Shelby M. McNeill

This study investigates how individual states raise revenue to pay for elementary-secondary education spending following school finance reforms (SFRs). We identify states that increased and sustained education expenditures after reform, search for legislative statutes that appropriated more education spending, and assess how policymakers funded the SFRs. Our results show that state legislatures increase investments in education by increasing tax revenue streams, such as sales and excise taxes, and by taking over property tax collections. Considering these results, we discuss that increased state investment in education should be accompanied by a policy mechanism to distribute state aid equitably to districts. Moreover, policymakers should consider local voters’ preferences when implementing SFR policies, as tax increases may reduce local fiscal effort for education.

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School finance reforms are not well defined and are likely more prevalent than the current literature has documented. Using a Bayesian changepoint estimator, we quantitatively identify the years when state education revenues abruptly increased for each state between 1960 and 2008 and then document the state-specific events that gave rise to these changes. We find 108 instances of abrupt increases in state education revenues across 43 states; about one-quarter of these changes had been undocumented. Half of the abrupt increases that occurred post-1990 were preceded by litigation-prompted legislative activity, and Democrat-party control of a state increases the probability of a changepoint occurring by 8 percentage points.

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Test-based accountability pressures have been shown to result in transferring less effective teachers into untested early grades and more effective teachers to tested grades. In this paper, we evaluate whether a state initiative to turnaround its lowest performing schools reproduced a similar pattern of assigning teachers and unintended, negative effects on the outcomes of younger students in untested grades. Using a sharp regression discontinuity design, we find consistent evidence of increased chronic absenteeism and grade retention in the first year. Also, the findings suggest negative effects on early literacy and reading comprehension in the first year of the reform that rebounded somewhat in the second year. Schools labeled low performing reassigned low effectiveness teachers from tested grades into untested early grades, though these assignment practices were no more prevalent in reform than control schools. Our results suggest that accountability-driven school reform can yield negative consequences for younger students that may undermine the success and sustainability of school turnaround efforts.

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