Working Paper: NBER ID: w27550
Authors: Nora E. Gordon; Sarah J. Reber
Abstract: The coronavirus has created an enormous—and expensive—challenge for elementary and secondary schools, while simultaneously depleting the revenue sources on which public schools depend. During the Great Recession, the federal government filled in a significant share of lost revenue. In contrast, the federal response to date has been limited. If Congress decides to invest in future generations, it faces a range of options for how to structure an aid package. One key aspect for any stabilization package is how federal funds should be allocated to states. We consider the types of approaches used in recent proposals, during the Great Recession, and at the onset of the COVID-19 crisis, as well as in major ongoing federal education programs for compensatory and special education. We simulate the distribution of funds and show the considerable difference in how per-child allocations correlate with child poverty rates under the most likely alternative approaches.
Keywords: Federal Aid; School Districts; COVID-19 Recession; Educational Equity
JEL Codes: H52; H7
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Federal aid (F35) | School funding during economic downturns (H72) |
| Federal stabilization aid during COVID-19 recession (H84) | Maintaining school spending levels (H52) |
| CARES Act allocation based on Title I formulas (I24) | Increased funding for high-poverty districts (I24) |
| Allocation formulas based on child poverty rates (I32) | More progressive funding distributions (D39) |
| Without federal aid (H84) | Revenue shortfalls in school districts (H79) |
| Revenue shortfalls in school districts (H79) | Detrimental impacts on educational services (I24) |
| Federal government's ability to provide unrestricted aid (H84) | Mitigating adverse effects of economic downturns on education funding (I21) |
| Progressivity of federal aid allocations (H77) | Financial resources available to schools serving disadvantaged populations (I24) |
| Financial resources available to schools serving disadvantaged populations (I24) | Educational outcomes (I21) |