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dc.contributor.authorChakrabarti, Rajashrien_US
dc.contributor.authorSutherland, Sarahen_US
dc.date.accessioned2012-04-16en_US
dc.date.accessioned2012-08-17T14:37:27Z-
dc.date.available2012-08-17T14:37:27Z-
dc.date.issued2012en_US
dc.identifier.urihttp://hdl.handle.net/10419/60914-
dc.description.abstractWhile sparse literature exists investigating the impact of the Great Recession on various sectors of the economy, there is virtually no research that studies the effect of the Great Recession, or past recessions, on schools. This paper starts to fill the void. Studying school funding during the recession is of paramount importance because schools have a fundamental role in fostering human capital formation and economic growth. We exploit unique panel-data and trend-shift analysis to analyze how New Jersey school finances were affected during the Great Recession and the ARRA federal stimulus period. Our results show strong evidence of downward shifts in both revenue and expenditure following the recession. Federal stimulus seemed to have helped in 2010, however, both revenue and expenditure still declined. While total revenue declined, the various components of revenue did not witness symmetric changes. The infusion of funds with the federal stimulus occurred simultaneously with statistically and economically significant cuts in state and local financing, especially the former. Our results also show a compositional shift in expenditures in favor of categories that are linked most closely to instruction, while several noninstruction categories, including transportation and utilities, declined. Interestingly, budgetary stress seems to have led to significant layoffs for untenured teachers, leading to a rightward shift of the teacher salary and experience distributions. Heterogeneity analysis shows that high-poverty and urban districts sustained the largest falls in the post-recession era, with Abbott Districts specifically falling the furthest from prerecession trends. Of importance, the Abbott Districts were the only group in our expansive analysis to show statistically significant negative shifts in instructional expenditure even with the federal stimulus. The findings of this paper contribute valuable insight regarding schools' financial situations during recessions and can serve as a guide to aid future policy decisions.en_US
dc.language.isoengen_US
dc.publisherFederal Reserve Bank of New York New York, NYen_US
dc.relation.ispartofseriesStaff Report, Federal Reserve Bank of New York 538en_US
dc.subject.jelH4en_US
dc.subject.jelI21en_US
dc.subject.jelI28en_US
dc.subject.ddc330en_US
dc.subject.keywordschool financeen_US
dc.subject.keywordrecessionen_US
dc.subject.keywordARRAen_US
dc.subject.keywordfederal stimulusen_US
dc.subject.keywordAbbott Districtsen_US
dc.titlePrecarious slopes? the great recession, federal stimulus, and New Jersey Schoolsen_US
dc.typeWorking Paperen_US
dc.identifier.ppn690130104en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Staff Reports, Federal Reserve Bank of New York

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