The Impact of School Facility Finance Reforms on the Distribution of School Spending, Educational Attainment and Earnings

• In Event: School Finance and Teacher Effectiveness

Abstract

In recent years, a number of influential papers have shown that the school finance reforms implemented across multiple states since the 1990’s led to large increases in state aid and current instructional expenditures for low-income school districts and corresponding improvements in the short-and long-term outcome of students. A common feature of these papers is that they focus nearly exclusively on reforms to state systems of financing current educational expenditures, as opposed to capital expenditures. However, since 1990, 15 states have also made major reforms to their existing system of school facility finance or created a facility finance system for the first time. In this paper, we examine the impact of those reforms on the distribution of school spending and the long-term outcomes of students exposed to those reforms. Using detailed financial data from the National Center for Education Statistics F33 files and difference-in-differences and event study methodologies, we first show that facility finance reforms led to sharp increases in state aid for school construction and modernization, school district construction spending, and smaller but significant increases in instructional spending. We then leverage data on high school graduation, college attendance and completion, and adult earnings from the American Community Survey to examine whether and how school facility finance reforms affected the long-term outcomes of students.

Authors

• Eric Brunner, eric.brunner@uconn.edu

• David Schwegman, School of Public Affairs, American University