The Twilight of the Setter? Public School Budgets in a Time of Institutional Change

Abstract

We use a policy change that occurred in Oregon in the late 1980s to re‐visit the budget‐maximizing agenda setter theory of local public expenditure. Prior to 1987, Oregon school districts held operating levy elections with an exogenous, often zero or very low, spending reversion. From 1987 through 1990, districts experienced a “safety net” regime where the reversion was at least the previous year's nominal spending. We find that the “safety net” sharply limited the agenda setter's ability to use the reversion as a threat to obtain voter approval of relatively large expenditures.

Keywords: Agenda Contro, Domestic political economy, Macroeconomic political economy, Microfoundations of political economy, Public finance, Public goods/clubs, Referenda, Regional specialization, U.S. political economy