The Fate of New Funding: Evidence from Massachusetts’ Education Finance Reforms

Abstract

In 1993, the state of Massachusetts implemented comprehensive reforms that included increased state aid to local school districts. This study presents empirical evidence on whether these reforms actually increased educational spending and, if so, in what functional areas. These evaluations are based on relatively detailed annual financial data from the unified school districts in Massachusetts and two neighboring states over the 1990–1996 period. The results indicate that the reforms did increase state aid to and spending by those districts that spent the least prior to the reforms. Furthermore, most of the new spending in these low-spending districts was directed toward student instruction and capital investments.