State Takeover of School Systems and Within-District Fiscal Equity

Abstract

State takeovers of school districts typically involve dramatic changes to the workforce in the targeted school system and are often undertaken for the express purpose of improving a school system’s finances. However, little is known about how takeover affects education spending, particularly the distribution of funds across schools within districts. This has important implications for human resources because inequitable spending exacerbates teacher quality shortages for schools that serve marginalized students. We capitalize on a novel source of school-level education spending data for 2018–2019 to examine how takeover influences overall spending, equality of spending across schools within districts, and race-, ethnicity-, and class-based gaps in spending across schools. We do this for a national sample of 24 districts taken over between 2013 and 2019 matched to a set of untreated comparison districts with a high propensity for takeover. We find that state takeover is associated with higher levels of education spending, and that the greater funding promotes racial and ethnic fiscal equity but does not increase income-based school finance equity. Importantly, average increases in school spending are likely too small to substantially affect educational inequality. Therefore, takeover does not seem to be a sufficient mechanism for meaningfully mitigating within-district finance inequity.