Wind Energy Development Delivers Significant Revenue To Local School Coffers, Driving Capital Spending, Berkeley Lab Study Finds

March 18, 2021

Wind energy has grown substantially in the United States over the past decades, contributing ever-greater revenue to states and local jurisdictions, including school districts. However, the impact of new wind energy installations on school revenues, expenditures, and student outcomes has not been well understood.

How have those windfall revenues been spent by these districts? Have those new monies translated into improved outcomes for their students? Is there evidence that some of the new revenue has been used to lower local tax rates for all property owners in the district? 

Using the universe of U.S. wind installations through 2016 and school-district-level data on revenues, expenditures, staffing, enrollments, teacher salaries, and student achievement, researchers from Berkeley Lab, University of Connecticut, and Amherst College, investigated these questions as described in a new working paper.

The study finds wind energy installations led to large increases in per-pupil revenues (Figure 1) due to increased local revenues, with minimal offsetting reductions in state aid. 

Large per-pupil expenditures were also evident (Figure 2). State aid formulas often penalize locally financed increases in current operating expenditures and, as such, districts spent the new revenues primarily on capital outlays. This caused dramatic increases in capital expenditures and modest increases in current expenditures (Figure 2) relative to normal overall spending. Before getting a wind project, districts spent about $9.50 for current expenses to each dollar of capital investments. But they spent new wind revenues in an opposite pattern, with twice as much for capital as current.  

Because of these allocation decisions, we find little to no reductions in class sizes or increases in teacher salaries overall, which tend to have a larger impacts on student achievement. Accordingly, we find no change in student test scores. If state and county goals were to improve test scores and other student outcomes at the expense of capital improvements, tax policy would need to direct a greater proportion of new revenues toward current spending, such as to hire additional staff to reduce class size. As it stands, new revenues are directed more toward capital expenditures, resulting in new or improved school infrastructure and equipment.

Finally, there is an additional way school districts may benefit from wind energy installation: property tax relief. The large increases in local revenues from wind energy installations suggest that districts did not take all these windfalls as tax relief, but did they take any? We looked at two states, finding property tax rates fell by 13% in Illinois school districts after the installation of wind projects, but they rose slightly in Texas.  

The study, “School District Revenue Shocks, Resource Allocations, and Student Achievement: Evidence from the Universe of U.S. Wind Energy Installations”, merged data from the DOE-funded U.S. Wind Turbine Database with data from the National Center for Education Statistics (NCES), Schools and Staffing Survey (SASS), National Assessment for Education Progress (NAEP) and Stanford Education Data Archive (SEDA).

The study represents the first national study of its kind and provides important information to stakeholders involved in the siting, permitting, hosting, and developing of wind projects about outcomes for school districts across the nation.

A webinar, with the authors, covering the results of the study is scheduled for 1 PM ET / 10 AM PT on Friday, March 26, 2021. Registration Link: https://lbnl.zoom.us/webinar/register/WN_7nJtHk_iQx6Pu_7TzAB3kQ

We appreciate the support from the U.S. Department of Energy Wind Energy Technologies Office, which made this work possible. Learn more at DOE Wind Energy Technologies Office.

 

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