Spending in Lean Times: School-Level Budget Allocations During the Great Recession in Texas

ABSTRACT The intention of this paper is to add to existing knowledge of how building-level spending is prioritized toward horizontal and vertical equity during severe economic downturns. Using a sample of all public schools in Texas during the Great Recession, we examine how schools undergoing the greatest spending reductions reallocated their spending on academic programs. Results demonstrate that schools undergoing financial shocks respond mainly by reapportioning regular, accelerated, and special education spending, rather than simply enacting across-the-board cuts. High-poverty, low-performing, and urban schools tended to prioritize reallocations toward targeted group support, while lower poverty, higher performing, suburban schools tended to prioritize reallocations toward regular education support. Furthermore, results of fixed and random effect regression models suggest that while spending allocations are in part determined by district-level characteristics, reactionary changes to spending are more explained by school or leadership characteristics. These results support the notion that site-level budgeting is an important factor in ensuring that spending is calibrated to current student needs when undergoing periods of financial uncertainty.