When Does Money Matter? School Funding and Black-White Inequality of Educational Achievement 2009–2014

• In Event: Excellence in Education Research: Early-Career Scholars and Their Work

Abstract

Contradictory evidence about the relationship between school funding and achievement could reflect heterogeneous effects by demographics or funding type. That is, revenue efficiency for achievement may vary by funding source and student characteristics. State education funding cuts during the 2008 recession provide an opportunity to examine potential variation in efficiency by funding source and race. This study asks: 1) What is the relationship between school funding and academic achievement?; and 2) Does this relationship vary by funding type or race? Drawing on district-level panel data from the Stanford Education Data Archive 2.0 and the Census Finance Survey, I use two identification strategies. First, I use school district and year fixed effects to estimate the relationship between changes in funding and achievement within the same district from 2009 to 2014. To help address geographic variation, I limit analyses to districts on state borders, where economic and demographic contexts are more similar. Second, I use two instrumental variable analyses to estimate effects of school funding on achievement. Results suggest heterogeneous effects on achievement by funding source and demographics. Specifically, revenue from state general funding formulae, which aim to increase equality in most states, increase achievement more among Black than White students and reduce Black-White achievement gaps.

Author

• Emily Rauscher, Brown University