Evaluating the impact of permanent school closure

Abstract

In any given school year, about seven percent of all U.S. public school districts will close one of its schools. In the years directly following the Great Recession, school closure increased by up to 5 percentage points. School closures can be devastating events that disrupt student and teacher routines, separate peer groups, and potentially overextend the resources of receiving schools. As a result, they are usually the last result of a school district to decrease funding. Closing a school allows districts to reduce spending by decreasing expenditures on building maintenance and operation. School closure was a tool used by districts to alleviate the financial distress following the extreme negative effects on public education caused by the Great Recession. During the recent Covid-19 pandemic, state funds began to follow similar trajectories to the 2008 recession. Thus, we ask ourselves 'what could we have done differently in response to the Great Recession?' This question is worth examining as it allows us to develop better policy in the wake of budget shocks that U.S. districts almost faced. While a closure is hard on a district, it can also provide a unique opportunity to re-allocate resources within the district to be more efficiently allocated. In normal years, tenure makes teacher re-allocation difficult, but the significant change in the educational environment brought about by closure can provide an opportunity to re-orient staff. Do districts take advantage of this opportunity? In this paper, I test the hypothesis that school districts used school closures as an opportunity to re-allocate resources in the wake of serious declining funds caused by the Great Recession. My results do not show convincing evidence that districts induced to close a school from the Great Recession's budget shocks used the opportunity to re-orient staff. This could be for two reasons: (1) they are not realizing the opportunity they have or (2) they are already allocating resources efficiently and that is not affected by the change in educational setting. If the first reason is the reality, this suggests that districts did not respond optimally to the event of school closure.