The capitalization of education finance reforms

The education finance reforms encouraged by state court rulings over the pa st 25 years have led to increased state aid and educational spending in poo rer school districts. This empirical study addresses whether these new reso urces were capitalized into the housing values and residential rents within those districts. Estimations based on district-level census data indicate that the new educational expenditures generated by the court mandates subst antially increased median housing values and residential rents. This Tiebou t response implies that court-mandated finance reforms increased the percei ved quality of the poorer school districts in reform states. However, the e xistence and magnitude of this response also implies that these reforms had unintended distributional consequences. For example, these results indicat e that for some the redistributive impact of education finance reform may h ave been sharply attenuated by the increased cost of residing in the distri cts that received new educational resources.