The effect of administrative pay and local property taxes on student achievement scores: Evidence from New Jersey public schools

We theorized that student test score performance will be positively related to the percentage of school district revenues raised from local taxes and with salary levels of school district administrators. Using both fixed and random effects panel analyses, we examine data for 217 Kindergarten-to-Grade 12 school districts in New Jersey for the years 2002–2009. Our results support the inference that increases in the percent of school funds raised locally have a positive influence on student test scores. However, the results for our hypothesis involving administrative costs were mixed. Administrative salaries and administrative spending were found to be positively related to test score performance in the one-way time fixed effects model, but not in the two-way models. Finally, classroom spending and the student–faculty ratio were found to be positive and significant in some of the tests, although not robust to alternative specifications.

► Paper examines the effect of property taxes and administrative costs on test scores.
► Positive relationship found between local revenue sources and student test scores.
► Mixed results were found with respect to administrative spending.
► Classroom spending and student–faculty ratios found to be positively related to test scores.