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School District Responses To Matching Aid Programs For Capital Facilities: A Case Study Of New York’S Building Aid Program

  • Wang, Wen
  • Duncombe, William D.
  • Yinger, John M.

States are financing a larger share of capital investment by school districts but little is known about how districts respond to facility aid programs. Our paper addresses this gap in the literature by examining how a short-term increase in the matching rate for the Building Aid program in New York affected district capital investment decisions. We estimate a capital investment model and find that most districts are responsive to price incentives but that price responsiveness is related to the fiscal health and urban location of the district. Drawing on these results, we provide recommendations for the design of capital investment aid programs to increase their effectiveness in supporting high-need urban districts.

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Article provided by National Tax Association in its journal National Tax Journal.

Volume (Year): 64 (2011)
Issue (Month): 3 (September)
Pages: 759-94

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Handle: RePEc:ntj:journl:v:64:y:2011:i:3:p:759-94
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  1. Stephanie Riegg Cellini & Fernando Ferreira & Jesse Rothstein, 2010. "The Value of School Facility Investments: Evidence from a Dynamic Regression Discontinuity Design," The Quarterly Journal of Economics, MIT Press, vol. 125(1), pages 215-261, February.
  2. Plummer, Elizabeth, 2006. "The effects of state funding on property tax rates and school construction," Economics of Education Review, Elsevier, vol. 25(5), pages 532-542, October.
  3. Stephanie Riegg Cellini & Fernando Ferreira & Jesse Rothstein, 2008. "The Value of School Facilities: Evidence from a Dynamic Regression Discontinuity Design," NBER Working Papers 14516, National Bureau of Economic Research, Inc.
  4. Fisher, Ronald C. & Papke, Leslie E., 2000. "Local Government Responses to Education Grants," National Tax Journal, National Tax Association, vol. 53(n. 1), pages 153-68, March.
  5. Hulten, Charles R. & Schwab, Robert M., 1993. "Infrastructure Spending: Where Do We Go From Here?," National Tax Journal, National Tax Association, vol. 46(3), pages 261-73, September.
  6. Alicia H. Munnell, 1992. "Policy Watch: Infrastructure Investment and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 189-198, Fall.
  7. Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February.
  8. Cromwell, Brian A., 1991. "Public Sector Maintenance: The Case of Local Mass-Transit," National Tax Journal, National Tax Association, vol. 44(2), pages 199-212, June.
  9. Ed Balsdon & Eric Brunner & Kim Rueben, 2003. "Private Demands for Public Capital: Evidence from School Bond Referenda," Working Papers 0009, San Diego State University, Department of Economics.
  10. Duncombe, William & Yinger, John, 1993. "An analysis of returns to scale in public production, with an application to fire protection," Journal of Public Economics, Elsevier, vol. 52(1), pages 49-72, August.
  11. Brunner, Eric J. & Rueben, Kim, 2001. "Financing New School Construction and Modernization: Evidence from California," National Tax Journal, National Tax Association, vol. 54(n. 3), pages 527-39, September.
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