Title

Three essays on education finance and policy

Date of Award

2009

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

Advisor(s)

John McHenry Yinger

Keywords

Education, Efficiency, Finance, Foundations, Policy, Student, Education finance

Subject Categories

Economics | Social and Behavioral Sciences

Abstract

This dissertation encompasses a number of topics related to education finance and policy. The common theme is the recognition of outputs of the educational process other than standardized scores in Math and English. I examine the outputs' effects on the interpretation of research on school efficiency, on the willingness of taxpayers to donate money privately, and on the motivation of students and teachers to improve student performance. I present each of the three papers as a chapter of the dissertation.

Chapter 1 examines the components of efficiency measures used in studies of educational cost. We enrich the literature by developing a model that uses two indexes of student performance. This model is used to reveal how scholars' choice among student performance measures affects the measurement of efficiency. We show that the inefficiency measured in educational cost studies includes spending related to student performance measures not included in the analyses. Our simulation shows that more of the resulting increase in spending associated with a $1000 increase in state aid can be explained by spending on other included student performance measures than by an increase in inefficiency, which measures both wasteful spending and spending on other outputs not included in the study. These results suggest that efforts to minimize measures of inefficiency may incentivize districts to dissolve programs valued by voters because spending for these programs is implicitly considered inefficient. This finding has widespread implications for education policy, especially in the development of accountability systems.

In Chapter 2, we examine the success of education foundations in securing private contributions to the public education system. We extend and enrich the research in Brunner and Sonstelie (1996 and 2003) by developing a measure of the size of the constraint imposed by the tax limits in each district, and incorporating this measure into estimates of revenue generating ability of each foundation. Estimates of the size of the tax limit constraint are derived from a series of structural equations that identify the level of student performance under the counterfactual scenario in which there are no tax limits. The percent difference between the desired performance level and the level attainable given the tax limits is used to measure how restrictive the tax limit is for each school district. Our study shows that this variable explains much of the between-district variance in the amount of revenue raised by education foundations. We also extend the model to account for other characteristics that influence private contributions to public goods and for the relationship between the parcel tax and private contributions. Finally, we analyze the extent to which private contributions are crowded out by government funding.

Chapter 3 evaluates the effectiveness of statewide "No Pass, No Play" policies using a quasi-experimental analysis. Although "No Pass, No Play" policies have persisted over two decades, very few studies of the policies' success in raising student achievement exist in the literature. The evaluation of "No Pass, No Play" policies is important because the policy can produce negative consequences. Students may drop out of school when denied the opportunity to participate in extracurricular activities, or they may choose easier classes in order to retain their eligibility. I use Kentucky's adoption of the "No Pass, No Play" policy to identify its effects on a number of different margins of response. The results show that student athletes in Kentucky performed no better academically in response to "No Pass, No Play". Instead, results suggest that course grades were inflated by student athletes' teachers in response to the policy.

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