The Relationship Between Capital Expenditures and Average Freshman Graduate Rates of Local Education Agencies
High school graduation is associated with higher salaries and lower probabilities of incarceration, among other benefits. However, it is unclear what financing decisions can maximize student outcomes. This study explores the relationship between capital outlays and operations and maintenance expenditures and high school graduation. While we would hypothesize that the quality of the building in which students are educated impacts education outcomes, we find that that may only be the case for specific years. Using a Local Education Agency (LEA) and year fixed-effects model, I find that a 1% increase in instructional spending the graduation and capital outlay in one’s freshmen year have a positive impact on graduation rates while operations and maintenance spending in a student’s 8th, 9th, and 10th grade years have a negative relationship with graduation rates. The data show that increased instructional spending, rather than spending on capital outlays or operations and maintenance, is the most efficient way to improve student outcomes.
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Hirsch, Michael (Georgetown University, 2015)Chicago makes extensive use of tax increment-financing (TIF) districts, which harness growth in property tax revenues to promote economic development in the district. The benefits of these districts are not necessarily ...