The impact of school finance reform on indicators of expenditure inequality

Many indicators of per-pupil expenditure inequality vary in response to changes in enrollment patterns as well as in expenditure patterns. Enrollment-compensated indicators of inequality should be used in making prereform, postreform estimates of the impact of school finance reforms. However, neither enrollment-compensated nor uncompensated indicators reveal any short-run impact in a case study of the 1975 New Jersey reform. Despite this lack of change registered by the static indicators, a substantial proportion of districts are found to be mobile, in the sense of moving at least two expenditure deciles over the study period. Enrollment changes are the only identified cause for such mobility.