Test-Based Accountability and the Effectiveness of School Finance Reforms

Abstract

A recent literature provides new evidence that school resources are important for student outcomes. This paper examines whether school accountability systems that incentivize performance (such as No Child Left Behind) raise the efficiency with which additional resources get spent. We leverage the timing of school finance reforms to compare funding impacts on student test scores between states that had accountability in place at the time of the reform and states that did not. The results show that finance-reform-induced increases in student performance are driven by those states where the reform was accompanied by the presence of test-based accountability.