School District Responses to Fiscal Constraints

Abstract

This paper examines how schools districts have responded to fiscal constraints in the past to gain insight into how they might respond in the future. It uses cross sectional data for Texas and New York first to develop a measure of the fiscal condition of each district and, second, to examine the choices made by school districts facing differing degrees of fiscal pressure. I conclude that districts respond to fiscal constraint by trying to protect the level of instructional spending, that central administration spending and staffing appear to be a luxury that is more affordable for districts in strong fiscal condition, and that spending on capital outlays is more responsive than other categories to a district's fiscal condition. Annual shortfalls in capital spending and maintenance in response to an extended period of fiscal constraint are likely to leave some districts with serious deficiencies in their capital facilities.

JEL Classification: I22, I28