The Education Gadfly Weekly

For those of us who have long pushed for charter schools to receive fair funding, progress has been slow, uneven, and hard-won. That’s why we at the Thomas B. Fordham Institute have spent decades documenting where the gaps remain largest.

More than twenty years ago, we published a landmark study, Charter School Funding: Inequity’s Next Frontier, which was then the most comprehensive state-by-state analysis of how public charter schools are funded and how their revenues compare with those of district-run schools. The gaps were striking: At the time, in the average state, the shortfall was $1,801, meaning charters got 78 cents on the dollar compared to similar district schools. The gap was largest in Missouri, where charters received $3,638 less per student.

In the years since, the Show Me State has preserved its reputation as one of the country’s worst offenders. So, we took notice when, in 2022, Missouri lawmakers surprised many observers by enacting a bill aimed at eliminating the longstanding funding gap between the state’s charter and traditional public schools.

On its face, HB 1552 looked like the largest funding shock in the history of the charter school movement. After all, by 2024–25, it had increased the total state and local revenues of Missouri charter schools—all of them located in Kansas City or St. Louis[1]—by nearly $4,000 per pupil. That’s enough to offset most of the roughly 25 percent funding gap they faced before the law took effect. Understandably, its passage was hailed by Missouri choice advocates as a “great relief for charter school students.”

Naturally, we at Fordham wanted to understand its effects on charter spending and achievement, so we turned to three scholars steeped in charter finance research to conduct our latest study, Moving Target: The Success and Failure of Missouri’s Charter School Funding Surge: Andrew Camp, senior research associate at the Annenberg Institute; Collin Hitt, executive director of the Policy Research in Education Center at St. Louis University; and David Griffith, national research director at Fordham.

Because of the number of moving pieces in recent years, including the addition of Elementary and Secondary School Emergency Relief (ESSER) funds, we weren’t sure what to expect. But the real-world story turned out to be more complicated than we imagined.

To be sure, HB 1552 seems to have made a difference for Missouri charters, with much of the new money devoted to additional teachers, more support staff, and/or raises for existing staff (in part resulting from improved teacher retention). And there is preliminary evidence that these additional resources have boosted charter students’ achievement in math (though not in English language arts).

But what complicates the narrative is that even the enormous infusion of new dollars provided by HB 1552 hasn’t led to funding parity because the underlying formula keeps recreating the very gap it’s meant to close.

As always, we encourage interested parties—in Missouri and beyond—to consult the full report for the gory details. But for those in a hurry, we urge attention to three points.

First, prior to HB 1552, Missouri charter schools received almost 30 percent less in total revenues per pupil than traditional public schools in the same city.

Kansas City charters received $7,065 (27 percent) less per pupil in 2021–22 while St. Louis charters received $8,146 (30 percent) less (Figure 1). As discussed in the report, neither excluding federal funding nor adjusting for student demographics has much effect on these figures, which are remarkably similar to the findings of our 2005 study.[2]

Figure 1. Prior to HB 1552, Missouri charter schools received almost 30 percent less revenue per pupil than traditional public schools in the same city.[3]

Second, despite providing charters with a large fiscal windfall, HB 1552 has mostly failed to close the district-charter funding gap.

A year after HB 1552 kicked in, its effects on its primary target—the gaps in state and local funding per pupil in Kansas City and St. Louis—were nearly invisible (Figure 2). As discussed in the report, that’s largely because district schools have been allowed to keep nearly all the local dollars they receive despite educating ever fewer students—plus the law creates a two-year lag, leaving charter funding perpetually chasing district funding rather than catching up to it.

While this might seem like a win-win—more money for all public schools in Kansas City and St. Louis!—it means that charters will continue to struggle to compete with traditional public schools with respect to teacher pay and other inputs. Plus, it’s surely not a win for taxpayers.

Figure 2. HB 1552 has mostly failed to close Missouri’s district-charter funding gap.[4]

Third, to no one’s surprise, HB 1552 is likely unsustainable in its current form.

In the authors’ median forecast—the midpoint of their projected outcomes—HB 1552 payments to Kansas City charters will increase from about $6,000 per pupil in 2025–26 to about $16,000 per pupil by 2030–31, a roughly 170 percent increase (Figure 3). Similarly, payments to St. Louis charters will increase from a little over $6,000 per pupil to roughly $11,000 per pupil.

Figure 3. HB 1552 payments per pupil are likely to keep growing, particularly in Kansas City.[5]

Panel A: Forecasts of HB 1552 revenue for Kansas City

Panel B: Forecasts of HB 1552 revenue for St. Louis

If you think about it, this makes sense. After all, when district enrollment falls but local revenues don’t, district funding per pupil rises. And the design of HB 1552 leaves the state responsible for making up the gap between what districts and charters receive without requiring districts to pitch in.

In the end, the state must make ever-larger payments to charters just to keep pace, creating an upward spiral that effectively subsidizes all public schools in just two charter-heavy cities while leaving taxpayers and students elsewhere in Missouri to bear more of the cost.

Yes, some of this was foreseeable, though the pace at which it’s occurring is a little surprising. No, Missouri isn’t the only jurisdiction with some version of this problem, though HB 1552’s design makes it easier to see.

So, what is to be done?

If you’re into prediction markets, the smart wager might be that Missouri will respond with yet another Rube Goldberg fix—one that trims the cost of HB 1552 while continuing to hold district schools harmless. But the forecasts above show where that sort of contraption-minded thinking leads.

So, before that becomes the new normal, policymakers in Missouri and other charter-heavy jurisdictions should do the obvious thing, which is also the fair thing: Ensure that local funding follows students to the public schools they actually attend, whether charter schools or district-operated schools. Otherwise, policymakers and charter schools will forever be chasing a moving target.

Attainment of industry-recognized credentials has soared across Ohio. Just 2.3 percent of students in the graduating class of 2014 earned credentials during high school, while 25.6 percent of the class of 2024 did so. These credentials include anything from basic training certificates in CPR or MS Word to full occupational licenses in welding or healthcare.

State policy is largely responsible for these skyrocketing numbers. Most notably, Ohio allows students to meet alternative graduation requirements through credentials—a strong incentive for schools to encourage credential attainment among students who are struggling to demonstrate competency in reading and math. Credentials are intended to signify students’ acquisition of technical skills and help them gain an edge in the labor market, not simply be a workaround to a diploma.

Without serious quality controls at the state level, the number of graduation-eligible credentials has ballooned to over 700. With so many approved credentials, Ohio schools have discovered the easiest ones to attain and used them to get students to the finish line (and inflate their graduation rates as well as report card ratings).

Understanding the harms of giving students diplomas based on dubious credentials, lawmakers directed the Ohio Department of Education and Workforce (DEW) to review and overhaul the list of credentials applicable for graduation. Last month, the agency unveiled a leaner and more focused list that—if policymakers can hold the line—will encourage the attainment of credentials that are both valued by employers and boost students’ earnings.[1]

Here’s what to know about the reboot.

A new data-driven valuation framework

The previous framework, which linked each credential to a point value between one and 12, did acknowledge that credentials have markedly differing values in the workplace. But points were largely assigned based on gut instinct and anecdote rather than solid, data-driven analysis.

The new system is different. It ties a credential’s value to a slew of labor market and higher education data. As Table 1 shows, data elements are organized around four dimensions that indicate whether the credential opens doors to high-wage, high-demand jobs. Greater emphasis is given to “career outcomes” data—e.g., the earnings and employment rates of Ohio students who earned the credential—and to “occupational demand,” which is based on the labor-market trends of the jobs linked to a credential. Employer demand for the credential itself, as measured by appearances in job postings, and postsecondary data round out the framework. Results from the four dimensions are combined to produce an overall score ranging from 0 to 100. These results inform the approval decisions made by a state committee that is responsible for developing the list of graduation-eligible credentials. The scores, however, are not ultimately decisive, as the committee makes the final call.

Table 1: Overview of Ohio’s new credential-evaluation system

A shorter list of graduation-eligible credentials

Informed by the results from the valuation framework, Ohio’s credentials committee approved a new list of eligible credentials. Under this system, they are deemed either: (1) standalones—a credential that meets the graduation marker by itself, or (2) bundles—a group of credentials that in combination meet the marker.[2] This bifurcation should be familiar to Ohio schools, but the lists are considerably shorter. On the standalone side, the number of state-approved credentials falls from 164 to 70. Most—though not all—of these standalones are linked to careers in construction, information technology, healthcare, manufacturing, and transportation.

An even more important culling occurred on the bundling side. Previously, struggling students could mix and match several low-level credentials for graduation purposes, with countless combinations possible. That is no longer the case. Moving forward, state policymakers will approve defined bundles that may be applied toward graduation. Just 21 such bundles—mainly tied to construction, healthcare, and manufacturing—made the cut. Bottom line: The new system scales back the number of graduation-eligible credentials from a whopping 738 to just 126.  

Table 2: Comparison of graduation-eligible credential lists

What’s off the list?

The credentials that schools have commonly used as graduation shortcuts were not approved under the new system. Rightly so, as Ohio students possessing these credentials—table 3 displays five of them—do not come anywhere close to earning a living wage of roughly $44,000 per year. In all five cases, the median annual income of students who attained these credentials fell between $25,000 and $30,000, or barely above the annual salary of a worker being paid minimum wage. They also lagged the income associated with the typical credential earned by Ohio students ($30,812).[3] Though income is only one element in the overall system, the poor wage outcomes associated with these credentials helped keep them off the list. Of note, the committee did approve two frequently earned certificates—CPR First Aid and OSHA-10 safety training—but their use for graduation purposes is now limited to just six bundles (one in healthcare and five in manufacturing). In the previous system, they could apply as part of a bundle across all career fields, which contributed to their widespread use.

Table 3: Median post-high-school incomes of Ohio students who earned selected credentials

The challenge moving forward: Maintaining a clean list

The new data-driven system promotes more accurate credential valuations and greater transparency, as the public can see for themselves the underlying data for each credential. It also promises a system that is more immune to low-level credentials. In future review cycles—the next has already begun—vendors, industry groups, and schools seeking inclusion of a credential will need to demonstrate value based on objective workforce data.

But the list of credentials could balloon yet again if policymakers are not careful. Without a data-driven standard for approval—i.e., a minimum cut score—the credentials committee has wiggle room to deviate from the valuation framework. Vendors and industry groups with financial interests and schools looking to maintain sky-high graduation rates could urge the committee to approve their favored credential or pressure it to set a low bar. In fact, even in the midst of the just-completed overhaul, the committee accepted several debatable credentials as standalones. They include three cosmetology licenses that are linked to low pay (below $30,000) and are not likely stepping stones to higher-paying careers.[4] While these credentials are not necessarily “gameable”—they do require substantial time commitments—their approval raises questions about whether committee members will hold the line when other low-payoff credentials are put forward. If cosmetology is in, what about others?

* * *

Ohio policymakers deserve credit for recognizing the problems with pushing meaningless credentials onto students and creating a more empirically based framework to value them. With a tightened list, Ohio will begin incentivizing schools to offer stronger career preparation to the students most likely to join the workforce directly after high school. Policymakers, however, must remain vigilant, as all this work could easily go for naught if the political pressure to water down the credentials list catches up to Ohio yet again. 

Defense Secretary Pete Hegseth has called the CLT the nation’s new “gold standard.” USA Today’s blockbuster investigation, published today, suggests a more accurate label would be “boondoggle.” In Florida, the state that has done more than any other to mainstream the CLT, the exam isn’t primarily functioning as a college admissions test at all. It’s a graduation escape hatch for students who couldn’t clear the state’s own algebra and reading bars, or post qualifying ACT/SAT scores. That distinction matters enormously, and it’s one policymakers in a growing number of states are ignoring at their students’ peril.

Here’s the mechanism, as USA Today lays it out: since 2023, Florida high schoolers who fail the state’s reading and algebra graduation exams can substitute a CLT score instead. At least nine districts now credit the CLT with lifting graduation rates. Duval County’s rate climbed from 87 percent to just over 94 percent between 2022–23 and 2024–25, and Superintendent Christopher Bernier (pictured above) attributes that gain directly to the CLT. In Hillsborough County, roughly 2,500 members of the 2025 graduating class, about one in six, used the CLT to satisfy their math requirement.

The reason this works as a graduation strategy is buried in the math content itself. Five math education experts reviewed the CLT, ACT, and SAT math sections for the USA Today investigation and found the CLT skews heavily toward pre-algebra and middle-school-level content: about 25 percent of the CLT’s questions are in this realm compared with 13 percent on the ACT and just 4 percent on the SAT. The SAT leans hardest into algebra; the ACT covers trigonometry, statistics, and precalculus. The CLT is heavy on geometry, ratios, division, and pattern recognition, skills generally covered in elementary and middle school. The College Board’s own executive vice president over the SAT, Priscilla Rodriguez, put it bluntly: the CLT math section is “not even possible to compare” with the SAT because it’s so different. “The layman’s term would be ‘easier,’” she said.

That lowering of the bar is what seems to be driving CLT adoption. Leesa Crescenzi, former head of Hillsborough’s math department, described a “beat the test” strategy circulating among students: answer the easy items honestly, then bubble the same letter for the rest. “Nine times out of 10,” she said, that strategy produced a passing score. “We’re saying, ‘Oh yay, they got it,’ but we know they didn’t.” That is not a measurement problem. That’s a massive validity failure at the core of what the instrument claims to assess.

This should alarm anyone who cares about high school graduation standards, not just testing wonks. The entire premise of using a standardized assessment as a graduation gate is that it verifies a floor of competency the diploma is supposed to represent. When a state quietly swaps in an instrument with a lower ceiling of difficulty and calls the resulting graduation-rate bump a success story, it isn’t closing an achievement gap, it’s lowering the bar for success.

Source: Classic Learning Initiative via The Washington Post.

The predictive validity question i.e., whether and how CLT performance is correlated with postsecondary outcomes, is even more damning, because it’s the one piece of evidence that should exist before a test is scaled to hundreds of thousands of students and paid for by tens of millions of taxpayer dollars. Florida districts have signed at least $2.8 million in CLT contracts since 2023, and Arkansas has committed $12 million over four years. Yet no Florida university could produce outcome data comparing CLT-admitted students with ACT/SAT-admitted students three years in.

The CLT’s own vendor told USA Today it tracks where scores are sent, not whether students are admitted, enrolled, or persist in postsecondary education. Iowa’s Board of Regents reviewed the available research and concluded there is “no evidence to support the predictive efficacy of the CLT” and recommended against using it for automatic admission. The College Board’s analysis echoes this conclusion, noting the CLT’s concordance study “does not meet industry standards” for comparing scores across exams. Arizona State’s Audrey Amrein-Beardsley called rigor claims built on unrepresentative samples an “overstatement” inconsistent with professional testing standards.

None of this is happening in a vacuum. The CLT’s expansion into Indiana, Georgia, North Carolina, Arkansas, Texas, and the U.S. service academies is explicitly bundled with a broader conservative education agenda, from DEI bans to Western-canon civics centers. That’s a separate political discussion. And it’s an entirely different debate from whether the CLT is psychometrically sound enough to gatekeep diplomas, scholarships, and admissions. Right now, the evidence says it isn’t.

Hillsborough board member Nadia Combs captured the real stakes: students who think they’re ready, who aren’t, discover the gap “when they get a job or they go to college.” An accountability system that manufactures that discovery after graduation instead of before it isn’t rigorous. It’s a prescription for failure that we’re handing to the kids, families, higher education institutions, and employers who are being told to trust it.

Editor’s note: This was first published on the author’s Substack,

Historically, students who enroll in community colleges unprepared for college-level work have been required to take prerequisite courses to boost their math and English skills before they’re permitted to enroll in credit bearing courses. This unexpected burden of additional time and money often leads large numbers of students to drop out prior to earning a degree.

To combat widespread attrition, many state education authorities began developing co-requisite remediation models, where underprepared students are simultaneously enrolled in credit-bearing courses alongside the non-credit courses designed to boost their reading and math skills. Research from Tennessee and elsewhere showed some success in speeding students up, lowering costs, and increasing persistence in the short term, but dropout numbers ended up as bad or worse in the longer term. A new working paper from CALDER looks at Kentucky’s recent efforts to help remedial students and finds a small ray of hope among their short term outcomes, with long term impacts still unclear.

The Bluegrass State’s 16 community colleges (collectively known as the Kentucky Community and Technical College System, or KCTCS) long followed the traditional prerequisite remediation process described above for all enrollees who did not meet statewide college readiness standards—typically based on a single ACT cutoff score on math and/or English tests. This could mean up to three semesters of coursework at full price without earning a single credit toward an associate degree. Of the students assigned to this type of remediation, less than 17 percent went on to meet readiness for credit-bearing coursework in their first year. The rest either switched to less-intensive certificate programs, dragged their non-credit bearing remediation into a second year, or dropped out before completing a full year. As in many other states, the Kentucky Council on Postsecondary Education began developing a co-requisite model to try and reverse these problematic trends.

The new KCTCS plan, rolled out systemwide in fall 2019, was three-tiered. Officials set two ACT test cutoff scores in both math and English. Above the highest cutoff, students were considered college-ready and required no remedial courses (although they could take them if they wanted). Below the lowest cutoff, students were generally required to take the traditional non-credit, prerequisite remedial courses. Students in the middle tier had access to a new co-requisite path.

Rather than comprising a preparatory curriculum to be completed before starting college-level coursework, co-requisite remedial courses were paired directly with the college-level classes they supported—often taught by the same instructor and/or teaching assistants—and provided what the CALDER authors describe as “on-demand support.” Students also earned credit toward their degree for completing them (1 or 2 credits per remedial course, depending on frequency, as compared to 3 credits for the typical college-level course). This could be interpreted as a lowering of standards for graduation—requiring fewer college-level credits among those earned toward a diploma—but the researchers do not delve into this. They do, however, discuss a new math course sequence (called Quantitative Reasoning, or QR) introduced alongside the remediation model, which is definitely characterized as a “less-intensive” pathway for students. It allowed for fewer math courses/credit hours toward degrees whose program area was deemed not to require college algebra. Students scoring in both the middle and lower tiers in math could opt into the QR path—with or without co-requisite remedial classes—if their degree area allowed for it.

The CALDER researchers use student-level administrative records obtained from the Kentucky Center for Statistics covering more than 43,600 newly-enrolled freshmen pursuing an associate degree (as opposed to certificate-program enrollees) at any KCTCS school between 2019–20 and 2023–24. Only 17 percent of students in the study sample met the highest (college-ready) cutoff in math and 49 percent in English. Approximately 69 percent and 21 percent of students had ACT scores below the lowest cutoff in math and English, respectively. CALDER’s researchers compared students just above and just below the two cutoff scores for their analyses.

The report details the differences in prerequisite and co-requisite enrollment around each cutoff point, but those numbers are difficult to make sense of due to students choosing non-required pathways (middle-tier folks enrolling in a co-requisite course when they don’t have to, a significant number of lower-tier students somehow avoiding prerequisite remediation, etc.). The most interesting finding in this regard, however, is that the shorter and less-rigorous QR math pathway proved popular with middle-tier students. Students just below the highest ACT math cutoff score were 5 percentage points more likely to start with a QR math course—as opposed to a college algebra course—than their higher-scoring peers. At the lower ACT cutoff, low-tier students were 4 percentage points more likely to start with the QR pathway (including co-requisite remediation) than their middle-tier peers just above the cutoff.

The analysts then estimate causal effects of remediation using a regression discontinuity design around the ACT score cutoffs in both subjects. In English, some benefits of co-requisite remediation were clear. Middle-tier students who took co-requisite remedial classes were about 5 percentage points more likely to pass college English within their first year than similar students who began credit-bearing courses without remedial support. These benefits accrued most strongly to male students and those attending college part-time. However, co-requisite remediation requirements reduced first-year college English enrollment overall by 6 percentage points. The co-requisite benefits in math were even smaller than those in English, but were still statistically-significant, especially for female students who opted for the QR math pathway. There are no longer-term impacts on persistence and completion yet available for the KCTCS model.

The report concludes with an expectedly downbeat assessment of the findings: Co-requisite remediation in Kentucky appears to be less harmful than the prerequisite system it largely replaced; however, that previous system was almost universally detrimental to student success. A small improvement on the very worst efforts to keep underprepared college freshman from dropping out of community college is not much to cheer about. The report’s authors talk briefly about ways higher education institutions could modify their remedial education to better support students (research finds positive impacts of advising, coaching, and even non-educational financial support), but ignore the obvious answers—ending the “college for all” mentality and making sure that those kids who are moving on to college are fully prepared before they leave high school.

SOURCE: Zeyu Xu and Benjamin Backes, “First, Do No Harm. But Can We Do Better? An Evaluation of a Statewide Developmental Education Reform,” CALDER Working Paper (March 2026).

Andrew Camp and Collin Hitt join Mike Petrilli and David Griffith to discuss Moving Target: The Success and Failure of Missouri’s Charter School Funding Surge, a new Fordham report by David, Andrew, and Collin. They examine Missouri’s effort to close the charter funding gap, how schools used the additional money, and why true funding parity remained out of reach. They also discuss the effects on staffing, teacher retention, and student achievement.

Then, on the Research Minute, Amber Northern reviews new research from Ohio on whether the threat of third-grade retention can improve reading achievement by prompting schools to provide struggling students with additional literacy support.

Recommended content:

• Moving Target: The Success and Failure of Missouri’s Charter School Funding Surge —Andrew M. Camp, Collin Hitt, and David Griffith, for the Thomas B. Fordham Institute
• The Impact of Increasing Funding for High-Performing Ohio Charter Schools: The Quality Community School Support Fund, 2019–23 —Stéphane Lavertu, Thomas B. Fordham Institute
• Charter School Funding: Inequity's Next Frontier —Sheree Speakman, Chester E. Finn, Jr., and Bryan C. Hassel, for the Thomas B. Fordham Institute
• Why Ohio’s third-grade retention law worked (until lawmakers killed it) —Vladimir Kogan, Thomas B. Fordham Institute
• The Effect of Retention Threat on Student Learning Gains: Evidence from Ohio —Sarah Souders and Robert Bifulco, EdWorkingPapers (July 2026)

Feedback Welcome: Have ideas for improving our show? We would love to hear them. Send them to [email protected]

---

Transcript

This transcript was generated with the assistance of AI and lightly edited for clarity and readability.

Introduction

Mike Petrilli [00:00]

Welcome to The Education Gadfly Show.

I’m your host, Mike Petrilli of the Thomas B. Fordham Institute.

This week, we’re joined by Andrew Camp and Collin Hitt, along with my co-host and their fellow co-author, David Griffith, to discuss their new Fordham Institute report, Moving Target: The Success and Failure of Missouri’s Charter School Funding Surge.

Missouri gave charter schools a major funding boost, but did the new money actually close the gap and improve student outcomes?

Then on the Research Minute, Amber Northern reviews new research from Ohio on how third-grade retention policies and targeted literacy interventions may affect students’ achievement.

All that and more this week on The Education Gadfly Show.

Clip [00:44]

This is The Education Gadfly Show.

Oh my God, we’re back to the bubble kids problem again.

What does Gadfly say?

Mike Petrilli [00:53]

Hello, this is your host, Mike Petrilli of the Thomas B. Fordham Institute, here at The Education Gadfly Show and online at FordhamInstitute.org.

Now, please welcome our special guests for this week, Andrew Camp and Collin Hitt. Andrew and Collin, welcome to the show.

Collin Hitt

All right, Mike. Hello.

Mike Petrilli

Hey, hey, hey.

Andrew is Senior Research Associate at the Annenberg Institute, and Collin is Executive Director of the Policy Research in Missouri Education Center at Saint Louis University.

Also joining us, as always, David Griffith.

David Griffith

Hey, guys. Good to see you.

Mike Petrilli

Yeah, well, first of all, excited that Collin is joining from my hometown of St. Louis, Missouri, where I grew up from age three to age eighteen and became, among other things, a big St. Louis Cardinals fan.

We were just chatting. They had an actually surprisingly good start this year, even though they’re a very young team rebuilding. But they have recently been showing more of what people expected, which was mediocrity. But you never know. They do have a tendency to make a run for it every year. So fingers crossed.

Hey, we have you on the show to talk about a study that the three of you co-authored. That’s right. Even David Griffith. So, David, you get to be the interviewee instead of the interviewer.

That study is called Moving Target: The Success and Failure of Missouri’s Charter School Funding Surge. Let’s talk about it on Ed Reform Update.

Ed Reform Update: Missouri’s charter school funding surge

Mike Petrilli [02:27]

Okay, guys, first of all, congratulations. Great study. And it turned out to be a more challenging study, perhaps, than we thought it would be.

We will talk about the twist. There’s a plot twist in a moment.

Tell us, first of all, about the law that we’re talking about. A few years ago, Missouri passed a bill that basically the notion was to dramatically boost spending for charter schools, right, and try to aim toward greater parity with traditional public schools.

Before this, I believe Missouri had some of the biggest gaps in spending between charter schools and district schools. So tell us about that law.

Collin Hitt [03:06]

So, by way of history, Missouri’s charter school law was designed really to allow for charter schools, which are almost entirely located either within Kansas City or St. Louis City School District limits.

But the law was designed to provide charter schools with the same amount of local and state combined funding as schools in the area districts. And for years, that more or less worked.

But then about ten years ago, you start to see a gap emerge, a lot like what you see in other states, where surrounding traditional public schools were working with more per pupil than were otherwise comparable charter schools.

And that gap was continuing to widen every year. I’m sure we’re going to get into the mechanics of why that was the case, but this had become apparent. And there was no real optimism, however, that a legislative fix was ever going to come. And that was really going to be the only opportunity to fix this and to bring charter schools back on par with traditional public schools in St. Louis and Kansas City.

And then, sort of against all odds, very late in the legislative session in 2022, a piece of legislation called House Bill 1552 passed in order to make charter schools whole.

And the mechanism that state lawmakers came up with is they said the state will pick up the tab. Rather than trying to divert more local money from area public schools to charter schools to put everybody on par, the state will just cut an extra check to make everybody whole.

The law passed in May, signed into law in June. Checks start to arrive in August, literally out of nowhere. It was a funding shock, which, as researchers, we like to study school finance. We like to study all kinds of things that vary, but rarely do we have any natural experiment, some money that just comes out of nowhere where we can really isolate the impact of a funding increase.

But that’s what we had in Missouri.

One of the things that we found, as you’ll see later, is that funding shock was way larger than anybody was anticipating at the time, which just turns this into an even cooler public policy development to research.

Mike Petrilli

How much money are we talking about here for the charter schools, extra money per pupil?

Collin Hitt

Well, the original projections were somewhere in the range of $2,400 to $2,700 per pupil, which would not have been enough to entirely close the gap between charter schools and surrounding public schools.

But over a twenty-student classroom, you’re talking about $50,000 a year or more per year in permanent revenue that, again, nobody was expecting. And you can see this when you go and look at charter schools’ budgets. They weren’t projecting this revenue. They weren’t anticipating it.

Part of our research is, do we see any terms of anticipatory effects? Are people spending the money before it arrived? No, is the answer to that.

And that alone looked like something that was going to be really interesting to study. That’s a lot of money. What we’re finding over time is that the increase is much larger, maybe two times as big as that, and perhaps on pace to be even larger yet, which I’m sure we’ll talk about.

What the funding shock was expected to do

Mike Petrilli [06:16]

Well, look, this means that it perhaps is the biggest funding shock for charter schools in history, in terms of a big upside coming in.

We studied a somewhat similar shock in Ohio a few years ago. I guess the theory here, and we’ve talked about this, David, on the show, is that in school finance reform in general, you do expect, all else being equal, that if you put a bunch of new money into the schools, you should get some kind of impact.

And there’s no reason to believe that that wouldn’t happen in the charter school sector.

And this is always tricky, right? There was a time way back when at the beginning of the charter school movement when some of us would say, well, maybe they don’t need as much money because they’re not going to have to deal with the union, and they’re going to maybe be able to find innovative ways to save money.

And maybe on the margins, that’s true. The problem is, if you have a huge funding gap, then, for example, it’s impossible to compete on salary, on pay and benefits, with the districts around you. And then if that’s the case, you struggle every year to try to recruit and retain good teachers.

So, Andrew, David, am I saying that right in terms of what the hypothesis would be here? That you would expect with this kind of funding shock to see outcomes improve for charter schools?

Andrew Camp [07:45]

Yeah, I think that that’s right.

I think one thing to note is that the evaluations of Missouri’s charter sector prior to this bill being passed and the new dollars going to charters, they already were quite effective at moving student outcomes.

Certainly as a researcher, the first thing that popped into my head is, does the marginal dollar go further in charter schools than it does in traditional public schools? If we do this study, how is this going to benchmark against the existing school finance reform literature?

Mike Petrilli

Okay. All right. And that literature, again, there have been debates over the years. Does money matter? Does it not matter? But it’s so hard to isolate sometimes the impact of money alone.

And so it’s why these shocks are really interesting, because you can say, okay, it’s all else being equal. What happens when you increase money?

Which is not to say that if you just keep increasing money forever, and let’s say you get to the point like in New York City where you’re spending $30,000 a year, that you’re going to continue to get positive returns on that. But maybe, especially at lower levels, a big bump might make it a lot better.

Again, David, am I saying this right? I feel like you hold me honest here. Is this fair?

David Griffith

No, that’s completely fair.

And as always, I think it’s more complicated than the bumper sticker version. I think, like you said, it makes sense that returns would diminish. So if you’re already spending $30,000, you probably will see a smaller return than if you’re spending $10,000.

And we tend to think that money matters more for kids who are learning less at home, who are more reliant on school for the basics. And so we think it might matter more for poor schools than non-poor schools.

But I think the big picture, honestly, is that it’s actually quite hard to isolate the effect of spending, whatever it is. As you know, we went decades basically struggling to figure out if it was having an impact.

And to be honest, I think we still struggle a little bit, right? Because the money just doesn’t sit still. It’s fungible. It trickles from one year to the next. Even when you can see it, there are things that it purchases that don’t necessarily have immediate impacts, like a new teacher.

So it’s still, I think, challenging to really nail it to the wall.

Where the money went

Mike Petrilli [10:20]

All right. And now for the big twist. Collin, you end up doing this study. And again, you’re trying to compare the spending in charter schools to the spending in traditional public schools, and then the outcomes in each sector as well. And lo and behold, what happens in the district sector?

Collin Hitt

Well, it’s comparable to the district sector.

So the research design that we did effectively used other traditional public schools in Missouri as your control group and looked at trajectories in hiring and spending and all sorts of things in those schools, and then kind of constructed, in a way, a trajectory similar to what we were seeing in charters.

And basically, do we see a change in charter schools relative to any change that we see at traditional schools at the same time?

So really, our first question all along here was, where did the money go?

And one of the cool things here is, if you don’t mind, Mike, I’d love to give props to Andrew, who is a phenomenal methodologist, a great writer, and just a great co-author.

But also, one of the things we like to say at the PRiME Center is one of the most important skills in research is detective work. And he’s one of the best people at detective work I’ve ever seen.

So we’re all used to the school finance datasets that we’re used to working with that normally we think of as rich, but we know that they’re not nearly as detailed as, say, a district or a charter LEA’s actual full financials that you would see if, say, you were a board member.

Turns out you can pull those financials from a specific portal in Missouri on a one-by-one basis. Almost nobody has exploited or even known this data exists. Andrew found it and then built what is without a doubt the most comprehensive and detailed school finance dataset in the history of the state, the most impressive one I’ve ever seen in any state.

And that alone has come out of this project. And because of that, we were able to look at some super detailed, fine-grained outcomes.

So first of all, where did the money go? Per 100 students, charter schools increased the number of full-time equivalent teachers they had. They were able to increase more support staff. And then what does that mean? They were also able to pay that staff more.

And over time, whether this be through increased retention or through recruiting more experienced teachers, we saw the average experience of the typical charter school teacher in the classroom increase, even in this short window of time.

That’s largely where the money went.

Mike Petrilli

Okay. And I think I did a poor job setting this up because I was going for a different twist in the story.

That’s great and that’s important, that we’ve got greater teacher retention. So I’ll just say it, though. The twist is that it turned out that the districts, St. Louis and Kansas City, ended up getting way more money also at the same time. Right?

We kind of expected going in that this shock is going to be a big upside increase in spending for the charter schools. And it turns out they did get that boost. But this is because of a weird quirk in Missouri’s law, right? Andrew, do you want to explain this?

The plot twist: District revenue kept rising too

Andrew Camp [13:53]

First off, Missouri’s funding law is one of the weirdest I’ve seen.

The local effort calculation uses assessed values from 2005 instead of just updating every year. So the state is sort of blind to how much property tax revenue, at least in their funding calculations, districts are bringing in.

But the twist that you’re referencing is this continued increase in revenue for Kansas City Public Schools and St. Louis Public Schools. And a lot of that is driven by the reality that those districts keep the property tax revenue that they take based off the current year assessments. They’re updating every year just like anywhere else.

But as their enrollments decline, the amount of revenue per student grows quite quickly, right? You’re splitting a pot among fewer and fewer students. So the per pupil dollars that the district has available to spend grows.

What we’ve seen, especially following Covid with district enrollment declines and some growth in the property tax revenue, is that these districts are receiving quite a bit more even than before the law was passed.

That is unrelated to the law itself. It would have happened either way, likely. But that’s why the gap has not quite closed, is that districts are still seeing this pretty sizable growth in per pupil revenues.

Mike Petrilli

Yeah, really, really interesting. And something, again, we have talked about on the show about what happens with enrollment declines.

Often in the media, it’s depicted as this budgetary emergency. You’re going to lose kids and you’re losing money. But actually, it turns out you lose kids, but you end up keeping a lot of the money because the local money just keeps coming.

And in a time when housing prices are going up, even in the Midwest, where maybe it’s not as much as on the coasts, it still makes a difference, right? Commercial property values, other things go up, then the money keeps coming in.

So, David, then what can we say? Charter schools get this huge increase. The district schools also get a big increase. Can we see any impact then on student achievement between the two sectors or other outcomes?

David Griffith [16:02]

Yeah. So I feel like Andrew should probably speak to this one as well. But we see some impact in math, and it’s sort of tentative, I think. I think the jury is probably mostly out, but certainly outcomes didn’t go down. And we don’t see much in English language arts.

Mike Petrilli

And again, we’re comparing, just to be clear, the charter sectors in St. Louis and Kansas City to the district schools in Kansas City and St. Louis? Or we’re comparing them to all schools in Missouri?

David Griffith

We’re comparing them to other schools in Missouri.

Mike Petrilli

Okay.

Andrew Camp

So if I can just chime in there, because I think the achievement, ultimately, that’s what I care the most about.

It’s important to note that the measures of student growth and achievement that we have for this study are the school-level value-added estimates. And so this is a measure of how much students learn each year. It’s not a good outcome for the cumulative effect of this.

But what we’re finding is about three percent of a standard deviation increase in student value-added growth. That’s kind of like knowing how fast you’re accelerating, but not knowing how fast you’re going.

And so part two of this study is looking, we have the student-level data now, to actually estimate the impact on students in a way that’s comparable to these other school finance reform studies.

Now, that three percent of a standard deviation, that’s a per-year figure. So I would note that if you multiply that by the number of years a student might be in a tested grade, you get to fifteen to eighteen percent of a standard deviation increase in math scores.

That’s a moderate to large effect, and on par with what you would expect with this amount of spending based on some other studies.

Mike Petrilli

Yeah, interesting. And again, of course, if districts hadn’t gotten this big windfall of money too, you never know how this plays out, right?

Part of what’s happening here is you’re trying to get the charter schools to be able to compete to recruit and retain great teachers. And the districts keep being able to spend, maybe outspend them or outpay them on that side as well.

Right, Collin? I mean, is that part of what makes it so complicated?

Collin Hitt [18:13]

It is complicated, and we go into detail in this in the paper.

But part of the reason was how the state fixed this, so to speak. Rather than just having a line item in the budget and saying, here’s an extra $67 million, which is what they projected the original amount cost to be, come back again, we’ll put another line item, they didn’t do that.

They wrote it into the formula.

So they said, for example, whatever St. Louis Public Schools has this year, we’ll try to make sure that charter schools have that same amount next year.

And it’s written in the formula. So as that first number, for example, in St. Louis, continues to go up because local revenues are going up and enrollment continues to stay flat or slightly decline, that per pupil number that SLPS is spending is going up.

And so by law, in formula, state spending is chasing that. And that’s why it’s larger than what we thought.

And nobody else in the state, the other 515 school districts in the state, including ones that are literally one foot away from where these charters are operating, has the same funding arrangement. So that becomes a sort of control group there.

So if you look at how charter schools compare to their host district, which is St. Louis Public Schools or Kansas City Public Schools, the law is designed to chase them. But they’re competing, of course, you know St. Louis well, you know Kansas City well, for resources, for teachers, for attention, for everything else.

Their real competition is every bit as much all of those other districts who are just completely unaffected by the law, which makes them a good control group. And in that respect is where you see charter schools increasing hiring, able to increase teacher pay, relatively speaking, and some early evidence of increasing math achievement with the use of those resources.

David Griffith [20:02]

Mike, if I can just jump in really quickly.

I think the broader lesson here, at least for me, is that if you don’t share local revenues with charter schools, eventually fiscal mayhem will ensue.

Basically, you have a choice. You can either tolerate an increasingly inequitable system where half of the kids just don’t get the kind of dollars that they deserve to get an education, or you can cut a giant check and allow them to keep up with traditional public schools as funding spirals upwards and effectively ask the rest of the state to bear the burden.

Or you can bite the bullet and do the obvious thing and just let local dollars follow local students wherever they go.

And so I think for the past twenty years, we’ve been sort of allowing one of the first two stories to play out because it’s politically convenient and it sort of keeps everybody happy.

But I think we’re maybe approaching a tipping point where we’re going to have to start making some tough decisions and planning for the long term.

Mike Petrilli

All right. I think we’re going to have to leave it there, gang.

But again, amazing work. Collin, Andrew, David, appreciate you coming on, talking about the study again for folks at home.

It’s called Moving Target: The Success and Failure of Missouri’s Charter School Funding Surge. Check it out, guys.

And now it’s time for everyone’s favorite, Amber’s Research Minute.

Research Minute: Third-grade retention threats and reading achievement

Mike Petrilli [21:40]

Amber, welcome back to the show.

Amber Northern

Thanks, Mike.

Mike Petrilli

So, you know, sometimes we end up talking about Virginia and Maryland because of where we live. But this week’s show is about the Midwest.

We were just talking about Missouri and a little bit about Ohio, with both states having recently boosted charter school funding. And now we’re going to talk about Fordham’s home state of Ohio yet again.

Amber Northern

Again, I realized for our Ohio readers and listeners, our Ohio team also covered this. But I’m like, it’s important. It has had national implications in my view. So our podcast listeners are going to get a dose of the same study.

So anyhow, you ready for me?

Mike Petrilli

Let’s do it.

Amber Northern

All right, let’s do it.

We are looking at students who were held back. All these states are trying to figure out, do we want to do this third-grade reading guarantee? Do we not? And we’ve got some new evidence.

This time out of our home state of Ohio, they’re not just looking at kids who were retained. They’re looking at the threat of retention. And I’ve covered some sort of earlier studies on this, but this one’s a more rigorous study and it’s further along. So it’s important.

It looks at Ohio’s Read to Succeed law, which again had the third-grade reading guarantee in it. It required students below a state-set proficiency threshold on their grade three ELA exam to basically risk being held back.

When we look at the data, we’ll find that only 1 percent of at-risk kids were actually retained during 2014 through 2017.

So this study says, okay, we had 1 percent retained, but there is probably a much larger group that was exposed to the threat. And did that make a difference?

And so they’ve got a neat design here where they’re able to separate out the threat. They take advantage of this natural experiment that’s built into Ohio’s testing schedule. Basically, third graders who took this ELA state test at least twice, so once in the fall, once again in the spring, their highest score determines whether they are ultimately retained, at least on paper.

So they focus on what happened after that fall test. They compare students who scored just enough to be safe from retention, regardless of how much they might learn later in the year, with students who fell just short of that bar and hence continued to face the threat of retention.

They have 500,000 first-time grade three students across these four cohorts, 2014 to 2017. Again, this is a regression discontinuity design examining kids above and below that threshold, so it doesn’t generalize to kids outside that range.

All that said, key finding: The threat works. I think that’s basically the bottom line.

Students who remained exposed to possible retention after the fall test score did significantly better by the end of third grade than students who had scored just high enough in the fall to avoid that threat. Not only in language arts, which was the interesting part, but also in math.

And so they say this math effect is kind of important because it shows that these gains aren’t merely test prep for the ELA test.

And they did look into the fading, because now we always look into fading. And it did fade modestly over time, but it still remains statistically significant through the seventh grade, which is not too shabby.

The authors estimate a spring grade three ELA gain of .077 standard deviations, with effects still detectable again through grade seven. At grade seven, it was about .03 standard deviations.

And then the threatened students, I feel bad saying the threatened students, but you know what I mean, they’re about 6.5 percentage points more likely to be assigned to some form of literacy program.

So this is where we actually think this instructional time, the small group tutoring, all these things are the mechanism for the improved achievement that we see.

And it also appears that this threat of retention changed how schools respond, with effects largest, and this is important, largest in higher spending districts and in schools serving more at-risk kids, even when those kids aren’t much more likely to be assigned to literacy programs.

So that again kind of shows us that the threat of retention and the school-level pressure that we’re seeing could be sort of complementary forces, where they’re kind of working together in different ways.

The students under retention threat are also less likely to be absent, so that’s another contributing factor.

And effects jumped notably in 2016 when Ohio first began reporting retention data and adding these financial incentives tied to outcomes. I’m not sure what they were, but that wasn’t discussed in the paper too much. But the bottom line was this reporting and incentives also mattered.

And then the bad news, the depressing news, is that Ohio lawmakers actually weakened their retention requirements in 2023. Basically, if we think that some of the effects that I just told you about came from the threat, and now we do, not holding back a small percentage of kids is not what’s moving the needle here.

It could be that now that they’ve watered down this requirement, which they have, we may not see the impact on this larger number of students that we saw just by this threat.

So there’s, I don’t know, maybe no more. I’m not sure exactly how it was watered down.

Anyway, that was kind of long, but that’s what I’ve got.

The good news and the bubble kids problem

Mike Petrilli [27:46]

Well, I can fill in a little bit about this bad news part.

First of all, the good news. It is great. And it’s more evidence that states absolutely should have retention policies like these. I think there’s a good argument for trying to maybe do them earlier than third grade. Nothing magical about third grade necessarily.

But there is some bad news. The first one, as you say, Ohio got rid of it. I mean, this is classic Ohio. I hate to say it. When the going gets tough, the Ohio lawmakers give up.

There was political pressure. You know, “Oh, we don’t like holding back kids. The kids feel bad.” And so now they basically have a loophole that you could drive a bus through that says if the parents don’t want their kid retained, they don’t have to be retained.

So basically, districts just go to the parents and say, “Hey, the state wants us to retain your kid, but if you tell us to, we’ll just pass them along to fourth grade anyways.” And guess what? Almost everybody gets passed along.

So that basically killed the retention policy.

The other bad news here, though, and I think it was David that pointed this out to me first, was that, oh my God, we’re back to the bubble kids problem again. What the study is showing is that the kids that are closest to the cut scores, closest to the proficiency line, the on-track line, get the attention.

And the kids that are above that line do not any longer get the attention. Ah, this is terrible.

As much as there are good things happening in Ohio, at least Ohio has a big focus on K–3 reading. There’s a piece in their state report card for judging schools based on how much progress they’re making on this. It’s not done in a value-added way. So we’re back to this bad thing with proficiency, where the bubble kids get the attention.

I mean, is that fair to say, David? Is that the right way to say it?

David Griffith [29:47]

I mean, I think there’s something to that.

The study has sort of all of the good sides and bad sides of accountability rolled into one, right?

I mean, it’s pretty unambiguous. Accountability works, whatever it is that you’re pushing on, right? That you’re sort of being mean about. You dig into the data and you see that, in fact, we’re moving the reading scores of these kids who can’t read very well, and that’s a huge deal.

But yeah, you make a good point, right? Which is, okay, relative to the kids who are just above the cut score. And this is what folks on the other side of the accountability debate will say: “Okay, but you are what you measure,” right?

And you know, kind of look at the leakage here, look at the leakage there. And so it’s really important to think carefully about the incentives. You can probably apply some sort of discount to whatever gains we’re claiming.

And then there’s the other point that you made about the politics, right? It’s got to be sustainable.

I don’t know. We’ll probably keep beating the drum no matter what happens, right? But it is demoralizing to see things that are working essentially just undone, despite the fact that you can point to the data and say the kids are benefiting.

So yeah, I don’t disagree with you, but I don’t think we should look past the good news here as well, even if it’s short-lived.

Mike Petrilli

And maybe the way to balance it is you still have some kind of third-grade or second-grade retention policy that you actually enforce, but then you also figure out a way to measure student achievement in those early grades and have some kind of value-added accountability system, right?

This is the craziness of saying, for school accountability, we don’t start measuring outcomes until the end of the third grade. And so that creates all kinds of strange, perverse incentives as well.

If you were actually holding schools accountable for helping all kids make progress K–3, really K–5, if you’re in elementary school, then maybe that balances out some of those other weird incentives with the grade retention.

Amber Northern

Yes.

I wonder, too, whether the threat of telling a parent, like, your child could be held back, I mean, because we know under the other program they weren’t really getting held back anyway. So it does make me wonder how we define threat.

And it’ll be interesting to see whether just informing a parent, even if they say no, functions in the same way an actual threat would, even though it didn’t really work that way, if that makes any sense.

Mike Petrilli

Yeah, no, that’s interesting. What is it that the school people are afraid of?

I think that a lot of educators, they sincerely feel bad. They feel bad for this kid having to be held back. And so this really maybe seems to motivate them to do whatever it takes to add resources, to maybe reach out more, get the kid in school, all the things we want to have happen in an accountability system, because they view it as such a bad thing.

But I think you’re right, Amber. It’s got to also get the attention of the parent. Like, what? My kid’s going to be, you know, we know from all the Learning Heroes data and other stuff that most parents think their kids are doing fine, right?

And this has got to come as a shock to a lot of parents and just saying, what do you mean? My kid can’t read, and you might hold them back.

David Griffith

Yeah, and there are a bunch of confounds here, right?

One of them is that I think the stuff that really matters is happening before we can really feel like we can apply the pressure through tests. And so, I don’t know. I’m not sure exactly how else to get parents and teachers to take this seriously other than to push on third-grade test scores under our current system.

But you can make the case that, honestly, what the data seem to be telling us about kids is more important in these years than, frankly, any other years. This is reading in the years when kids have to learn how to read.

And so I don’t know of a way around it, right? I think we have to push on these data. I think we have to insist that people are honest about this.

I don’t know. I agree. I think it’s a great question, like, what are they afraid of exactly, right? I don’t know that fear is quite the right word for it.

I think it brings focus in an area where people are inclined to not want to believe the bad news. And I think that probably includes teachers as well as parents. But I think we’re not allowing them to discount the bad news if we adopt a policy like this.

Mike Petrilli

All right, gang, I think we will need to leave it there.

Great stuff, Amber. Thanks for bringing it to us.

Amber Northern

You got it.

Mike Petrilli

Love that it’s from Ohio. Wish that Ohio would go back to its old policy.

All right. That is all the time we’ve got for this week. So until next week.

David Griffith

I’m David Griffith.

Mike Petrilli

And I’m Mike Petrilli of the Thomas B. Fordham Institute, signing off.

The Education Gadfly Show is a production of the Thomas B. Fordham Institute, located in Washington, D.C. For more information, visit us online at FordhamInstitute.org.