Should President Biden follow through on his campaign promise to grant local school districts veto power over the creation of new charter schools within their borders, on the assumption that their expansion harms traditional public schools?
Anyone consulting the available research on the link between charter competition and student achievement will find little evidence to support such a shift. Indeed, multiple studies, including a recent analysis from Fordham, have found that charter expansion improves student outcomes at nearby district schools—or, at worst, does no harm. Yet the debate over charters’ fiscal effects is less studied and more complex. Opponents of charters contend that they drain district coffers because revenues decline as students leave while fixed costs remain largely the same, while proponents argue that it is charters that are denied essential funding.
So where does the truth lie?
To find out, we turned to Mark Weber of New Jersey Policy Perspective—@JerseyJazzman, to his Twitter followers—whose work on this topic is well known, to conduct our newest study, Robbers or Victims? Charter Schools and District Finances. Veterans of the charter wars will recognize the surprising nature of this partnership, as Mark’s skepticism of charters roughly mirrors Fordham’s longstanding convictions regarding their efficacy. However, for the purposes of the project, all parties agreed to sheath their swords (and their Twitter handles).
Because much of our knowledge of charters’ fiscal effects is based on studies from a handful of Rust Belt states, a primary goal of our project was to broaden the conversation by including as many states as possible. However, because every state takes a distinctive approach to authorizing and funding its charters, we decided against producing national estimates, choosing instead to generate separate estimates for each of the twenty-one states that met our inclusion criteria. Similarly, because both districts and states are likely to adjust their behavior as charters take root and grow, we included all eighteen years for which plausibly comparable data on charter locations and districts finances are available. And to simplify this complicated analysis, we asked Weber to focus on independent charter schools—that is, those not authorized by traditional school districts—as these are the ones most critics find worrisome.
The results are summarized in three findings.
- In most states, an increase in the percentage of students attending independent charter schools was associated with a significant increase in host districts’ total revenue and spending per pupil.
- In most states, an increase in the percentage of students attending independent charter schools was associated with an increase in host districts’ local revenue per pupil, and in some states, it was also associated with an increase in state and/or federal revenue per pupil.
- In most states, an increase in the percentage of students attending independent charter schools was associated with an increase in host districts’ per-pupil spending on support services, and in some states, it was also associated with an increase in instructional spending per pupil.
Identifying policies that could explain these patterns isn’t difficult, particularly on the revenue side. After all, numerous studies have found that charters’ de facto or de jure exclusion from local funding sources is the single biggest driver of district-charter inequities, and in states like Arizona and Idaho, charters still lack any access to local funding. So obviously, charter-driven enrollment losses are likely to increase host districts’ local funding per pupil insofar as they mean that districts are serving fewer students with roughly the same amount of locally generated money.
Furthermore, most states have some form of “hold-harmless” policy that directs more money to districts with declining enrollments, plus policies that funnel additional dollars to smaller school districts. And some of the states with the largest increases in state funding per pupil, such as Massachusetts and New York, also have policies that compensate districts specifically for charter-driven enrollment losses.
Finally, increases in host districts’ federal funding per pupil could be attributable to the fact that all four Title I programs also have time-limited hold-harmless provisions or issues with the distribution of Title I funds between traditional districts and charters.
But what about spending? One potential interpretation of the increases in support spending, which includes things like building maintenance and administration, is that charter-driven enrollment declines are indeed increasing host districts’ fixed costs on a per-pupil basis. However, in our view, though not necessarily in Weber’s, the simplest explanation for the observed increases in host districts’ spending per pupil is that their revenues per pupil are increasing. After all, traditional school districts, like all government agencies, have a strong incentive to spend whatever monies they receive, rather than signal that policymakers may be giving them more money than they require.
Either way, one piece of undeniably good news is that host districts’ instructional spending per pupil remained neutral to positive in all twenty-one states, even in the face of charter expansion. Notably, this key finding is consistent with the growing body of research that suggests charter competition has a neutral-to-positive effect on the achievement of students in traditional public schools.
Now someone needs to tell President Biden.
