School Finance Reform, Local Teacher Unions, And District Expenditures: Evidence From Washington

• In Event: Beyond “Money Matters”: How Policy Design Shapes the Distribution and Effectiveness of School Spending

Abstract

School finance reforms raise student outcomes on average, but their effects vary across contexts (Jackson and Mackevicius, 2024). This variation has shifted attention from whether money matters to how new funds are spent, and the institutions that shape resource allocation patterns (Handel and Hanushek, 2023). This paper studies local teacher unions as relevant actors that may shape district spending allocations. We examine Washington State’s recent school finance reform, implemented in 2018–19 following the McCleary case, which generated large increases in state aid. Because districts retain discretion over spending and teacher salaries are bargained at the district level, we assess whether districts with stronger local unions devote more of that additional revenue to teacher salaries, and whether those increases are concentrated among more experienced teachers—informed by prior literature linking unions to larger salary increases, and more “back-loaded” salary schedules (Bruner et al., 2020; Grissom and Strunk, 2012).

We combine district-year data on revenues and teacher-level salary data from 2013 to 2023 with an instrumental variables design that exploits the timing of the reform and pre-reform projections of districts’ net revenue increases. Preliminary results suggest that additional revenue increases average teacher total salary across all experience groups. The interaction between revenue and union strength is positive across teacher experience bins, implying that districts with stronger local unions translate additional funding into larger salary increases, but we don’t find greater increases concentrated for specific experience levels.

This paper contributes in three ways. First, in contrast to most prior literature, we explore how districts invest new funding from school finance reforms, including how salary gains are distributed across the teacher experience profile and whether unions affect this distribution, given a revenue increase. Because teacher effectiveness rises early in the career and higher starting salaries can improve recruitment and retention, raises for novice teachers may be more productive than further backloading pay toward senior teachers (Hendricks, 2015). Second, we use a district-level, continuous, pre-reform proxy for union strength based on contract restrictiveness (Goldhaber et al., 2013; Strunk and Reardon, 2010), which better measures union strength at the level at which bargaining occurs. Third, in contrast to most prior work on state school finance reforms, we examine how additional revenue is allocated across schools within districts and whether local unions shape within-district allocation.

Authors

• Francisco Villarroel, Syracuse University
  Presenting Author

• David S. Knight, University of Washington
  Non-Presenting Co-Author