Date of Award
Spring 2025
Embargo Period
5-1-2025
Document Type
Dissertation
Degree Name
Doctor of Philosophy (PhD)
College/School/Department
Department of Public Administration and Policy
Program
Public Administration and Policy
First Advisor
Lucy Sorensen
Committee Members
Gang Chen; Mikhail Ivonchyk
Keywords
Cutback Management, School District, State Aid, Fiscal Retrenchment, Great Recession
Subject Categories
Education Economics | Education Policy | Public Administration
Abstract
The Great Recession posed unexpected fiscal challenges for public sector entities, particularly small and mid-sized organizations such as school districts, which operate with limited revenue flexibility and constrained managerial capacity. While the recession was a macroeconomic event, which could be an exogenous shock to state and local governments beyond their control, state and local policy responses played a critical role in shaping its long-term effects on local public services. Scholars have emphasized the importance of long-term perspectives among policymakers and public managers to sustain the quality of public services during crises. However, the heightened uncertainty of the recession also constrained cognitive capacity, potentially leading to suboptimal decisions and unintended policy consequences. This dissertation explores these issues through the following three chapters.
The first chapter examines the impact of New York State’s primary aid cut policy during the post-Great Recession era. A recession like the Great Recession is unpredictable and uncontrollable by policymakers, its impact on school districts is highly dependent on federal- and state-level policies, particularly state aid cut policies. High urgency and uncertainty of policy environment due to the recession, these policies are structured inadequately through missing new emerging needs, which could result in greater student learning losses in certain communities. My analysis, utilizing eleven years of data from 620 public school districts in the State of New York, demonstrates that a one percent net loss in total revenue due to state funding cuts following the Great Recession led to declines of 0.04 and 0.037 standard deviations in mathematics and English Language Arts performance indices, respectively, under average local economic conditions. These effects were more pronounced in regions with severe labor market downturns, indicating that state funding cuts based on pre-recession conditions failed to account for the recession’s heterogeneous impact across regions, thereby widening educational disparities. Developing contingency plans for such funding cuts could help formulate more equitable policies in urgent policymaking situations.
The second chapter examines the factors influencing school districts’ strategic responses to fiscal crises related to the state aid cut policy discussed in the first chapter, using data from 618 school districts in New York State during the post-Great Recession era. While existing research on cutback management often emphasizes either theoretical frameworks or narrow empirical assessments of budgetary decisions, my study advances the field by integrating unsupervised machine learning techniques—specifically Self-Organizing Maps (SOM) and hierarchical clustering—to categorize district-level budget responses across multiple years and categories. I identified three budgetary responses and used a multinomial probit regression model to test the extent to which superintendent experience, administrative capacity, and institutional factors shape these strategies. Results indicate that administrative capacity and financial institutional factors, particularly relevant to school district finance, were associated with budgetary responses of school districts. In contrast, superintendent experience and non-financial institutional factors were not associated with those choices. These findings underscore the importance of institutional and managerial capacity in navigating financial retrenchment and highlight the need for state-level support to help small public entities respond more strategically to future economic downturns.
The third chapter evaluates school districts’ responses behind budgets to a mandatory expenditure increase resulting from rising teacher pension costs. Stemming from mandatory expenditures like employer contributions to public pension plans, fiscal pressures present significant challenges for public school districts. Unlike revenue declines during recessions, these expenditure increases are often less visible but still have substantial implications, particularly for personnel budgets. This study investigates the effects of rising employer contributions in New York State school districts from the 2007-08 to 2014-15 school years. Using eight years of data from 621 districts, the analysis reveals that a 10 percent increase in per-teacher employer contributions results in almost a 0.6 percent reduction in full-time equivalent teachers, predominantly through cuts to non-permanent positions and reduced hiring of new teachers. With inflation adjusted employer contributions more than doubled since the early 2000s, these impacts are particularly severe. While superintendents with prior experience managing pension cost spikes present slight differences in how they managed senior staff and professional positions, these variations were limited. Contrary to recent studies emphasizing the importance of exceptional leadership during budgetary crises, this research underscores the limited role of superintendents in creating cutback strategies, potentially due to institutional factors such as limited revenue flexibility and strong stakeholder influence. Additionally, the findings highlight the need for funding policy reforms to enhance school districts’ capacity to manage fiscal stress effectively.
Through these three chapters, I tried to illustrate the challenges in public education in responses to financial crises. Limited cognitive capacity of policymakers can lead to unintended policy side effect widening inequity within a generation. The limited managerial discretion and institutional constraints question whether superintendents can make significant differences in financial responses with the possibility of their effort behind budgetary decisions. While prior research emphasizes the importance of a long-term perspective during crises, my findings suggest that this is not easily achievable by relatively small and mid-sized public entities such as school districts. This work contributes to the literature on cutback management by framing school district behavior through a suboptimal decision-making lens and offers practical insights into responses through federal- and state-level policies rather than overemphasize local managerial capacity.
License
This work is licensed under the University at Albany Standard Author Agreement.
Recommended Citation
Hwang, Moontae, "Challenges in Financial Prosperity: Cutback Management and Bounded Rationality in New York State School Districts" (2025). Electronic Theses & Dissertations (2024 - present). 162.
https://scholarsarchive.library.albany.edu/etd/162
