Credit Constrained? How the Cost of Capital Affects District Resources and Student Achievement

• In Event: 43.077 - MTCC Roundtable Session 15
  In Roundtable Session: 43.077-7 - Educational Finance, Resources, and the Challenges of Equity

Abstract

This study focuses on an aspect of the school finance literature which remains largely unaddressed, namely the relationship between district credit constraints, investments in public schools, and underserved student populations. District debt issuance, which has grown substantially in recent decades, finances investments in the physical infrastructure of public schools, investments which may improve student achievement and other important school outcomes. Leveraging an exogenous shock to district borrowing capacities, this paper will estimate the effects of how such changes affect district debt issuance, school resources, and student achievement differentially across district types. Estimates concerning debt spending may inform future financial policymaking as school districts, municipalities, and state governments debate funding reforms and revenue provision while considering challenging fiscal constraints.

Author

• J. Cameron Anglum, Saint Louis University