Why has growth of user fees and other nontraditional sources of local education revenues been so limited? Evidence from Colorado

PurposeThe purpose of this paper is to explore why school districts in the USA made so little use of local sources of non-tax revenues, even when faced with declines in traditional revenue as occurred during the Great Recession? The analysis uses the case of Colorado, where historically districts ha...

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Bibliographic Details
Published in:Journal of public budgeting, accounting & financial management accounting & financial management, 2020-01, Vol.32 (1), p.26-48
Main Authors: Downes, Thomas, Killeen, Kieran
Format: Article
Language:English
Subjects:
After school programs
Budget deficits
Cohort analysis
Education
Estimates
Fees & charges
Great Recession
Panel data
School administration
School districts
School finance
School superintendents
Tax revenues
User fees
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Summary:PurposeThe purpose of this paper is to explore why school districts in the USA made so little use of local sources of non-tax revenues, even when faced with declines in traditional revenue as occurred during the Great Recession? The analysis uses the case of Colorado, where historically districts have made more use of alternative revenues.Design/methodology/approachData for the analysis are drawn from the NCES’s Common Core of Data with administrative data to create a panel of Colorado school districts. The paper presents estimates of traditional panel models, as well as spatial panel models, that give the correlates of variation in alternative revenue for education.FindingsAs is true nationally, in Colorado school districts made no increased use of non-tax revenues in fiscal downturns, while the presence of expenditure limits does increase use, though not as might be expected. Revenues from overrides of the limits and alternative local revenues appear to be complements. Further, there is no evidence of spatial relationships for the alternative revenue sources considered.Originality/valueThis paper uses richer data than has ever been used to explore the determinants of alternative revenues, making it possible to explore relationships others could not. In addition, synthetic cohort analysis is used to generate plausible instrumental variables for passage of an override of an expenditure limitation. Further, no existing analysis of nontraditional revenues considers the possibility that use of those revenues might be spatially correlated.
ISSN:1096-3367
1945-1814
DOI:10.1108/JPBAFM-04-2019-0065