Charter school effects on district spending and achievement

Among the most frequently heard concerns around charter schools is that they drain money from traditional districts, potentially harming students who stay behind. Yet another school of thought theorizes that charters encourage district improvements by injecting competition into a largely monopolistic system. A new study conducted by Matthew Ridley and Camille Terrier puts both these claims to the test using data from Massachusetts, a state that recently held a hotly debated and ultimately unsuccessful referendum on expanding charters.

To examine charters’ effects on district spending and achievement, the researchers rely on a 2011 reform that allowed charter school expansion in underperforming Massachusetts districts. They identify nine “expanding” districts, including Boston, where the charter share increased markedly post-reform, and then compare their spending and test-score growth in math and English language arts (ELA) to “non-expanding” districts whose charter share remained flat. The analysts use various statistical techniques, including a “synthetic control method,” to estimate the impacts of charter expansion in the years after reform (2011–12 through 2014–15).

In terms of fiscal impact, their study finds that charter expansions increased districts’ per-pupil expenditures. Post-reform, total per-pupil spending in expanding districts rose at a faster clip than non-expanding ones, and by 2015 their expenditures were 4.8 percent higher. When broken down by expenditure type, the analysts find that fixed-cost expenditures, like maintenance and interest, increased by 6.2 percent and instructional expenses rose by 7.2 percent relative to the control group. Yet support service expenses slipped in expanding districts, suggesting that districts responded to greater competition by reallocating resources from support to instructional activities.

There is, however, an important policy twist to these financial results. During this period, Bay State districts with increasing charter enrollments received state reimbursements that compensated for the financial losses associated with transfers, explaining much of the rising expenditures. Yet this is also a costly approach that funds districts for students not in their classrooms. And it may be an unsustainable one as well; as the authors note, in more recent years—starting in FY 2015 to 2017—Massachusetts has cut its reimbursement rates. Nevertheless, whether the fiscal results of this study apply in states without reimbursement policies remains less certain.

Turning to the effects on student achievement, Ridley and Terrier conclude that charter expansions led to modest improvements among district pupils. Their analysis reveals achievement gains in both math and ELA among the expanding districts relative to those whose charter shares did not increase. Specifically, by 2015, expanding districts saw achievement gains of 0.03 standard deviations in math and 0.02 in ELA—what Ridley and Terrier call a “small positive effect.” They note that these gains are similar to those uncovered in a few other charter studies that also found mild but positive competitive effects.

This study challenges the notion that charters damage the well-established district school system. And it’s a pity that critics continue to push this canard to coax voters into opposing efforts to expand charters. (Can we redo the Massachusetts referendum in light of this study?) Instead, an accumulating body of evidence indicates that, through healthy competition—and collaboration as well—the expansion of charter schools can indeed contribute to a rising tide that lifts all boats.

SOURCE: Matthew Ridley and Camille Terrier, Fiscal and Education Spillovers from Charter School Expansion, School Effectiveness & Inequality Initiative (2018).

 
 
Aaron Churchill
Aaron Churchill is the Ohio Research Director of the Thomas B. Fordham Institute.