Education Finance Reform, Local Behavior, and Student Performance in Massachusetts

This study examines the impact on student performance of the education finance reform enacted in 1993 in Massachusetts and of school districts’ institutional structure. Estimating education expenditure and demand functions, this study presents evidence that changes in the state education aid following the education reform resulted in significantly higher student performance. Also, school officials and voters in the dependent school districts in Massachusetts respond to fiscal incentives in much the same way as those in independent school districts in other states. Finally, there are significant differences between regular school districts (coterminous with a single municipality) and regional school districts (consisting of more than one).