Abstract This paper asks whether increasing public school funding can be an effective long-run crime-prevention strategy in the United States. Specifically, we examine the effect of increases in funding early in children’s lives on the likelihood that they are arrested as adults. We exploit quasi-experimental variation in public school funding, leveraging two natural experiments in Michigan and a novel administrative data set linking the universe of Michigan public school students to adult criminal justice records. The first research design exploits variation in operating expenditures due to Michigan’s 1994 school finance reform, Proposal A. The second design exploits variation in capital spending by leveraging close school district capital bond elections in a regression discontinuity framework. In both cases, we find that students exposed to additional funding during elementary school were substantially less likely to be arrested in adulthood. We show that the social benefits of increasing school funding are greater than the costs, even when considering only the crime-reducing benefits.

School finance reforms caused some of the most dramatic increases in intergovernmental aid from states to local governments in U.S. history. We examine whether teachers' unions affected the fraction of reform-induced state aid that passed through to local spending and the allocation of these funds. Districts with strong teachers' unions increased spending nearly dollar-for-dollar with state aid and spent the funds primarily on teacher compensation. Districts with weak unions used aid primarily for property tax relief and spent remaining funds on hiring new teachers. The greater expenditure increases in strong union districts led to larger increases in student achievement.