Did Proposition 2 1/2 affect local public education in Massachusetts? Evidence from panel data

Did Proposition 2 1/2 affect local public education in Massachusetts? Using a panel data set on school district budgets (1972–1992), the authors find the following. School districts constrained by Proposition 2 1/2 have significantly less own-source revenue. However, constrained districts receive significantly more intergovernmental revenue approximately offsetting the reduced own-source revenue, leading to no significant change in education spending. On the other hand, an analysis of a cross-section of school districts shows that student achievement in constrained districts is significantly lower than unconstrained districts. Thus, the evidence indicates that Proposition 2 1/2 reduces student performance in Massachusetts, even though it has no significant impact on school resources.