Last month, Fordham kicked off our new Think Again series with my colleague Adam Tyner’s appropriately skeptical take on the claim that standardized tests such as the SAT prevent minority students from accessing higher education.
Contrary to that widespread assumption, the implication of many local, state, and federal policies is that districts’ total revenues per pupil increase when students leave for charter schools. For example, in thirty-seven of the forty-six states where charters exist, they are partially or entirely excluded from local funding sources such as bond levies. Similarly, many states have adopted “hold harmless” policies that temporarily shield school districts from the revenue declines that would otherwise be associated with declining enrollments. (Federal Title I programs include similar previsions.) Consequently, districts’ total revenues per pupil should increase insofar as students exit the system but the associated tax dollars stay put.
Importantly, some research suggests that the presence of charters has reduced residential property values and, by extension, local revenues per pupil in Rust Belt states such as Michigan, Ohio, and Pennsylvania. Yet other studies paint a more positive picture. For example, a recent Fordham study that focused on “independent” charters—that is, those not authorized by the “host” school district—found null or positive effects on districts’ total revenues per pupil in most states. In other words, at least on average, charters may have little effect on districts’ total revenues per pupil in either direction.
Meanwhile, research on charters’ effect on districts’ instructional spending per pupil is mixed. For example, studies of Ohio, Pennsylvania, and California all found declines in districts’ instructional spending when charters expanded, both in absolute terms and as a share of total spending. Yet in Massachusetts and New York City, instructional spending seems to have increased. This matters, given charter opponents’ claims that their expansion forces districts to accept larger class sizes or lower teacher salaries.
Finally, research on charters schools’ academic impacts on district schools has become increasingly positive in recent years. For example, at least a dozen studies have found positive effects on district students’ achievement, while just three have found negative effects.
Ironically, the logical implication of these findings is that, insofar as charters are marginally reducing districts’ total revenues, they are also making them more efficient. And conversely, increases in district students’ achievement aren’t necessarily evidence of greater efficiency insofar as districts reap a fiscal windfall.
Either way, districts that lose students to charter schools can and ultimately will adjust their behavior, much as they do in response to the inevitable changes in local demographics. In other words, the challenge for policymakers is managing whatever transition costs may be associated with moving to a more choice-based system in a way that is fair to students and taxpayers.
In general, insulating districts from the fiscal pressures associated with enrollment declines is the wrong way to approach that challenge. But when and where districts are granted some sort of grace period—that is, when policymakers allow their revenues per pupil to increase temporarily—the associated costs should be borne by the general public, not the marginalized children whose parents or guardians have chosen to send them to a public charter school.