PIPE Workshop: David Schönholzer (USC Economics)

This paper examines how political institutions shape the size and composition of educational spending in the United States. We study the case of school capital investments, which are funded by bonds issued by school districts. These bonds are subject to approval in local referenda for which eleven states require a supermajority of voters. To study the equilibrium impacts of super-majority requirements on the size and composition of school capital investments, we build and estimate a structural model of bond proposal, design, and voting. In the model, school districts consider when to propose a bond, design the size and composition of capital investments, and submit them to voters for approval in local elections. Using a newly assembled dataset of more than 7,000 bond referenda, we estimate heterogeneous preferences of school districts and voters across eight U.S. states. With these estimates, we then examine the impact of changes in majority requirements. We find that voter and district preferences differ substantially from each other. Policy simulations show that an increase in the required supermajority leads districts to push for projects that are smaller and more aligned with voter preferences, with important implications for student outcomes.

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