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School Finance Reform, the Distribution of School Spending, and the Distribution of SAT Scores

  • David Card
  • A. Abigail Payne

In this paper we study the effects of school finance reforms on the distribution of school spending across richer and poorer districts, and the effects of spending equalization on the distribution of student outcomes across children from different family backgrounds. We use school district data from the 1977 and 1992 Censuses of Governments to measure the correlation between state funding per pupil and median family income in each district. We find that states where the school finance system was declared unconstitutional in the 1980s increased the relative funding of low-income districts. Increases in state funds available to poorer districts led to increases in the relative spending of these districts, and to some equalization in spending across richer and poorer districts. We then use micro samples of SAT scores from this same period to measure the effects of spending inequality on the inequality in test scores between children from different family backgrounds. We find some evidence that the equalization of spending across districts leads to a narrowing of test score outcomes across family background groups.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6766.

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Date of creation: Oct 1998
Date of revision:
Publication status: published as Card, David and A. Abigail Payne. "School Finance Reform, The Distribution Of School Spending, And The Distribution Of Student Test Scores," Journal of Public Economics, 2002, v83(1,Jan), 49-82.
Handle: RePEc:nbr:nberwo:6766
Note: LS
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  1. Rubinfeld, Daniel L., 1987. "The economics of the local public sector," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 11, pages 571-645 Elsevier.
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  12. T. A. Downes & D. N. Figlio, . "School Finance Reforms, Tax Limits, and Student Performance: Do Reforms Level Up or Dumb Down?," Institute for Research on Poverty Discussion Papers 1142-97, University of Wisconsin Institute for Research on Poverty.
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