In an effort to ensure equal educational opportunity for all children, most states adopted School Finance Reforms (SRFs) between 1970 and 1995 that made significant changes to funding for public education. There exists little evidence on whether and how these changes affect the adult well-being of students from poor neighborhoods or whether they reduce differences in adult well-being between those who were children from wealthy and poor neighborhoods. This project will fill this gap in our understanding of such policies by analyzing the effect of these reforms on state distributions of school spending, and by presenting the first analysis of the effects of SFRs on both academic achievement and long-run adult outcomes. This project will consist of two analyses.
The first analysis will investigate the effects of different types of SFRs on both the level and distribution of education spending in a state. Earlier national studies rely on data that were only available every 5 or 10 years and were found to contain considerable errors. Accordingly, newly released and more reliable annual data on government finances allows for (a) a comprehensive analysis of the effect of SRFs on changes at various points in the distribution of spending across poor and wealthy districts, and (b) a detailed analysis on how the distribution of school spending within a state evolves over time in response to SFRs. To identify the effects of these reforms on spending, education spending will be compared for years before reforms to education spending in same state after reforms. Changes for those same years in states that did not implement reforms over the same period will serve as a basis for comparison to account for underlying changes over time. These results will be used to classify reforms into those that decrease spending inequality, those that increase overall spending, and those that decrease overall spending.
The second analysis will investigate the effects of different types of SFRs on long and short run student outcomes. For this analysis, test scores from the National Assessment of Educational Progress (NEAP) and adult outcomes (e.g. teen pregnancy, years of education, unemployment, occupational status, and earnings) from Census data will be linked to the timing of SFRs in an individuals state of schooling (NAEP) or state of birth (Census). Outcomes will be compared for cohorts who were of school-going age before reforms to outcomes of cohorts from the same state who were of school-going after reforms. Changes for those same cohorts in states that did not implement reforms over the same period will form as a basis for comparison to account for underlying changes over time.
This project's findings may inform current and ongoing policy debates and legal debates, particularly in those nine states in which school finance rules are currently being reformed and ten states in which school finance rules are being legally contested. As the first analysis of school finance reforms on long run adult outcomes, the project will help answer the broader question of whether increased school spending can lead to improved outcomes. Due to large budget deficits caused by the most recent recession, there are more than 30 states in which state education funding has declined between 2008 and 2011. As such, understanding the extent to which changes in school spending may affect outcomes in the short and long run is of immediate policy relevance and importance. By using the large changes in educational spending associated with SFRs and linking these changes to both, test scores and long-run adult outcomes, this research will present fresh evidence on the effect of education spending on the short run and long run adult outcomes of affected students.
