Turning around schools (and neighborhoods?): School improvement grants and gentrification

Abstract

Most funding intended to close gaps in K-12 education targets schools, rather than students directly. We investigate whether household sorting in response to changes in K-12 school funding inhibits spending from reaching targeted students with a case study in Metro-Nashville Public Schools of the School Improvement Grant (SIG) program, which invested $7 billion in the nation’s lowest-achieving schools between 2009 and 2016. Using a boundary-discontinuity difference-in-differences design and home sales data, we estimate that households were willing to pay more than three times the average per-pupil grant award to live in SIG school zones. Neighborhoods zoned for SIG schools experienced moderate income and racial integration following funding receipt. However, evictions in these neighborhoods increased by 35%, and non-white enrollment at SIG schools declined by 15%. Our findings illustrate a major limitation of place-based public good provision: sorting may displace the initially targeted population.