on student achievement using the nationwide National Assessment of Education Progress data and exploiting differences in the effects of the recession on fiscal health across the country.