The Great Recession led to marked declines in state revenue. In this paper we investigate whether (and how) local school districts modified their funding and taxing decisions in response to state aid declines in the post-recession period. Our results reveal school districts responded to state aid cuts in the post-recession period by countering these cuts. Relative to the pre-recession period, a unit decrease in state aid was associated with a relative increase in local funding. To further probe the school district role, we explore whether the property tax rate, which reflects decisions of districts facing budgetary needs, responded to state aid cuts. We find, relative to the pre-recession period, the post-recession period was characterized by a strong negative relationship between property tax rate and state aid per pupil. We also find important heterogeneities in these responses by region, property wealth, and importance of School Tax Relief Program revenue in district budgets.

Florida's 1999 A-plus program was a consequential accountability program that embedded vouchers in an accountability regime. Under Florida rules, scores of students in several special education (ESE) and limited English proficient (LEP) categories were not included in the computation of school grades. One might expect these rules to induce F schools (that faced stigma and threat of vouchers) to strategically classify their weaker students into these excluded categories. The interplay of these rules with those of the McKay program for disabled students, however, created an interesting divergence of incentives as far as classifications into excluded LEP and ESE were concerned. Because classifying students into ESE made them eligible for McKay vouchers that were funded by public school revenue, the McKay program acted as a strong disincentive to such classification. Using a regression discontinuity strategy, I investigate whether the differences in incentives led the F schools to exhibit different behaviors as far as classifications into excluded ESE and LEP were concerned. Indeed, I find robust evidence in favor of classification into excluded LEP in high-stakes grade 4 and entry grade 3. In contrast, I do not find evidence of classification into excluded ESE.