The Sensitivity of Causal Estimates from Court-Ordered Finance Reform on Spending and Graduation Rates

We provide new evidence about the effect of court-ordered finance reform on per-pupil revenues and graduation rates. We account for cross-sectional dependence and heterogeneity in the treated and counterfactual groups to estimate the effect of overturning a state's finance system. Seven years after reform, the highest poverty quartile in a treated state experienced a 4 to 12 percent increase in per-pupil spending and a 5 to 8 percentage point increase in graduation rates. We subject the model to various sensitivity tests. In most cases, point estimates for graduation rates are within 2 percentage points of our preferred model. JEL codes: C23, I26