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An economic analysis of achievement incentives for school districts
Abstract
Declining student achievement and increasing costs for public education in recent years have resulted in a public demand for accountability from education. Thirty-six states have legislated minimum competency testing programs (MCT) requiring school districts to identify the minimum basic skills that students should acquire. Although state funds for education do not depend upon the results of these tests, some educational reformers feel this type of policy action would provide further incentives for school districts to change their policies and increase student achievement. This study examines the impact on school districts if a state would make allocations dependent upon district student performance on an MCT. Two types of output adjustment schemes a state may enact are examined. A state may base allocations on a state-normed percentage of students passing an MCT or on increased levels of student achievement on an MCT over a specified time period. Estimation is based on a public expenditures model which incorporates an educational production function. Problems with the conceptual formulation and estimation of this model are examined. It is believed that policies based on production function studies which concentrate on input manipulation are of limited value for policy formation. Direct analysis of output adjustment schemes is believed to be a more appropriate policy focus. The parameters of the demand equation for output, indicated by the model, are estimated with data for Missouri school districts in 1979-1980 to determine the district characteristics influencing the demand for output. A probit model is specified for estimating, with maximum likelihood techniques, those district factors affecting the probability of a district achieving either output adjustment scheme. Estimation indicated that the only significant variables influencing the probability of a district achieving either output adjustment scheme were the student characteristics within a district. Allocation of state aid grants based upon district increases in student output was found to be a more equitable policy than basing allocations on a state-normed level of output. Districts with lower absolute achievement levels have a greater probability of increasing their student output than districts with higher absolute output levels.
Subject Area
Labor economics|Economic theory|School administration
Recommended Citation
Hallows, Karen Swenson, "An economic analysis of achievement incentives for school districts" (1988). ETD collection for University of Nebraska-Lincoln. AAI8818625.
https://digitalcommons.unl.edu/dissertations/AAI8818625