The Productivity of Public Charter Schools

This new report from the University of Arkansas compares the productivity of public charter schools and district schools, both in terms of cost effectiveness and return on investment (ROI). For the cost-effectiveness analysis, the authors consider how many test-score points students gain on the 2010–11 NAEP for each $1,000 invested; to measure ROI, the authors used, among other data, student-achievement results from CREDO’s national charter school study (that matched students via a “virtual twin” methodology). The key finding: For every $1,000 invested, charter students earned a weighted average of an additional seventeen points in math and sixteen additional points in reading on NAEP, compared to traditional district students, controlling for student characteristics such as poverty and special-education status. This translates into charters nationwide being 40 percent more cost effective. The researchers calculate ROI by converting the learning gains over time by students in charter and traditional sectors into an estimate of the economic returns over a lifetime and comparing those returns to the revenue amount invested in their education. Using Eric Hanushek’s existing estimates on lifetime earnings and productivity, they find that public charter schools delivered a 3 percent increase in lifetime economic gains for a student who attends a charter for one year and a 19 percent increase for a student who attends a charter school for half of their K–12 education. It is likely that the higher productivity rests on the fact that charters receive less funding and are thus more disciplined in using those funds. If they were funded equally to the district sector, would they continue to be more productive?

SOURCE: Patrick J. Wolf, et al., The Productivity of Public Charter Schools (Fayetteville, AR: School Choice Demonstration Project, University of Arkansas, July 2014).

Amber M. Northern, Ph.D.
Amber M. Northern, Ph.D. is a Senior Vice President for Research at the Thomas B. Fordham Institute