Education funding is sticky. Once dollars are sent to a public school or school system, they tend to stay there. That is a fundamental lesson I have learned from co-authoring nine school funding studies, with a tenth one released this week.
Prime examples of the stickiness of school funding include local education dollars and “phantom funding.” Local school funding, primarily raised through property taxes, tends to go exclusively to district-run public schools, even when public charter schools expand in a community. Local funding is a big deal, composing an average of 45 percent of total education revenue.
“Phantom funding” is the common practice of funding public schools based on their prior year enrollment, and even sending some portion of a given student’s per-pupil funding to their former public school district two or three years after the student has left. This sends education resources to the place where students used to be, not to the schools where they are now. Phantom funding financially rewards public school systems that are losing enrollment while punishing systems, including many public charter schools, that are gaining in popularity.
Given the stickiness of education resources, we might expect that per-pupil spending in district-run public schools would tend to increase when public charter schools open or expand nearby. We would be right.
As Mark Weber demonstrates in the Fordham Institute report Robbers or Victims? Charter Schools and District Finances, in fifteen of the twenty-one states studied, charter school enrollment growth has been followed by increased funding of students in district-run schools. As Weber puts it, “In most states with nontrivial charter sectors, there is a statistically significant [positive] relationship between independent charter market share and host school districts’ revenue and spending per pupil.” Based on these data, people who support increased funding for public school students should also support expanded charter schooling.
Weber examines the effect of increases in the proportion of K–12 students enrolled in charter schools from 2000 to 2017 on district-run public school revenues and expenditures. His sample includes all states that contained a critical mass of districts with independently authorized public charter schools in their area by the end of the study period. He uses statistical regression models to control for the consistent peculiarities of individual districts, time trends, and a handful of variables that affect school funding and spending. Weber admits that his analytic method only identifies correlations between charter school market share and district revenue and expenditures. Those relationships are descriptive, not necessarily causal, but descriptive studies of these questions are the best we can do under the circumstances.
The results are broadly consistent with a competitive response by districts to pressure from charter schools, as market theory would predict. The growth of public charter schools in an area decreases the monopoly power of local school districts, pressuring them to respond in constructive ways or risk losing customers. Weber’s research indicates that most districts respond by increasing spending on student support services, while some of them also boost spending on classroom instruction. If a public school wants to please parents and retain students, focusing more resources on instruction and student supports is a logical place to start.
These findings are problematic for the Biden administration. The new president has promised to increase federal resources for district-run public schools through more Covid-19 emergency funding and by halting the growth of public charter schools. While more relief dollars appear to be likely, the growth of public charter schools increases per-pupil funding in district schools. By tamping down charter school enrollments, the Biden administration would reduce the resources available to students in district-run public schools, according to Weber’s findings. The Biden administration’s strategy of discouraging charter school growth would undermine the administration’s goal of increasing per-pupil funding in district-run public schools.
Average student learning loss due to the pandemic is likely to be substantial. If traditional public schools are to receive large tranches of emergency aid to help students catch up in their learning, then public charter schools should share equally in those funds, on a per-pupil basis. Students should not be valued less simply due to the type of public school they attend.
Moreover, the data indicate that more charter school choice for parents tends to result in more resources for district-run public schools. The school districts tend to use the extra per-pupil revenue to boost spending on student supports and instruction. Everybody gets what they want. Why mess with that?
