Fiscal Federalism and the Progressivity of Within-District Spending in U.S. Public Education

• In Event: Unpacking Education Production Pipeline: Government Spending, Allocation of Funds, and Household Invested

Abstract

The traditional view in public economics is that local governments in a federal system cannot effectively redistribute resources due to interjurisdictional competition over wealthier taxpayers. However, analyzing the first school-level spending data across the country reveals that within-district spending allocations are generally progressive: school districts typically allocate more spending to schools enrolling a higher number of disadvantaged students within their boundaries. We consider explanations for this unexpected pattern. We identify state and federal policies as key drivers of this within-district progressivity, aligning with the traditional view that redistribution is primarily operated through central governments. Specifically, approximately 83% of the within-district contribution to progressivity can be explained by federal spending and allocations earmarked for special education and English language learning students.

Authors

• Heewon Jang, University of Alabama

• Richard DiSalvo, Princeton University