Impacts of New School Facility Construction: An Analysis of a State-Financed Capital Subsidy Program in Ohio

The authors contribute to research on school facility quality and student achievement by examining Ohio’s capital subsidy program for school construction between 1997 and 2011. This subsidy program distributed over $10 billion for school construction across 231 school districts. Using an instrumental variables estimation, the authors find that the percentage of students meeting test score proficiency thresholds decreases in math and reading during the first couple of years after the capital expenditures and then increases in subsequent years. These results are consistent with short-term disruptions in student learning followed by long-term benefits from the capital expenditures. The authors explore the mechanisms through which capital expenditures affect achievement and find some evidence that changes in capital expenditures are correlated with changes in operational expenditures, suggesting that some of these effects may be attributable to operating expenditures. Similar effects were observed in the housing market; while in the short term, these construction projects decrease home prices, the housing market does benefit in the long term from improvements to the capital stock.