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Federal Aid to School Districts during the COVID-19 Recession

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  • Nora Gordon
  • Sarah Reber

Abstract

The coronavirus has created an enormous — and expensive — challenge for elementary and secondary schools while simultaneously depleting the revenue sources on which public schools depend. During the Great Recession, the federal government filled in a significant share of lost revenue. In contrast, the federal response to date has been limited. If Congress decides to invest in future generations, it faces a range of options for how to structure an aid package. One key aspect for any stabilization package is how federal funds should be allocated to states. We consider the types of approaches used in recent proposals, during the Great Recession, and at the onset of the COVID-19 crisis, as well as in major ongoing federal education programs for compensatory and special education. We simulate the distribution of funds and show the considerable difference in how per-child allocations correlate with child poverty rates under the most likely alternative approaches.

Suggested Citation

  • Nora Gordon & Sarah Reber, 2020. "Federal Aid to School Districts during the COVID-19 Recession," National Tax Journal, National Tax Association;National Tax Journal, vol. 73(3), pages 781-804, September.
    • Handle: RePEc:ntj:journl:v:73:y:2020:i:3:p:781-804
    DOI: 10.17310/ntj.2020.3.07
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    References listed on IDEAS

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    1. Lavertu, Stéphane & Clair, Travis St., 2018. "Beyond spending levels: Revenue uncertainty and the performance of local governments," Journal of Urban Economics, Elsevier, vol. 106(C), pages 59-80.
    2. C. Kirabo Jackson, 2018. "Does School Spending Matter? The New Literature on an Old Question," NBER Working Papers 25368, National Bureau of Economic Research, Inc.
    3. Elizabeth U. Cascio & Sarah Reber, 2013. "The Poverty Gap in School Spending Following the Introduction of Title I," American Economic Review, American Economic Association, vol. 103(3), pages 423-427, May.
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    5. Elizabeth U. Cascio & Nora Gordon & Sarah Reber, 2013. "Local Responses to Federal Grants: Evidence from the Introduction of Title I in the South," American Economic Journal: Economic Policy, American Economic Association, vol. 5(3), pages 126-159, August.
    6. Howard Chernick & David Copeland & Andrew Reschovsky, 2020. "The Fiscal Effects of the COVID-19 Pandemic on Cities: An Initial Assessment," National Tax Journal, National Tax Association;National Tax Journal, vol. 73(3), pages 699-732, September.
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    1. repec:aei:rpaper:1008586598 is not listed on IDEAS
    2. Clemens, Jeffrey & Veuger, Stan, 2021. "Politics and the distribution of federal funds: Evidence from federal legislation in response to COVID-19," Journal of Public Economics, Elsevier, vol. 204(C).
    3. Jeffrey Clemens & Philip G. Hoxie & Stan Veuger, 2022. "Was Pandemic Fiscal Relief Effective Fiscal Stimulus? Evidence from Aid to State and Local Governments," NBER Working Papers 30168, National Bureau of Economic Research, Inc.
    4. repec:aei:journl:y:2020:id:1008578025 is not listed on IDEAS
    5. Nora Gordon & Sarah Reber, 2021. "Were Federal COVID Relief Funds for Schools Enough?," NBER Chapters, in: Tax Policy and the Economy, Volume 36, pages 123-157, National Bureau of Economic Research, Inc.
    6. Green, Daniel & Loualiche, Erik, 2021. "State and local government employment in the COVID-19 crisis," Journal of Public Economics, Elsevier, vol. 193(C).
    7. Howard Chernick & David Copeland & Andrew Reschovsky, 2020. "The Fiscal Effects of the COVID-19 Pandemic on Cities: An Initial Assessment," National Tax Journal, National Tax Association;National Tax Journal, vol. 73(3), pages 699-732, September.

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