Evaluating the recession’s impact on state school finance systems

Abstract

Abstract:The Great Recession's effect on state school finance systems was unlike previous downturns in the early 1990s and early 2000s in that it a) involved a greater loss of taxable income in many states, thus greater loss to state general fund revenues, b) also involved a substantial collapse of housing markets and related reduction or at least leveling of growth of taxable property wealth, c) but also involved a substantive infusion of federal "fiscal stabilization" aid to be used to fill holes in state general aid formulas. The goal of this study is to evaluate the effects of the recession on equity of state school funding systems with respect to child poverty concentrations. Using school district level panel data from 1993 to 2011, we evaluate the interplay between local, state and federal source revenues through the course of the recent recession by comparison with the less severe economic downturn of the early 2000s. Then using state level estimates of elasticities between revenue and spending measures and district poverty rates, we estimate whether changes in the distribution of state, local or federal revenue contribute most to changes in overall equity of current spending and whether those contributions changed during the recent recession. Keywords: school funding; fiscal stabilization; recession; poverty; equity Evaluando el impacto de la recesión en los sistemas estatales de financiamiento educativo Resumen: El efecto de la Gran Recesión en los sistemas estatales de financiamiento educativo fue epaa aape Education Policy Analysis Archives Vol. 22 No. 91 2 diferente a las crisis anteriores en la década de 1990 y principios de 2000, ya que a) implicó una mayor pérdida de renta imponible en muchos estados, por lo tanto una mayor pérdida de ingresos del fondo general, b) también implicó una caída sustancial de los mercados de vivienda y la reducción relacionada o, al menos, la nivelación del crecimiento de la riqueza propiedad imponible, c), también involucró una infusión sustantiva de ayuda federal para la "estabilización fiscal" que se utilizó para cubrir déficits en las fórmulas generales de sobre de los presupuestos estatales. El objetivo de este estudio es evaluar los efectos de la recesión en la equidad de los sistemas de financiación de escuelas estatales en relación a las áreas de concentración de pobreza infantil. Utilizando datos de panel a nivel de distrito escolar 1993-2011, se evalúa la interacción entre los ingresos de fuentes locales, estatales y federales a través del curso de la reciente recesión en comparación con la crisis económica de la década de 2000 que fue menos severa. Luego, utilizando estimaciones a nivel estatal de las elasticidades entre las medidas de ingresos y de gastos y los índices de pobreza del distrito, se estimó si más cambios en la distribución de ingresos estatales, locales o federales contribuyen a los cambios en el patrimonio neto total del gasto corriente y si esas contribuciones cambiaron durante la reciente recesión. Palabras clave: financiamiento escolar;...

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