The Response of Local School Systems in Georgia to Fiscal and Economic Conditions

The 2001 recession had a major effect on Georgia's fiscal condition. We explore how economic conditions affected state and local financing of K-12 education in Georgia. We find that the magnitude of postrecession cuts in state real revenue per student varied widely across the local school systems in Georgia. We then examine whether and how cuts in real revenue per student at the state level affected local real revenue per student, and we find weak evidence that local real revenue per student is lower when state real revenue per student is higher-that is, local school systems in Georgia seemed to respond to changes in economic conditions and changes in state real revenue per student by increasing local real revenue per student in order to offset decreases in state real revenue per student. We also find no support for the position that the reaction of school systems in Georgia to changes in state revenue was more pronounced in the years immediately following the 2001 recession. We discuss the implications of our findings for the current economic environment.