Year: 2014
Type: conference-paper
Study design: Observational Study
Abstract: The school finance reforms that began in the early 1970s and accelerated in the 1980s caused some of the most dramatic changes in the structure of K-12 education spending in US history.Between 1971 and 2010, school finance litigation cases were brought forth in 43 states; systems were overturned in 28 of them.This paper presents a comprehensive analysis of the effects of these reforms on the level and distribution of school district spending, as well as their impacts on subsequent educational and economic attainment outcomes.In the first section, using a long panel of annual school district data on per-pupil spending spanning 1962-2010, we present a rigorous event-study analysis of the effects of different types of school finance reforms on state distributions of school spending in both the short and long run.We analyze the efficacy of both court-mandated reforms and legislative reforms to narrow school spending disparities between rich and poor districts and raise the overall level of per-pupil spending.We find that courtordered school finance reforms have been instrumental in moving toward the goal of equalizing per-pupil spending, and have worked primarily by raising spending at the bottom of the distribution, while spending at the top remained unchanged.Though both legislative and courtmandated reforms reduced inequality in the short run, only court-mandated reforms increased school spending for poor districts in the long run.Differences in effects across types of reforms stem largely from the nature of the spending formulas implemented and their impacts on the tax price of schooling (i.e., the amount by which a district has to raise taxes in order to increase school spending by $1).Formulas that entail high tax prices reduce long-run spending for highincome districts, and those that entail low tax prices lead to long-run increases in school spending, particularly for low-income districts.In the second section, we link the spending and reform data to detailed nationallyrepresentative data on children born between 1955 and 1985 and followed through 2011 (the Panel Study of Income Dynamics (PSID)) to study the effect of the reform-induced changes in school spending on long-run adult outcomes.These birth cohorts straddle the period in which most of the major school finance reform litigation accelerated, and thus were differentially exposed, depending on place and year of birth..We use the timing of the passage of courtmandated reforms as an exogenous shifter of school spending.Results from event-study and instrumental variable models reveal that increases in per-pupil spending, induced by courtmandated school finance reform, led to significant increases in the likelihood of graduating from high school and educational attainment for poor children, and thereby narrowed adult socioeconomic attainment differences between those raised in poor and affluent families.Some key patterns indicate that these improvements reflect the causal effect of these reforms: (a) no evidence of pre-existing time trends; (b) improvements were experienced only by cohorts within the same school districts that were exposed to the reforms, with impacts constrained only to school-age years of exposure accompanied by no effects for non-school age years (whether preschool ages or beyond age 17); (c) improvements were monotonically increasing in years of exposure and largest for those exposed to reforms for all 12 years of public school; (d) improvements were larger in districts that experienced larger reform-induced increases in school spending; and (e) no effects for children from non-poor families.These results persist with the inclusion of school district fixed effects and extensive controls for childhood family characteristics, race-and region-specific birth cohort effects, linear cohort trends in 1960 county characteristics, and controls for other coincident policies (e.g., "War on Poverty" initiatives & related safety-net programs; desegregation) that prevailed at the time these children were growing up..The results imply that a $1,000 increase in per-pupil spending each year for all 12 years of public school is associated with 0.178 more years of schooling, 14 percent higher earnings, and an 8 percentage-point reduction in the annual incidence of poverty in adulthood.
Source: bepress Legal Repository
Author: Rucker C. Johnson
Language: English
Subfield: Education
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W270395585