Essays in K–12 Education Finance

Abstract

This dissertation uses large-scale administrative data and quasi-experimental methods to examine three interrelated dimensions of public policy and K–12 education finance: the fiscal effects of policy changes, families’ and students’ behavioral responses, and the academic and labor market consequences of these policies. Chapter 1 examines how increases in school spending influence families’ decisions between public and private education. Leveraging court-mandated school finance reforms (SFRs) as exogenous shocks to district funding, I estimate how changes in funding and spending affect public school enrollment and racial segregation. Consistent with prior research, I find that reforms substantially increased spending in low-income school districts and that these gains persisted over time. Overall, the additional resources did not lead to broad shifts toward public schooling, suggesting that higher spending alone is insufficient to draw families into the public sector. Only in low-income suburban districts do I find evidence that increased spending modestly raised the share of students attending traditional public schools. However, low-income districts experienced increases in the school-age population in the medium and long run following reform implementation, even as the share of students attending traditional public schools remained unchanged. Chapter 2 addresses a long-standing question in social science research and education policy: “Does school spending matter?” While recent causal studies document positive effects of increased school spending on student outcomes, context-specific evidence remains important to policymakers. This study exploits discontinuities in the state aid formula introduced by the 1993 Massachusetts Education Reform Act to estimate the effects of increased school funding on academic and labor market outcomes. I replicate prior work and show that state aid increases fourth- and eighth-grade achievement on state standardized tests. I then extend this analysis to examine long-run academic and labor market outcomes, including high school graduation, college enrollment, and early-career earnings, using cohort-level data from the Massachusetts Longitudinal Data System. In contrast to the short-run achievement results, the estimated impacts on long-run outcomes are small and statistically insignificant. Chapter 3 examines the impact of public subsidies for private development projects on K–12 school finance. A large empirical literature finds little evidence that publicly financed professional sports facilities generate broad-based economic growth. Yet far less is known about the opportunity cost of these subsidies for public services. I focus on publicly financed stadiums and arenas for professional sports franchises in the NFL, NBA, MLB, and NHL and link existing data on facility financing to district-level school finance records to construct a novel panel dataset. Using quasi-experimental variation in the timing of subsidy approval, I show these subsidies generate a two-stage reduction resources for K-12 education. First, causing an immediate decline in state funding followed by reductions in revenues at the local level.