School Finance Reforms, Teachers' Unions, and the Allocation of School Resources

Eric Brunner, Joshua Hyman, Andrew Ju. 2018. “School Finance Reforms, Teachers' Unions, and the Allocation of School Resources”

Abstract

School finance reforms caused some of the most dramatic increases in intergovernmental aid from states to local governments in U.S. history. We examine whether teacher unions affected the fraction of reform induced state aid that passed through to local spending and the allocation of these funds. Districts with strong teacher unions increased spending nearly dollar-for-dollar with state aid, and spent the funds primarily on teacher compensation. Districts with weak unions used aid primarily for property tax relief, and spent remaining funds on hiring new teachers. The greater expenditure increases in strong union districts led to larger increases in student achievement.

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