Affordable housing and Title I investment in schools facing neighborhood change

Abstract This article leverages the timing and location of Low‐Income Housing Tax Credit (LIHTC) properties to study the impact of affordable housing on local public schools. The research design links new developments from 2000–2020 to campus‐level demographics, spending levels, teacher counts, and class sizes in a difference‐in‐differences framework. Through rental unit take‐up, LIHTC increases the enrollment of students that income‐qualify for school lunch subsidies, with minimal effects on racial composition. Because Federal Title 1 funding is linked to student income, I study heterogeneity in the effect of LIHTC on school spending based on Title 1 status. Schools that opt into Title 1 status when LIHTC arrives experience spending increases, teacher headcount increases, and reductions in class sizes. By contrast, LIHTC schools already designated as Title 1 experience class size increases as per‐pupil spending declines. Because most US schools are listed as Title 1, the level of funding for compensatory programming is the key policy lever for schools facing neighborhood change.