The Effect of the New Haven School Construction Project on Test Scores, Home Prices, and Public School

Enrollment Policy Brief

Christopher Neilson christopher.neilson@yale.edu Seth Zimmerman seth.zimmerman@yale.edu Yale University Department of Economics October 9th, 2011

Background and Summary In 1995, New Haven began the Citywide School Construction Program (SCP), a comprehensive effort to rebuild every public school in the district. By 2010, out of 42 school buildings in the district, 30 had been rebuilt or extensively renovated, with an additional seven schools under construction or under design.1 With total projected costs of approximately $1.4 billion (in 2005 dollars2), the SCP is believed to be the largest per-capita school construction program in the U.S. Of the $1.4 billion in total expenditures, New Haven paid for just over 20 percent, or $300 million; the remaining funds came from State or Federal sources. This document summarizes the results of an independent study of the effects of the New Haven SCP on educational and community outcomes in the city. Our method of analysis controls for persistent differences in neighborhoods and for citywide trends. For an extensive discussion of the technical details of this analysis, see Neilson and Zimmerman (2011). Because high school assignment in New Haven is in general not based on neighborhood of residence, we focus on the effects of middle- and elementary-school construction. Our key findings are as follows: 1) The SCP had large and positive effects on Connecticut Mastery Test (CMT) reading scores for New Haven elementary and middle school students. By six years after occupancy of the new building, students realized CMT reading score gains of similar size to those observed in students attending high-performing charter schools. If these gains can be maintained through the completion of school construction phase-in, they will reduce the gap between New Haven schools and schools in the rest of the state by 36 percent. The SCP does not appear to have had large effects on math scores. 2) The prices of homes in neighborhoods receiving the average level of SCP investment rose by 11 percent relative to prices of homes in other neighborhoods. The associated increases in property tax revenues likely lowered the true cost of the SCP to a value substantially below the sticker price. 3) The SCP raised public school enrollment amongst neighborhood residents, and students arriving in neighborhoods after school construction were more likely to have demographic characteristics associated with higher test scores. 4) School principals who were present at the time of school construction traced the positive effects of construction to a combination of the pedagogical advantages of the new buildings and improved student, parent, and teacher motivation.

1
2

This count omits charter schools and transitional schools for at-risk youth, and counts each address separately for schools with multiple addresses.

We deflate expenditures to the year of building occupancy.

Data and Methods In principle, school construction may influence educational and community outcomes through a variety of channels. If improved school facilities help students learn, then school construction will boost academic performance. Alternatively, if facilities improvements have little effect on learning and school construction diverts educational resources away from more productive uses, school construction may actually reduce educational achievement. Similarly, if residents view investments in school facilities as valuable contributions to public infrastructure, school construction will increase the value of homes with access to new facilities. If residents believe the money spent on school construction would be better used elsewhere, school construction could have the opposite effect. We conducted our analysis of student outcomes using data on CMT reading and math test scores and school enrollment for New Haven public school students. Our data span the years 2004 through 2010. Prior to 2006, the CMT was administered annually to 4th, 6th, and 8th graders. Beginning in 2006, the CMT was administered annually to students in grades three through eight. We conducted our analysis of home prices using sale records for all homes sold in New Haven between January 1995 and January 2010. To assess the effects of school construction, we assigned each student to a neighborhood based on their zoned elementary, middle, and high schools. We then calculated per-capita school construction intensity in each neighborhood by dividing expenditures on schools in the neighborhood by the total capacity of those schools.3 Using this data, our basic analytic strategy is to compare year-over-year changes in CMT scores (school enrollments, home prices) for neighborhoods at different phases of the construction process. A simple example makes this easy to understand. Say there were only two neighborhoods, A and B, and two years of data2009 and 2010. The school in neighborhood A is rebuilt, with the new building occupied in 2010, while the school in neighborhood B is not rebuilt over the period. We would then compare the growth in test scores between 2009 and 2010 for students living in neighborhood A to growth in test scores for students living in neighborhood B. The amount of score growth varies with the size of the investment in neighborhood A. This technique, known as difference-in-differences, allows us to estimate the effects of school construction in a way that controls for underlying differences between neighborhoods and city-wide trends.4 It will succeed so long as the ordering of school construction is not systematically related to neighborhood specific trends in the outcomes of interest. All available evidence indicates that this assumption holds.

3 4

Note that all zoned schools were rebuilt under the SCP. If students attend a school outside of their zoned neighborhoodas many students do in New Havenour analysis will tend to understate the effects of school construction, because some students who we label as having benefitted from school construction will not actually have received that benefit.

Results Test Scores Between 2006 (the first year in which the current version of the CMT was administered) and 2010, mean CMT reading scores in New Haven rose slightly relative to statewide averages. Quantifying year-overyear score gains is complicated somewhat by the fact that the distribution or spread of scores changes as the test itself changes from year to year and grade to grade, so that gaining a fixed number of points may have different meanings for different groups of students in different years. For concreteness, we describe score gains using a 2010 fifth grader as a reference point. That is, we answer the question if a fifth grader in 2010 experienced effects of the average size for a district student over the 2004-2010 period, how much would her score have changed? We make cross-time and cross-grade comparisons by standardizing scores so that at the state level the mean and variance of the scores does not change. 5 New Haven owes a substantial fraction of its recent CMT reading score growth to the SCP. Between 2006 and 2010, reading CMT scores in New Haven grew from 209 to 214, compared to a state average score of 243 (constant across years due to our standardization). That is, New Haven closed 15 percent of the achievement gap between its schools and schools in the rest of the state. This score growth is shown in the lighter-colored orange bars in Figure 1. What if the school construction project had not taken place? Then the citywide average score in 2006 would have been 207, with growth to 209 in 2010. This is shown in the green bars in Figure 1. The gap between New Haven scores and statewide scores would have been 6 percent wider in 2006 and 14 percent wider in 2010 without the SCP. The increasing contribution of school construction to New Haven test scores over time reflects project phase-in: as more schools were completed, more students began to reap the benefits of new school buildings, which grow with time since building occupancy. In total, growth due to school construction made up 45 percent of total test score growth between 2006 and 2010.

More specifically, we follow standard procedure in the literature on educational achievement and standardize scores by state-level year- and grade-specific means and standard deviations. To obtain the units described in this th brief we re-standardize using 5 grade reading means and standard deviations from 2010. The analysis described here also differs from the results presented in the technical paper in that we include students attending transitional schools in our sample. This does not substantively affect our findings but does make the sample used in this brief representative of population of CMT takers in New Haven over the period.

Figure 1

Score

200

205

210

215

CMT Reading scores with and without the SCP

2006 Year No SCP

2010 Observed scores

Mean New Haven scores on CMT reading tests with and without the SCP. CMT scores normalized using statewide means and standard deviations for 2010 fifth graders.

An important question to ask is what will happen over the long run, when all construction projects are completed and students have had a chance to learn in each new school for a number of years. A reasonable guess is that the effects of school construction in New Haven as a whole will come to resemble the effects of school construction on students living in neighborhoods where construction took place relatively early on in the SCP. As shown in Figure 2, the effects of school construction were small and not significantly different from zero in the years prior to building occupancy. Beginning in the year of building occupancy, the effects become statistically significant, and grow further with time. On average, score gains for students living in neighborhoods where treatment took place at least six years prior to test-taking were roughly 11 points. This corresponds to 36 percent of the 29-point gap between New Haven average scores and statewide averages in 2010, and is comparable in size to the gains realized by students at high-performing charter schools. Though the evidence that school construction affected reading scores is very strong, we find little to suggest that school construction affected math scores. Our estimates are consistent with a story in which school construction does affect math scores, but in a statistically noisy way, and with a story in which school construction in fact has a positive effect on reading scores only. It is possible that the pedagogical and motivational changes that school construction enabled have greater benefits for reading than for math. See below for a somewhat more detailed discussion of the mechanisms by which school construction affects student achievement.

Figure 2

Effect of SCP on Reading CMT Scores

20 CMT points 0
-5

10

15

0 Years after building occupancy Average effect 90% CI

The effect of the SCP on CMT reading scores for students receiving the mean level of school construction investment. CMT scores normalized using statewide means and standard deviations for fifth graders in 2010.

Public School Enrollment The goal of school construction is not simply to improve student test scores. Rather, it is to provide a variety of school-centered amenities that increase the appeal of living in the surrounding neighborhood and attending the rebuilt school. We find that the SCP substantially raised the number of students living in affected neighborhoods who chose to enroll in public schools. This effect is first observed in the year of building occupancy, and rises as time elapses post-occupancy. Further, the students who enroll in public schools after building occupancy tend to have demographic characteristics associated with greater academic achievement. In a school district where nearly 90 percent of students are black or Hispanic and 75 percent of students are eligible for free or reduced-price lunch, this suggests that over the long run, the SCP is likely to increase socioeconomic diversity in New Haven schools. Home Prices Existing economic research indicates that home buyers are willing to pay more for homes in districts or neighborhoods with better zoned schools (Black 1999, Bayer et al. 2007). It stands to reason, then, that if school construction improved school performance, it may also have raised property values. This proves to be the case. We find that in neighborhoods receiving the average level of investment in school infrastructure, the prices of purchased homes rose by 11.1 percent relative to homes in other neighborhoods at the time of occupancy. We find no evidence that this effect diminished with elapsed time post-occupancy. 6

This finding has potentially important implications for New Haven tax revenues. Assume that a) school construction had the same effect on the values of the stock of residential and non-residential real estate as it did on the sale prices of transacted homes, b) school construction in one neighborhood did not affect the prices of homes in other neighborhoods, and c) the effects of school construction on home prices do not diminish over time. Assumption a) is necessary for computations using published Grand List values. Assumption b) is difficult to verify, but is consistent with limited empirical evidence. Assumption c) can be tested directly and appears to be accurate. Under these assumptions, we can compute the gains in annual property tax revenues due to the SCP using formula Tax Gain=Grand List Real Estate Value x Property Tax Rate x Effect of SCP The 2008 grand list value reported in the FY 2011 budget document6 was $5.6 billion. The mill rate in New Haven is 43.9, corresponding to a property tax rate of 4.39 percent. The estimated mean effect of school construction is to raise prices by 11.1 percent. The implied annual gain in tax revenues is approximately $27 million (in current dollars). Over many years, these annual gains add up: using our approximation, the present discounted cost of delaying investments in school infrastructure by 10 years is roughly $238 million, given a real interest rate of five percent. This is $218 million in 2005 dollars16 percent of the SCPs total cost and 72 percent of the citys share of that cost. This calculation relies on strong assumptions and should not be taken as precise, but it does strongly suggest that, due to its positive effect on tax revenues, the true price of the SCP was substantially lower than the sticker price. Recall also that this estimate includes only the tax revenues created by zoned middle school and elementary schools, not high schools or magnet schools not associated with a neighborhood zone.

How does school construction help students? The preceding discussion describes the positive effects of school construction on a variety of important outcomes: student achievement, school enrollment, and home prices. One question we have not yet addressed is why this occurs: what specifically is it about school construction that helps students and, in turn, makes living in communities with rebuilt schools more desirable? The available data does not allow us to answer this question quantitatively, but we have taken first steps toward a qualitative answer using a survey of New Haven school principals. We administered our survey to 22 current district principals, of whom ten were in office at the time of school construction. We focus our analysis on the responses of those ten individuals. Principals reported that the effects of school construction represented a mix between specific physical changes that enabled better teaching or student management and construction-related improvements in student, teacher, and parent motivation. Nine of the ten principals reported that the motivational effects of school construction were at least as important as the pedagogical and management changes due to specific building features. Though we encourage caution when trying to separately identify these
6

http://www.cityofnewhaven.com/Finance/pdfs/FY_2011_BOA_Approved_Budget.pdf.

two types of effectsfor example, specific physical changes may improve motivation through better classroom or hallway managementthese findings are consistent with the idea that school construction improved outcomes at least in part by building community engagement with the school system. Conclusion New Havens investment in school infrastructure anticipates needs in many urban school districts across the country. Our findings show that school construction substantially improves academic performance for elementary and middle school students, and increases enrollment in public schools. Further, our back-of-the-envelope calculations indicate that the sticker price of school construction overstates the effective price, as the higher property values that result from school construction lead to increased tax revenues. We believe that school construction is a key part of the school and neighborhood revitalization toolkit, and we view New Haven as a leader in this respect. Our conclusions come with two important caveats. First, our findings indicate an important role for school maintenance. School buildings inevitably decay over time. This has the potential not only to decrease the pedagogical functionality of existing buildings, but to reduce the levels of student, parent, and teacher engagement that appear to be tied to the availability of high quality facilities. Second, there is the question of efficiency. Our findings do not show that the SCP was the best of all possible investments in school infrastructure. It is possible that smaller or larger projects, or projects of similar size but with some difference in approach, could have produced greater returns. The problem of optimal school infrastructure investment is a promising topic for future research. For now, the SCP represents a first step towards understanding and addressing nationwide deficiencies in school infrastructure. Works Cited Bayer, Patrick, Fernando Ferreira, and Robert McMillan, A Unified Framework for Measuring Preferences for Schools and Neighborhoods, Journal of Political Economy, 08 2007, 115 (4), 588638. Black, Sandra E., Do Better Schools Matter? Parental Valuation of Elementary Education, The Quarterly Journal of Economics, May 1999, 114 (2), 577599. Neilson, Christopher, and Seth Zimmerman. September 2011. The Effect of School Construction on Test Scores, School Enrollment, and Home Prices. Mimeo. Available upon request.