| dc.description.abstract | Research has shown that districts with market power engage in higher bureaucratic spending and spend more per pupil than do districts in competitive markets. With the democratic engagement mandate in the Every Student Succeeds Act, states like California are shifting accountability and school finance policies to offer districts and communities more local control. This study examines the implications of local control on school spending for districts with different levels of market power. Districts administrators in monopolistic districts may use their additional authority under local control to increase bureaucratic expenditures and allocate resources away from instruction. On the other hand, communities may pressure such districts to allocate resources towards instruction and curb excessive spending. I exploit the implementation of California’s Local Control Funding Formula (LCFF) in 2013 to test whether local control is associated with a change in the relationship between market power and district expenditures. I use expenditure data on Californian school districts serving secondary grades from 2009-10 to 2015-16 from the Common Core of Data to study whether districts with varying levels of market power alter their spending behavior in different ways after LCFF was enacted. I find that while all districts increased spending after LCFF, more monopolistic districts had smaller increases than did districts in perfectly competitive markets. This pattern holds true for total expenditures, instructional expenditures, and expenditures on salaries and benefits. These results suggest that a policy providing districts and communities with greater local control can close the expenditure gap between monopolistic districts and those in competitive markets. | |
