Paying for School Finance Reforms: How States Raise Revenues to Fund Increases in Elementary-Secondary Education Expenditures

This study investigates how individual states raise revenue to pay for elementary-secondary education spending after a school finance reform (SFR). We consider 24 states that implemented SFRs between 1989 and 2005. Using a synthetic control approach, we identify six case-study states (Arkansas, Kansas, Maryland, Michigan, New Hampshire, and Vermont) that increased and sustained education expenditures after reform. We then searched for legislative statutes that appropriated funding for increased education spending and identified how policymakers intended to fund the SFR. Five states—AK, KS, MI, NH, and VT—paid for increased education expenditures by altering tax rates and changing tax revenue sources. A common feature among these five states is that they increased their control over the management of property tax revenues.