Educational resource multipliers for use in local public finance: An input-output approach

This paper develops an input-output framework for use in local public finance. A state-wide educational system is described in terms of its school districts and educational programs for which local, state and federal funds are allocated. A distinction is made between earmarked funds and discretionary funds. Educational resource multipliers are developed to show how changes in earmarked funds directly and indirectly affect the total level of educational expenditures in all districts and the total level of educational expenditures on all programs. The theoretical results are illustrated using data for the State of Pennsylvania. Finally, we show how the input-output approach relates to the standard partial equilibrium approach in the education finance literature.