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Public Impacts of Unconventional Oil and Gas Development

Laura Zachary and Nathan Ratledge

This report was produced as part of The Impacts of Shale Gas and Oil Development, an RFF initiative.

JUNE 2017 Public Education Impacts of Unconventional Oil and Gas Development

Laura Zachary and Nathan Ratledge∗

Contents

Summary ...... 1

Community Risk-Benefit Matrix ...... 1

1. Introduction ...... 4

2. Gaps in Existing Literature...... 5

3. Population...... 5 3.1. Student Population and Student- Ratio ...... 7 3.2. Student Demographics ...... 8

4. ...... 8

5. Labor Market ...... 11 5.1. Labor Market Pull on Educational Attainment ...... 11 5.2. Labor Market Pull on Education Professionals ...... 13

5. Conclusion ...... 14

References ...... 15

∗ Zachary: Consultant. Ratledge: Consultant. This literature review was produced as part of The Community Impacts of Shale Gas and Oil Development, an RFF initiative. The authors would like to thank the Alfred P. Sloan Foundation for funding this effort. © 2017 Resources for the Future (RFF). All rights reserved. No portion of this report may be reproduced without permission of the authors. Unless otherwise stated, interpretations and conclusions in RFF publications are those of the authors. RFF does not take institutional positions. Resources for the Future (RFF) is an independent, nonpartisan that conducts rigorous economic and analysis to help leaders make better decisions and smarter about natural resources and the environment. Resources for the Future | Zachary and Ratledge

Summary volatility and uncertainty in school finances that further impacts the ability This report reviews the resource of districts to strategically use increased literature examining the effect of funding to improve student outcomes. unconventional oil and gas development on Without knowing if increased revenues public education via three main channels— would continue in the future, districts student population, school finances, and the cannot commit to permanent labor market. expenditures such as increases to teacher • In all, 15 studies were reviewed, . covering the following education To draw conclusions about the net effect impacts: student enrollment and of unconventional oil and gas development on demographics, student-teacher ratios, educational outcomes as well as inform school finances (changes to revenue and decisions to help mitigate and harness, expenditure streams), and educational respectively, the potential negative and attainment ( rates, completion positive impacts on public education, rates, and dropout rates). policymakers more research and analysis • A limited number of studies specifically that employ a combination of statistical and examine the relationship between qualitative methods. unconventional oil and gas development and public education outcomes. Community Risk-Benefit Matrix • Existing literature that pools data across The Community Risk-Benefit Matrix many plays masks interpretation of the identifies specific areas of concern related to impacts that clearly vary substantially impacts addressed by the team’s literature across states; research that distinguishes review (left column of the matrix below), as across individual states appears far more well as impacts for which RFF have telling. conducted original research and analysis. (See • This literature review finds diverging page 3 for the section of the matrix related to trends in student enrollment in boom this review, on the public education impacts of districts across western states such as unconventional oil and gas development.) Texas, North Dakota, and Montana seeing increases in student enrollment The matrix indicates the quality of the and yet a decrease in student numbers in literature for each impact, judged subjectively eastern states such as Pennsylvania, with the color indicating whether we find the Ohio, and West Virginia. studies analyzing an impact to be, on average, of a certain quality. Impacts may be assessed • Funding per student and the resulting by multiple low-quality studies and a medium- impacts on education vary based on the quality study, for example, and we would ability for districts to oil and gas consider this body of literature to be low based on production, how these quality. A high-quality classification indicates interact with education funding that we trust the results of such studies, formulas, local pressures on how to including the accuracy, magnitude, and spend revenue windfalls and the direction of the results—meaning, in a spending and saving restrictions for practical sense, that it has no serious or fatal school districts within a state. flaws (such as inadequate ) that • Substantial revenue coming in relatively would lead us to question the results. A study rapidly due to resource booms leads to is considered low quality if we believe we

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cannot trust the results because the study has View or download the entire matrix, multiple, serious flaws (e.g., , including all sections that correspond with data, focus, or study are inadequate to each of the literature reviews by topic reliably estimate outcomes). A study is produced as part of this initiative: considered medium quality if it does not fit in WHIMBY (What’s Happening in My the other two categories. A study is therefore Backyard?): A Community Risk-Benefit medium quality if it has any such major flaw Matrix of Unconventional Gas and Oil or if either the methodology, data, focus, or Development study design lead to questionable results for a number of reasons. Generally, we find the magnitude and direction of these results to be informative, but question the precision. Lastly, we summarize the findings reported by the literature for each impact— whether the studies as a whole report increases, decreases, or no relationship between the impact and an increase in unconventional oil and gas development. The “heterogeneous” classification indicates that the literature reports different outcomes across areas. The “inconsistent” classification indicates that the literature reports contradictory results (i.e., two studies find an increase or decrease for a certain impact in the same context).

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COMMUNITY RISK-BENEFIT MATRIX LITERATURE REVIEW: PUBLIC EDUCATION IMPACTS OF UNCONVENTIONAL OIL AND GAS DEVELOPMENT

KEY

Higher quality: The majority of studies reviewed for an impact are of higher quality. Where there is one study of higher quality, it is marked as such.

Medium quality: The majority of studies reviewed for an impact are of medium quality. Where there is one study of medium quality, it is marked as such.

Lower quality: The majority of studies reviewed for an impact are of lower quality. Where there is one study of lower quality, it is marked as such.

Not reviewed: Research on an impact was not reviewed.

Increase: Studies show a positive, robust ↑ association with an impact (an increase in incidence or magnitude).

Decrease: Studies show a negative, ↓ robust association with an impact (a decrease in incidence or magnitude).

Heterogeneous: Across regions or areas, ↑↓ studies report robust results that differ.

No association: Studies report results that showed no association.

Inconsistent: Studies report differing ~ (contradictory) results.

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1. Introduction Second, state fiscal policies vary substantially in the way and degree that they Rapid resource development affects local distribute increased tax revenue from through numerous channels that expanded oil and gas development to local may impact public education. Figure 1 shows school districts impacted by the boom (link 2). the three main channels explored in the The resulting impacts to student achievement existing literature—student population, school depend on the ways that states levy taxes on finances, and the labor market—and the unconventional oil and gas, as well as whether possible pathways through each channel that or not state fiscal directs revenues to link unconventional oil and gas development locations facing population growth and makes booms to student achievement in local sufficient funds available in the time needed to communities. maintain or build additional infrastructure as First, the student population may change well as to provide services (link 6 and 9 or during a boom if an influx of workers with directly through link 7). Even if do school-age children moves to a community receive more revenue per pupil, choices or (link 1 shown in Figure 1 below). Sudden funding policies may not promote spending in increases in student populations may put ways that effectively improve student greater strain on school resources by achievement. Finally, a boom in effectively lowering revenue per pupil (link 4 unconventional oil and gas development and then 7). If schools are unable to hire results in higher competition (link 3) and enough staff to meet the of new greater labor demand in the oil and gas while continuing to provide the same quality may pull and students out of of education to students already in the schools (links 8 and 10). A higher student- community, student achievement may suffer teacher ratio could, in turn, impact the ability (link 5 and then 9). However, if growth in of schools to provide quality education and revenue per student due to the boom outpaces thus harm student performance (link 9). If the required expenditures per student before the demand for workers pulls students into the boom, funding windfalls may enable schools labor force directly, it could increase dropout to hire and retain qualified teachers and offer rates and lower the educational attainment of more educational resources associated with people in the community (link 10). increasing student achievement.

FIGURE 1. LINKAGES FROM AN UNCONVENTIONAL OIL AND GAS DEVELOPMENT BOOM AND STUDENT ACHIEVEMENT IN LOCAL COMMUNITIES

Source: Adapted from Marchand and Weber (2015; Figure 1).

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2. Gaps in Existing Literature student enrollment and demographics, student- teacher ratios, school finances (changes to Understanding how such impacts might revenue and expenditure streams), and materialize is critical for local and state educational attainment (graduation rates, policymakers to help communities capitalize completion rates, and dropout rates). Taking a on the potential benefits of a resource boom as step back and looking at the literature as a well as mitigate potential negative impacts on whole, both statistical analysis and in-person public education. Very few studies, however, interviews of education professionals in states specifically examine the relationship between experiencing major unconventional oil and gas unconventional oil and gas development and development over the past decade reveal public education outcomes, or the mechanisms diverging trends in student populations, described in Figure 1, though a number of student-teacher ratios, as well as finances studies discuss education tangentially as part among school districts across states. For of larger economic analyses (see Table 1). example, studies found an increase in student Within resource economics literature, this lack enrollment in boom districts across western of focus on public education outcomes states such as Texas, and in North Dakota and associated with unconventional oil and gas Montana in the Bakken and a decrease in development is in part related to limited student enrollment in eastern states including historic discussion between resource Pennsylvania, Ohio, and West Virginia in the economists and education experts. In addition, Marcellus, discussed further in the next a limited amount of standardized education section. metrics makes legitimate comparisons of data across regions and years difficult. 3. Student Population The bulk of existing studies focused on Education professionals in boom districts education and unconventional oil and gas across all regions examined in the literature— development either pursue solely qualitative Texas, Colorado, Montana, North Dakota, that highlights important issues but Ohio, Pennsylvania, and West Virginia— cannot measure the effects of development on expressed initial concern that the booms education—or are heavily quantitative and would result in rapid increases of student miss out on important nuances that fail to populations and that rural districts would not appear in available data alone. To develop be able to adjust swiftly enough to meet strategies for education systems aimed at changing needs (Schafft, Kotok, and Biddle capitalizing on the gains and mitigating the 2014; Ratledge and Zachary 2017). potentially harmful effects of booms in Employing both qualitative and statistical unconventional oil and gas development, research methods, Ratledge and Zachary decisionmakers must be able to understand the (2017) find that rapid growth in student strength and direction of the linkages in Figure enrollment occurred in the Bakken region, but 1—as well as the nuances not captured in opposite outcomes occurred in the Marcellus. commonly reported education data. As such, a In fact, whereas, North Dakota’s boom critical need exists for more research that districts experienced an increase in student employs a combination of statistical and numbers, top boom districts across states in qualitative methods to synthesize the Marcellus region had a statistically larger and answer open questions. drop in student populations compared to non- The remainder of this report reviews the boom districts. major literature on the various linkages depicted in Figure 1. Metrics covered include:

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TABLE 1. SUMMARY OF STUDIES REVIEWED

Study Location Analysis Metrics Methods time period Ratledge and ND, CO, MT, WV, 2000/01– Unconventional oil and gas Difference-in-difference Zachary PA, OH 2014/15 development, student- analysis of districts across 5 (2017) teacher ratio, student states and interview-based population, school study in 6 states finances, educational attainment and outcomes Rickman, Montana, North 2006–2013 Unconventional oil and Synthetic control method Wang, and Dakota, and West gas, educational Winters Virginia attainment (2017) Bartik et al. 9 shale plays Varies by Shale oil and gas, local Difference-in-difference (2016) across the United play, 1992– level net welfare impacts analysis with Rystad potential States 2013 for fracking index Genareo Two districts in 2011–2012 Unconventional oil, Qualitative single-case study (2016) ND transient students, (interviews and student-teacher ratio, observations) school finances; staff Weber et al. Barnett shale 1997–2013 Shale gas, property tax Normalized difference and (2016) region, TX base changes, school propensity score matching finances Cascio and Entire US shale 2000–2013 Shale oil and gas, labor Difference-in-difference Narayan reserve regions markets, dropout (student Analysis with an instrumental (2015) covering 30 of attainment), school variable and restricted event lower 48 states finances, teacher attrition study estimates

Marchand 1,012 school 2000–2013 Shale oil and gas, labor Instrumental variable and and Weber districts in TX market, school finances, fixed effects estimation (2015) student-teacher ratio, teacher quality, and student achievement Schafft et al. Marcellus shale 2011 Unconventional gas, Interview and focus group. (2014) region, PA education professionals’ Using survey data conduct perceptions of community, Kruskal-Wallis statistical economic, and education significance impacts Schafft, Kotok, Four top 2000–2013 Shale gas, Student Analysis of school district and Biddle producing population, demographics, data and focus group surveys (2014) counties in PA and achievement, school finances, dropout rates Schafft and Marcellus shale 2011–2013 Shale gas, educational and Interview and focus group- Biddle (2014) region, PA instructional decision based making, uncertainty Weber (2014) Louisiana, Texas, 1995–2010 Shale gas, educational Difference-in-difference Arkansas, and attainment of analysis and two least- Oklahoma population squares design Kelsey et al. Marcellus shale 2007–2010 Shale gas, school finances, Descriptive statistical analysis (2012) region, PA student population,

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Explaining the divergent trend in student and Biddle 2014). Ratledge and Zachary enrollment in the Bakken versus the Marcellus (2017), Kelsey et al. (2012), and Schafft, regions is not straightforward as it is not Kotok, and Biddle (2014) all found a negative necessarily the result of one dominant effect. association between energy development and Several plausible factors could each have larger decreases in enrollments in contributed to the outcome. For example, it’s Pennsylvania. Between 2005–2006 and 2010– reasonable to believe that given the extremely 2011 Schafft, Kotok, and Biddle (2014) found rural nature of northwest North Dakota, the that the four top producing counties in size of complementary development (, Pennsylvania experienced a nearly 8 percent services, , etc.) in the Bakken was decline in student enrollment compared to a simply that much larger than in the Marcellus state average decline of around 2 percent. as a region. In the Marcellus region, most of Ratledge and Zachary (2017) confirmed this the districts with unconventional oil and gas finding, as summarized in Table 2. The development fell within a drive of 15 minutes authors estimate that top producing districts in to an hour to a larger town or , whereas in Pennsylvania had on average between 14 and North Dakota that drive may take an entire 21 fewer students enrolled in first through day. As a result, it seems likely that the sixth grades (grouped in two-year cohorts) existing population could not provide the than non-boom districts at the end of the boom labor force to fill oil as well as others period measured in the study. In Ohio and related to the complementary/secondary West Virginia, also in the Marcellus region, (such as in hospitality, public Ratledge and Zachary (2017) found a larger , etc.). A final factor could have also drop in student populations compared to non- been the higher actual or even expected boom districts. that comes from oil production as opposed to Less research has focused specifically on . The higher profit in oil may have education impacts due to the boom in encouraged more people to move with their unconventional oil and gas development in the children to the region for work in the oil Bakken region. As shown in Table 2, Ratledge industry. and Zachary (2017) found a rise in student enrollment numbers leading to an increase in 3.1. Student Population and Student- the student-teacher ratio in North Dakota Teacher Ratio boom districts. Genareo (2016) is the only Researchers from Penn State Bakken region-specific study found in this have published several survey-based analyses review. The study conducts an interview- over the past decade, polling educators and based assessment of education in two top oil- school administrators in the Marcellus shale producing districts in North Dakota. The region regarding the opportunities and study’s investigation reported increasing challenges facing their districts due to concerns regarding transient students resulting unconventional oil and gas development in increases to staff workload and decreases in (Schafft et al. 2014; Schafft, Kotok, and per-pupil funding. Biddle 2014; Schafft and Biddle 2014; Kelsey et al. 2012). Despite concerns that the boom would bring a sudden influx of students to districts overlaying the Marcellus play, enrollments in these typically rural districts actually continued on the previous trajectory of a steady, long-term decline (Schafft, Kotok,

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TABLE 2. IMPACT OF UNCONVENTIONAL OIL AND GAS DEVELOPMENT ON STUDENT ENROLLMENT AND TEACHER POPULATIONS

Student numbers Student-teacher ratio Marcellus   Pennsylvania   Ohio − − West Virginia   North Dakota   Colorado (except Piceance) − + Source: Ratledge and Zachary (2017). Notes: Arrows imply statistical significance. + /− signs imply a trend direction but no statistical significance. Difference-in-difference regression runs show average results for boom districts (meaning school districts located in top 10% oil or gas producing areas) compared to non-boom districts. Runs dropped neighboring districts to control for spillover and to better isolate the effect of being a boom district versus a non-boom district on these outcomes.

3.2. Student Demographics Ratledge and Zachary (2017) is the only study to combine extensive in-person Schafft, Kotok, and Biddle (2014) looked interviews with statistical analysis of at Pennsylvania, finding little evidence that an education impacts across multiple regions. increase in unconventional oil and gas The authors conducted interviews with development is associated with changes in teachers, school staff, administrators, school student demographics or other outcomes, such board officials, as well as state and nonprofit as changes in the number of English Language staff. The interviews revealed that additional Learners (ELL) students or the share of students coming and going in the middle of a students with special education school year caused strain on school resources accommodations. The study also finds that and that the official annual enrollment data, rates of students qualifying for free or typically collected only once a year in mid- reduced-price lunch programs increased at a October, failed to capture these higher student lesser rate in top producing counties compared turnover rates. Education professionals cited to counties in the rest of Pennsylvania. concern about increased numbers of transient Examining all three states in the Marcellus students in Pennsylvania, Ohio, West region, Ratledge and Zachary (2017) found Virginia, and Colorado during different stages statistically significant decreases in the rate of of the boom; those in North Dakota and students eligible to enroll in the free lunch Montana in the Bakken region in particular program in boom districts compared to non- stressed issues with high student turnover boom districts in both Pennsylvania and Ohio, rates during the boom. suggesting that either students from lower- income families were driven out of the 4. School Finances community due to increases in the cost of living or that average income Annual data from the National Center for increased overall in these communities during Education Statistics’ National Public the boom. In contrast, however, the authors Education Financial Survey, indicates that for did not find a statistically significant most states, around 45 percent of public difference in the rate of students eligible to school funding comes from local revenue participate in free or reduced lunch programs sources, 45 percent from state funds, and in North Dakota due to the boom. around 10 percent from the federal government (NCES 2017). The majority of

www.rff.org | 8 Resources for the Future | Zachary and Ratledge local funds come from property taxes (Turner Studies focusing on specific regions are et al. 2016). In most major oil- and gas- better able to reveal nuance in the relationship producing states, much of the property tax between education and income going to counties and school districts unconventional oil and gas development. comes from the value of the itself Funding per students and the impacts on (Raimi and Newell 2016). As such, a problem education greatly vary based on a number of can arise when a community’s property values factors, such as the ability of districts to tax oil and taxes become too dependent on these and gas based on production, how these taxes , especially when prices decline. interact with state education funding formulas, This dependence exacerbates issues of funding and the spending restrictions and criteria for volatility and uncertainty for public schools, school districts within a state. A large factor in making it even more difficult for districts to these outcomes is whether a state taxes oil and plan ahead. gas production as property. Examining all nine major producing A survey-based study focusing on regions, Bartik et al. (2016) found an increase Pennsylvania (which for most of its in total school revenues that resulted from a did not tax oil and gas wells as property) 13 percent increase in property tax revenues as reported that most education professionals well as a 26 percent increase in all other interviewed felt that the state directed revenue sources combined. The authors also relatively little of the financial benefit of found a “small, and noisily estimated, 2.5 increased tax revenues from oil and gas percent increase in education expenditures” development to public schools (Kelsey et al. while spending per pupil remained “virtually 2012). Ratledge and Zachary (2017) found no unchanged” (Bartik et al. 2016, 23), though statistically significant change to revenues or the data used in this study are reported every expenditures per pupil due to the boom in five years and analysis is conducted across Pennsylvania. In contrast, boom districts in nine shale regions. Raimi and Newell (2016), Ohio and West Virginia, two states that do tax using structured interviews and local public oil and gas as property, saw average increases financial data to assess financial impacts, in revenue per pupil compared to non-boom concluded that local governments have districts during the treatment years examined received increased income from in the study (Ratledge and Zachary 2017). unconventional oil and gas development and Marchand and Weber (2015) found that that the majority of regional governments had unconventional oil and gas development in neutral to positive net financial impacts. One Texas slightly decreased the percentage of important finding to note from this study is students passing state exams. Although this that energy development may expand the local study indicates that the larger contributor to tax base and directly generate revenues for the overall negative impact of unconventional education, or it may increase revenue to state oil and gas development on student governments that is then redistributed to achievement in Texas stems from a pull in the school districts or to school funds. Additional labor market that led to a decline in teacher revenue from one source, however, does not quality, Marchand and Weber also found mean greater overall school revenue. In fact, evidence that the boom decreased overall an increase in funds for school districts student performance because districts chose coming from a local severance tax, for not to spend revenue windfalls from the boom example, may crowd out revenue from federal on areas that improve student performance, or state sources (Gordon 2004; Dahlberg et al. such as maintaining and recruiting qualified 2008; Litschig and Morrison 2013).

www.rff.org | 9 Resources for the Future | Zachary and Ratledge teachers. To put it simply, how schools spend unconventional oil and gas development on additional revenues matters. The authors note education finance (see overview of trends that resource-rich districts in Texas often depicted in Table 3). The study found that, on responded to expanded tax bases by lowering average, North Dakota boom districts received tax rates and/or allocating additional funds to $1,212 fewer dollars in total state revenue per capital projects such as new football fields or pupil than non-boom districts during the gymnasiums rather than to educational treatment period captured in the study, and yet expenditures such as increasing teacher pay. capital spending per pupil rose. The region Marchand and Weber find that “unless experienced significant increases in student funding is allocated disproportionately to populations during the boom and needed to districts where the production occurs, and is build new to meet the growth in used to improve teacher quality, rising enrollment. On the other hand, the Marcellus may reduce student performance as districts region saw per-pupil expenditures rise—a struggle to retain teachers” (2015, 41). On finding supported by the relative decline in average, the authors estimate that a 10 percent student populations (discussed above) in increase in non- spending is associated Marcellus districts and the increase in with a decrease in passing rates for state revenue. exams of 1 to 2 percentage points. Substantial evidence from the education In a second paper, Weber et al. (2016) literature shows that increased funding can conducted a statistical analysis in Texas using lead to improved student outcomes. In a values as a proxy for changes in the comprehensive of peer-reviewed oil and gas property tax base, finding that quantitative analyses on the impact of money increased shale development caused a in education, Baker (2016) concluded that per- substantial increase in the property tax base, pupil spending is positively associated with and subsequently increased school revenues improved or higher student outcomes. and expenditures per student in the Barnett Jackson, Johnson, and Persico (2015) found shale region. Due to large variation in oil and that a “10 percent increase in per-pupil gas taxation and education funding policies spending each year for all twelve years of across states, these findings only apply to public school leads to 0.27 more completed Texas and cannot be generalized to other years of education, 7.25 percent higher wages, states. and a 3.67 percentage-point reduction in the annual incidence of adult ” (3). Ratledge and Zachary (2017) conducted statistical analysis assessing the impacts of

TABLE 3. IMPACTS OF UNCONVENTIONAL OIL AND GAS DEVELOPMENT BOOM ON PUBLIC EDUCATION FINANCE

Total Local State Education Capital revenue revenue revenue spending spending per pupil per pupil per pupil per pupil per pupil Marcellus  +   + Pennsylvania + − + + + Ohio +  + + + West Virginia     − North Dakota  −    Colorado (except Piceance) − − − − + Source: Ratledge and Zachary (2017). Note: Arrows imply statistical significance. + /− signs imply a trend direction but no statistical significance.

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How schools spend additional funds commit to permanent annual costs such as matter: even if school spending increases, for increases to teacher salaries. example, it may not student The literature assessing education finance achievement (Baker 2016; Sander 1993, 1999; and unconventional oil and gas development Chaudhary 2009; Cobb-Clark and Jha 2013). specifically reveals a variety of findings that In their longitudinal study of school finance overall show substantial volatility in local reforms across the , Jackson, funds as a result of increased drilling. Studies Johnson and Persico (2015) found that focusing on specific regions are better able to exogenous school spending increases were reveal nuance in the relationship between associated with significant gains in metrics education finance and unconventional oil and used to measure school quality, such as gas development. Funding per student and the reductions in student-teacher ratios and resulting impacts on education vary based on increases in teacher salaries. Local the ability for districts to tax oil and gas based governments can treat tax revenue differently. on production, how these taxes interact with As Marchand and Weber (2015) explain, state education funding formulas, local without guidance in place to help schools pressures on how to spend revenue windfalls evaluate their spending options, combined and the spending and saving restrictions for with pressures on local policymakers from school districts within a state. constituents to use revenue windfalls to decrease local tax rates, school districts may 5. Labor Market find themselves unprepared to use the money in ways targeted to improve educational 5.1. Labor Market Pull on Educational outcomes in the long run. Attainment In addition, substantial revenue coming in Only a handful of studies attempt to relatively rapidly due to resource booms leads measure statistically the effect of oil and gas to volatility and unpredictability in school development on educational attainment, finances that further impacts the ability of meaning the highest degree of education an districts to strategically use increased funding individual completes. As a whole, these few to improve student outcomes. This issue holds studies find conflicting results. Furthermore, especially true when school districts are data limitations limit the robustness of any unable to save excess funds without risking study’s findings. A key issue is that most of corresponding drops to other revenue sources these studies relied on the American as a result. Recent research from Davis, Community Survey (ACS) to measure Vedder, and Stone (2016) suggests the dropouts or high school completions on an importance of the predictability of funding on individual basis (Weber 2014; Rickman, student achievement. Ratledge and Zachary Wang, and Winters 2017; Cascio and Narayan (2017) found that stress from financial 2015). The ACS only produces three- or five- uncertainty was also acute and a commonly year estimates for geographic areas with cited concern for educators in boom districts populations under 65,000. Because many of across states in the Marcellus region the communities impacted by the shale oil and (Pennsylvania, West Virginia, and Ohio), the gas boom are quite rural and have small Bakken region (North Dakota and Montana), populations, this limitation makes it hard to as well as in Colorado. In particular, isolate the impacts of a sudden increase in administrators across all states said that unconventional oil and gas development on without knowing if increased revenues would school dropouts, completions, or graduation continue in the future, districts could not rates. These large gaps in the time series and

www.rff.org | 11 Resources for the Future | Zachary and Ratledge the use of multi-year averages for less- some education. Looking at the populated regions make these impacts educational attainment of the adult population inherently difficult to study quantitatively. in communities during a boom, however, does However, with no other dataset including not eliminate concerns regarding long-term educational attainment metrics for individuals impacts of educational attainment due to across states, ACS data do have some value potential impacts on public education that even though results should be interpreted with younger students might have experienced. a grain of . Using ACS data to assess the effect of As part of RFF’s research initiative on the unconventional oil and gas development on Community Impacts of Shale Gas and Oil dropout rates across all shale reserve regions Development (of which this report is a part), (including 30 states), Cascio and Narayan researchers used data regarding high school (2015) estimate that the boom caused the completion and dropouts from the National gap in high school dropout rates Center for Education Statistics (NCES), among 17- and 18-year-olds to widen by 11 although the data are not available on the percent between 2000 and 2013. The study, individual level. Problematically, as the however, does not differentiate results across research was underway, NCES retracted these states and instead pools data for regions above data due to issues regarding quality and shale reserves across the entire United States. inconsistent definitions across states, leading While this contributes to our understanding of the RFF research team to try instead to collect the issue, such a generalization may be a unique data on dropouts and completions problematic for interpreting the results from state resources. Ratledge and Zachary considering studies such as Ratledge and (2017), however, also found the consistency Zachary (2017) find a large amount of of definitions (even within one state across heterogeneity across states. years) to be inadequate for employing their With workers and their families often statistical analysis. moving in and out of these areas for only short Past resource development booms resulted periods of time during boom stages of in a decrease in school enrollment during a unconventional oil and gas development, boom due to a low-skilled labor bias researchers must employ additional methods associated with the majority of industry to isolate the impact on pre-boom residents of positions, although studies did not necessarily the communities. Examining ACS data from find a decrease in ultimate educational 2006 to 2013 for 18- to 24-year-olds, attainment (Black et al. 2005; Emery et al. Rickman, Wang, and Winters (2017) reported 2012). Weber (2014) was the first to use ACS significant reductions in both high school and data to assess the impacts of the recent boom college attainment for populations living in in unconventional oil and gas development on the studied areas prior to the boom in education outcomes and did not find Montana, North Dakota, and West Virginia. statistically significant evidence that increased The authors estimated that unconventional oil shale gas production in nonmetropolitan and gas development in Montana reduced high counties across Arkansas, Louisiana, Texas, school attainment (defined as obtaining a high and Oklahoma contributed to lower school or GED ) by 6 percentage educational attainment of the resident adult points. Furthermore, the study estimates that it population. Rather, the study found that shale resulted in a decrease in Montana’s college gas production increased the share of the attainment (including individuals who population with a high school degree and attended and did not necessarily graduate) of 4

www.rff.org | 12 Resources for the Future | Zachary and Ratledge percentage points. In addition, Rickman, negatively impacts schools not only by Wang, and Winters (2017) found a decrease in increasing teacher turnover, but also by both high school and college attainment of lowering the average years of teacher over 5 percentage points in North Dakota, as . Specifically, Marchand and well as a reduction in high school and college Weber (2015) estimate that a 10 percent attainment of 2.6 percentage points and 5.5 increase in the wage gap for a district in Texas percentage points, respectively, in West resulted in an increase in the number of Virginia. inexperienced teachers (defined as having less than five years of experience) of 2–3.5 Because ACS is the only dataset used to percentage points. assess educational attainment across states, some studies that analyze specific states or In comparison, Ratledge and Zachary differentiate across states in their analysis (2017) did not report any notable concern attempt to use state-provided data when about teacher attrition due to the boom from available—but state administrative data often their interviews in districts across the use definitions and reporting guidelines that Marcellus region. Educators across the differ both from state to state and across years. Bakken region, however, noted severe For Pennsylvania, Schafft, Kotok, and Biddle difficulty with teacher and (2014) found negligible changes in dropout retention in general for such rural districts. rates overall in the top four producing Adding to the stress on teachers, reports of counties. Looking at state data covering all of rapid student turnover increased teacher Pennsylvania’s non-urban districts, Ratledge burnout. Teachers in boom districts in western and Zachary (2017) found no statistically states also expressed having problems due to significant differences in male, female, or total high costs of living. In interviews with dropout rates between boom and non-boom educational professionals across all six states districts. involved in their study (Colorado, Pennsylvania, West Virginia, Ohio, North 5.2. Labor Market Pull on Education Dakota, and Montana), Ratledge and Zachary Professionals (2017) heard repeatedly that bus drivers were Marchand and Weber (2015) focus on the the only common school-related type of impacts in Texas of the boom in professional to leave the education system unconventional oil and gas development on during the boom for work in the industry, student achievement through the labor market where commercially licensed drivers could pull of education staff out of schools in order earn substantially more (note, however, that to work for the industry. They found that an this aspect was not quantitatively studied). increase in the wage gap between public The impacts of unconventional oil and gas sector teaching positions and private sector development on the labor market for both jobs, such as positions related to the shale teachers and students remain inconclusive energy industry boom, impacted the labor from a review of the existing literature. Two market by pulling teachers out of public of the main studies to date that attempt to schools. They also found that unconventional measure the statistical effect of oil and gas development slightly decreased the unconventional oil and gas development on percentage of students passing state exams student educational attainment found a and that this impact primarily stemmed from a decrease in educational attainment (Cascio pull in the labor market that led to a decline in and Narayan 2015; Rickman, Wang, and teacher quality. The labor market pull Winters 2017). However, due to the

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heterogeneity of many impacts across future examination of long-term impacts on different plays and states, studies examining student achievement should continue. In the impacts on boom districts within states particular, issues such as classroom separately are more telling. In addition, ACS congestion and qualitative reports of high data limitations, especially for rural areas, rates of both student and teacher turnover in limit the robustness of any of these studies’ western rural districts in states such as North statistical findings. While the only study to Dakota and Montana suggest a potential for date that has attempted to measure the impact lower educational achievement in the long run of the boom in unconventional oil and gas for these students. To draw conclusions about development on teacher turnover, focused the net effect of unconventional oil and gas solely on Texas (Marchand and Weber 2015). development on educational outcomes as well Ratledge and Zachary’s (2017) qualitative as inform decisions to help mitigate or harness findings for other states again suggests the potential negative and positive impacts on significant heterogeneity in the impacts of public education, policymakers need more booms on different states. To draw research and analysis that employ a conclusions about the impacts of the combination of statistical (including state- unconventional oil and gas development boom provided data) and qualitative methods. on both educational attainment and teacher turnover, better data are needed to facilitate robust analysis of individual states.

5. Conclusion To date, only a handful of studies specifically examine the influence of unconventional oil and gas development on public education. This report reviews the existing literature that examines three main channels—student population, school finances, and the labor market—through which changes in outcomes may materialize and the possible pathways that link unconventional oil and gas development booms to student achievement in local communities. Issues with education data make legitimate comparisons across states, regions, and years difficult. Existing literature that pools data across many plays masks the impacts that clearly vary substantially across states; research that differentiates between individual states appears far more telling. Although the existing literature does not raise significant concern for school districts in many high-producing unconventional oil and gas states regarding lower educational attainment or short-term impacts from the recent boom on student performance, the

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