The Productivity of Public Charter Schools

EDITOR’S NOTE: This short review originally ran in Education Gadfly Weekly on July 23, 2014. Here we present the original review with an added Ohio perspective.

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 across the United States 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. Meanwhile, Buckeye State charters are less cost effective than national charters, though still more so than their district counterparts within the state. Ohio charters averaged nine additional NAEP points in both reading and math per $1,000 in funding relative to comparable districts. 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 nationwide 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. Ohio’s charters lagged behind the national charter average in delivering lifetime expected ROI: just 2 percent for a student attending a charter for a single year and 13 percent for a student spending six-and-a-half years in a charter. (Again, it should be noted that Ohio charters’ average ROI is greater than if students had stayed in their district school.) It is likely that the higher productivity rests on the fact that charters are receiving 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 the Senior Vice President for Research at the Thomas B. Fordham Institute.