Implications of Financial Shocks and Budgetary Constraints on the Public Education Sector

This dissertation comprises three separate, stand-alone essays (chapters) that examine the effects of state-imposed binding school district tax and expenditure limitations (TELs) on the public education sector after the implementation of the No Child Left Behind Act of 2001 (NCLB). Previous education finance and policy research finds that NCLB was an underfunded federal mandate on state governments and school districts. However, school districts in states with binding tax and expenditure limitations (TELs) were restricted in their abilities to raise additional revenue to fund the needed investments to comply with NCLB mandates. This dissertation examines whether or not there was negative unintended consequences in states with binding TELs as a result of this underfunded federal mandate. All three essays empirically address separate research questions. The first chapter examines the differential effect of binding TELs on states' shares of education funding after the implementation of NCLB. Using a state-level panel dataset from 1992 to 2009, I find states that imposed binding school district TELs have 6.9 percentage point higher state shares of total education funding relative to states without binding school district TELs after the implementation of NCLB. This suggests state governments intervened by increasing funding assistance to school districts. As a result, there was an unintended expansion in the role and influence of states in the provision of public education after the passage of NCLB. The second chapter expands on the first chapter in two ways. First, I test whether the main finding in the first chapter varies across different types of school districts. Second, I test whether or not the increase in states' shares of education funding in states with binding TELs provided adequate funding supplements to local districts. Using a school district-level panel dataset, I find that those state governments with binding TELs did not increase state funding to school districts adequately. Additionally, I find that NCLB had the largest adverse effect on education revenues for low property-wealth school districts in states with binding TELs. The last chapter changes the outcome of interest from education finances to teacher turnover. Previous public management and organizational theory literature focuses primarily on the employee- and organizational-level characteristics that influence employee turnover. However, other potential determinants of employee turnover, such as factors external to the organization, are understudied. The last chapter addresses this gap in the literature by examining the effect of the interaction between NCLB and binding TELs on teacher turnover. Using a nationally representative teacher-level dataset, this paper tests the hypothesis that, after the implementation of NCLB, teachers in states with binding TELs on school districts become more likely to turnover than their counterparts in other states. This paper presents evidence to support this hypothesis.