Does State Financing of Public Schools Reduce Expenditure Inequality across School Districts?

Deborah L. Garvey, Santa Clara University

Proponents of centralization (increased state funding of public education) argue that state financing reduces inter-district disparities in education spending by raising spending in low-spending districts, not by penalizing high-spending districts. This paper uses a well-established centralization scheme in Washington State and a unique eight-year panel dataset of district-level fiscal, socioeconomic and census data to assess centralization's impact on within-state spending inequality. Non-parametric kernel density estimation, quantile plots and inequality measures provide descriptive evidence of centralization's impact on spending inequality. Quantile regression and fixed-effects estimation identify centralization's effect on the distribution of spending independent of other factors. Preliminary results indicate that centralization reduced expenditure inequality in Washington. Greater equality was achieved through increased spending among the lowest-spending districts and slightly dampened spending among high-spending districts. These findings suggest that increased state funding of local public schools can have profound implications for the distribution of resources across pupils.