abstract:

The key to anticipating local response to state finance policy is to bridge knowledge of the state context with the specifications of the individual reform. Yet it is precisely this unique blend of social, political, and economic factors in any given state that makes the impact of school finance reforms difficult to predict, especially as these factors continue to change over time. Using longitudinal data for all public school districts in Maryland, we address this challenge by examining the impact of a voluntary education finance reform intended to reduce inequities in spending across wealthier and poorer counties. We find that following finance reform implementation, local district expenditures increased an average of 11%. However, we also observe a differential response whereby wealthier counties increased their contribution beyond what the reform stipulated while districts which received greater amounts of state aid, allocated less money to schools. When drafting plans for state policy regarding education finance reform, policymakers may wish to consider the results presented here and in other research to anticipate the magnitude of differential local response and use simulations to incorporate this response into the predicted policy outcome.