Another commonly used control variable in econometric research on public school systems is racial composition of the community or the student body. The rationale for this control is that factors correlated with race, but uncorrelated with the explanatory variable of interest (i.e., district enrollment), may affect district spending. To capture any such effect, the model includes the nonminority percentage of the district’s population.

These data were obtained from “Summary File 3” of the 2000 U.S. Census.[9] It should be noted, however, that these data are available only for 1999, necessitating the use of the 1999 value across all five time periods. This can be expected to decrease the predictive power of this variable (it can only capture variation between districts, not within districts over time), since district demographics may have changed over the period in question. But as we shall see from the regression results, the between-district variations ensure that this variable is a useful and statistically significant predictor even without data on any possible interyear variations in the variable within districts.