School Spending and Student Outcomes: Evidence from Revenue Limit Elections in Wisconsin
47 Pages Posted: 6 Aug 2019
Date Written: August 1, 2019
This study provides new evidence on the relationship between school spending and student outcomes by exploiting quasi-experimental variation in Wisconsin's school finance. State-imposed revenue limits cap the total amount of revenue that a school district in Wisconsin can raise for operating expenses. If a district wishes to exceed this cap, it must hold a local referendum. I leverage close elections in a dynamic regression discontinuity framework and find that school districts that narrowly pass a referendum spend roughly 5% more per pupil. These spending increases result in a 25% reduction in the dropout rate, an increase in test scores of approximately 30% of a standard deviation, and a 15% increase in postsecondary enrollment. Exploring plausible mechanisms, the study provides evidence of improvements in measured school inputs including teacher salaries, teacher experience, and student-staff ratios.
Keywords: School Spending, Student Outcomes, Regression Discontinuity
JEL Classification: H0, H41, H75, I20, I22, I24, I28, J24
Suggested Citation: Suggested Citation