Firms for Funding: The Effect of Million Dollar Plants on School Finances and Student Achievement

Abstract

We compare school districts in counties that win a Million Dollar Plant (MDP) to those in counties considered finalists. We show that winning an MDP leads to a persistent increase in school district revenue that more than offsets the increase in student enrollment. This windfall revenue is mostly spent on instructional expenses and teacher hiring, leading to a reduction in average class size and improvements in reading and math scores. Finally, we find manufacturing plants lead districts to spend additional property tax revenue on capital projects while high-tech establishments induce expenditures on instruction that improve math proficiency scores.

Keywords: Million Dollar Plants, Local Economy and Public Schools, Education Finance, Economic Shocks and Public Goods