School Spending and Student Outcomes: Evidence from Revenue Limit Elections in Wisconsin

Abstract

This study examines the impacts of two distinct types of school spending on student outcomes. State-imposed revenue limits cap the total amount of revenue that a school district in Wisconsin can raise unless the district holds a referendum asking voters to exceed the cap. Importantly, Wisconsin law requires districts to hold separate referenda for operational and capital expenditures, which allows for estimating their independent effects. Leveraging close elections in a dynamic regression discontinuity framework, I find that increases in operational spending have substantial positive effects on test scores, dropout rates, and postsecondary enrollment, but additional capital expenditures have little impact. (JEL D72, H75, I21, I22, I28)