Publication Date

Winter 2016


CERPS Working Paper #2016-1


The Great Recession forced states around the country to make substantial budget cuts to public education. As a result, districts that rely more heavily on state funding – those with greater concentrations of students in poverty– may be disproportionately impacted by the Great Recession funding cuts; however, little prior research examines this issue. This study examines how state school finance systems responded to recessionary funding cuts and then draws on data specific to Texas to examine local district taxation patterns in response to state spending cuts. The study finds that (a) on average across states, high-poverty districts experienced an inequitable share of funding and staffing cuts following the Great Recession; (b) changes in the income-based funding gap varied across states (c) the funding gap increased in Texas by more than in 43 other states; (d) idiosyncrasies within the Texas school finance system prevented high-poverty districts from maintaining equitable funding levels, despite increasing tax rates at a faster rate than otherwise similar wealthier districts; and (e) leveling up funding for high-poverty districts in Texas would cost the state $9.1 billion, a 17% increase in education spending. The study provides evidence on how school districts were impacted by recessionary spending cuts and how they responded, and offers alternative strategies for restoring state education budgets.