Accountability or Austerity? A Critical Policy Analysis of K–12 Fiscal Accountability in California

• In Event: Level Matters: Inter- and Intra- District Analyses Exploring Nuances in Racialized Power Across Space and Place Over Time

Abstract

Periods of fiscal crisis challenge leaders to make difficult financial decisions (Hess & Downs, 2010). Shrinking district revenues, for example, require leaders to cut personnel and programs from district budgets (Major, 2013; Turner & Spain, 2020), often at the expense of school quality and students’ opportunities to learn (Jackson et al., 2021). To support districts through this process, states have implemented K-12 fiscal accountability policies to monitor and intervene in district finances during periods of district fiscal distress (Bowman & Zuschlag, 2022; Morel, 2018).
State policymakers justify fiscal accountability by arguing a state’s organizational and financial resources benefit districts by supporting the identification of “wasteful” or “inefficient” expenditures (Arsen & Mason, 2013; Schueler & Bleiberg, 2022). One problem with this logic, however, is that it presupposes inefficient spending practices exist and are the sole cause of fiscal distress, which may not always be true. In this paper, I examine K-12 fiscal accountability policy in California to better understand what fiscal accountability policy is designed to do (Thompson, 2016; Thompson & St. John, 2019). In particular, I critically examine the policy logic undergirding fiscal accountability, considering whether fiscal accountability reflects an improvement in district spending efficiency or austerity pressure for fiscally distressed school districts (Diem et al., 2014).
To guide this analysis, I consider the following research questions:

Research question #1: What is the relationship between fiscal accountability and district per pupil expenditures?
Research Question #2: What is the association between fiscal accountability and student academic outcomes in Reading/Language Arts and Mathematics?

Together, the questions shed light on (1) whether school district finances change during periods of fiscal intervention, and (2) whether these changes are associated with changes in district academic outcomes. In theory, a negative association between fiscal accountability and student academic outcomes would suggest, controlling for other factors, that financial changes during periods of state intervention reflect pressure on districts to cut expenditures at the cost of quality, which I argue should be considered an austerity approach to fiscal accountability (Adamson et al., 2020; Blyth, 2013; Means, 2013; Saltman, 2014).
To answer my research questions, I leveraged a panel data set which includes data on instances of fiscal intervention into district finances in California. I relied on differences-in-differences and an event study approach to estimate the relationship between fiscal accountability, district finances, and student outcomes (Callaway & Sant’Anna, 2021; De Chaisemartin & d'Haultfoeuille, 2020, 2022; Goodman-Bacon, 2021). I find that fiscal accountability resulted in a 4.2% cut ($316) to total per pupil expenditures, with cuts concentrated primarily in instruction and facilities. With respect to student outcomes, I find that fiscal accountability is negatively associated with student outcomes in English/language arts and mathematics, implying fiscal accountability pressures promote financial austerity on district finances. I discuss the implications of these findings for fiscal accountability in California and nationally, considering specifically the implications for Black and Brown school districts, which are disproportionately represented within fiscal accountability systems because of the legacy of racism in the United States.

Author

• Christopher Saldaña, University of Wisconsin - Madison