Changing Education Finance Policy,School Referenda Activity,and Success Rates

Abstract

In this article, we use data on Wisconsin school referenda over the 1991– 2004 period to examine how changes in education finance affected school referenda activity. Beginning in 1996–1997, state officials in Wisconsin altered the average state share of school costs from about one-half to two-thirds. Because the state equalization aid formula depends on the school district tax base and per pupil spending, the policy change resulted in some districts receiving up to 80–90 percent state funding for school district spending. However, a requirement for capital project approval is that school districts place such proposals on the local ballot. We find evidence that changes in tax prices associated with the modified state aid formula altered school district referenda success rates across school districts. In particular, we find that in districts where the state aid formula further encouraged own source spending, the probability of referenda success increased.