We examine the impact of the Great Recession on public education finance and employment. Five major themes emerge from our work. First, nearly 300,000 school employees lost their jobs. Second, schools that were heavily dependent financially on state governments were particularly vulnerable to the recession. Third, local revenues from the property tax actually increased during the recession, primarily because millage rates rose in response to declining property values. Fourth, inequality in school spending rose sharply during the Great Recession. We argue, however, that we need to be very cautious about this result. School spending inequality has risen steadily since 2000; the trend in inequality we see in the 2008–13 period is very similar to the trend we see in the 2000–08 period. Fifth, the federal government's efforts to shield education from some of the worst effects of the recession achieved their major goal.

Of thirty-eight states with lotteries, sixteen earmark lottery profits for primary and secondary education. In this article, we use a panel data set of states with lotteries to examine the impact of earmarking lottery revenues on state educational spending. We can reject the hypothesis that spending increases dollar for dollar with earmarked profits, but there is a high likelihood that earmarking increases school spending more than non-earmarking. We find that 50–70 cents out of an earmarked dollar finds its way to local school districts. In contrast, each dollar of lottery profits increases state revenues to schools by about 30 cents in states that deposit profits into the general fund. Of the lottery dollars that reach local school districts, we find that at least 80 percent of it is spent on schools.