The Short-Term Effects of the Shift From Prior-Year to Current-Year Enrollment on School Inputs in Arizona

Oct 15, 2026

Uploaded by Adam

Explores how Arizona’s 2017 shift under the Arizona Education Finance Amendment (AEFA) from prior-year to current-year enrollment affects school inputs in the short term. The analysis evaluates expenditures and district personnel, with emphasis on teachers, using a difference-in-differences design across enrollment decline and growth years. Average districts show limited response to AEFA, while heterogeneity emerges: highest-income districts reduce substantially more inputs than lowest-income districts, especially instructional spending, administration spending, full-time equivalent teachers, and teachers with 1–5 years of experience.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages14

Reading Time35 min

AccessFree to download

Introduction

Policy background and AEFA timing

Enrollment trends in Arizona (2006–2020)

Literature gaps and study contributions

Research questions and DID approach

AERA Open January-December 2023, Vol. 9, No. 1, pp. 1–14 DOI: 10. 1177/23328584231210281 Article reuse guidelines: [sagepub.com/journals-permissions](sagepub.com/journals-permissions)[ ](sagepub.com/journals-permissions)© The Author(s) 2023. [https://journals.sagepub.com/home/ero](https://journals.sagepub.com/home/ero) The Short-Term Effects of the Shift From Prior-Year to Current-Year Enrollment on School Inputs in Arizona Phuong Nguyen-Hoang University of Iowa Angie Nga Le Rutgers University Arizona shifted to using current-year enrollment, instead of prior-year enrollment, as the basis for determining state aid for school districts following the passage of Arizona Education Finance Amendment (AEFA) in 2017. This study examines the short-term effects of AEFA implementation on school inputs—namely, expenditures and district personnel, particularly teachers. We find that the average district does not seem to respond to AEFA. However, our heterogeneity analyses reveal that the highest-income districts significantly reduce more inputs than the lowest-income districts in response to AEFA. The differential impact between these two groups is most evident in instructional expenditures, administration expenditures, total full-time equivalent teachers, and particularly teachers with 1–5 years of experience. Keywords: econometric analysis, educational policy, enrollment declines, finance, k–12, policy, school expenditures, state education aid Introduction State aid plays a significant role in financing education for the majority of U.S. states, including Arizona. According to the mostrecent data from the Digest of Education Statistics (DES), state education aid comprised an average 50.1% of local school districts’ total revenue in 2019, with Arizona’s share at 49 . 1% .1 Since 1980, Arizona has based its education aid on district enrollment. Before 2017, state education aid to school districts was based on their prior-year enrollment—a popular form of“hold-harmless” provisions in state education aid (Center for Public Education, 2021) . Under the Arizona Education Finance Amendment (AEFA) since 2017, the state has used a school district’s current-year enrollment to determine its state aid. Although Arizona’s state education aid has always been based on current-year numbers in years of enrollment growth, AEFA removed the hold-harmless feature for districts with enrollment declines since 2018 (after a grace year with state backfill in 2017) . Figure 1 shows that public school enrollment in Arizona started to decline sharply at the beginning of the Great Recession in 2008 until 2012, when enrollment leveled off. The negative slope between 2012 and 2020 is much flatter than that between 2008 and 2011. Although 2012 is the start of a relatively steadier period of total enrollment in Arizona, 96.8% of school districts in our sample experienced annual enrollment declines at least once during this period of 2012– 2020. Also, during the pre-AEFA (2012–2017) and postAEFA (2018–2020) periods, the shares of enrollment decline occurrences are unchanged at 54% and higher than those of enrollment growth. This suggests state aid cuts in more than half of the postperiod district years. However, no study has ever been conducted to estimate the effects of AEFA on school districts’ expenditures and personnel. This study seeks to fill this gap in the literature. This study straddled two lines of inquiry. Studies in the first line of inquiry examined the effects of enrollment changes on school inputs. These studies were, however, published decades ago (Cavin et al., 1985; Edelman & Knudsen, 1990) . The second line of inquiry examined the relationship between state aid and school expenditures. When state aid is largely determined by enrollment, school district expenditures may vary according to enrollment-induced fluctuations in state aid. Several studies have found that school districts with increased state aid spent more (Card &

FAQs

What policy change does AEFA introduce in Arizona’s school funding?

AEFA replaces prior-year enrollment with current-year enrollment as the basis for determining state aid to school districts.

How does the study evaluate AEFA’s short-term impact?

It uses a difference-in-differences design to study changes in school district expenditures and district personnel across enrollment decline and enrollment growth years.

Do all districts respond similarly to AEFA?

No. Average districts show little overall response, but heterogeneity is clear: higher-income districts reduce more inputs than lower-income districts.

Oct 15, 2026

Uploaded by Adam