Article

Fiscal Impacts of Charter Schools: Lessons from New York

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Abstract

This brief argues that charter school programs can have direct fiscal impacts on school districts for two reasons. First, operating two systems of public schools under separate governance arrangements can create excess costs. Second, charter school financing policies can distribute resources to or away from districts. Using the city school districts of Albany and Buffalo in New York, we demonstrate how fiscal impacts on local school districts can be estimated. We find that charter schools have had fiscal impacts on these two school districts. Finally, we argue that charter schools policies should seek to minimize any avoidable excess costs created by charter schools and ensure that the burden of any unavoidable excess costs is equitably distributed across traditional public schools, charter schools, and the state. We offer concrete policy recommendations that may help to achieve these objectives.

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... The magnitude of the fiscal impact of charter expansion hinges on a range of factors, including the share of students migrating to charter schools, the types of students who enroll in charter schools, and, perhaps most salient, the fiscal flexibility of school districts to contend with and adjust to these changes (Baker, 2016;Ladd & Singleton, 2017). Bifulco and Reback (2014) argued that these adverse effects were caused by school districts' lack of capacity to adjust fixed costs (building maintenance and opera- tions) in response to charter growth. Moody's Investors Services highlighted a similar concern in "economically weak" urban school districts, as did consultants hired by the Nashville, Tennessee, school district to study the impact of charter schools on their district (Baker, 2016). ...
... Moody's Investors Services highlighted a similar concern in "economically weak" urban school districts, as did consultants hired by the Nashville, Tennessee, school district to study the impact of charter schools on their district (Baker, 2016). Furthermore, the lack of intradistrict coordination of revenue and expenditures ties into the underlying inefficiencies caused by "operating two systems of public schools under separate governance arrangements" (Bifulco & Reback, 2014, p. 1) and the liberal approval process for new charter schools (Baker, 2016). ...
... These spatial patterns bear uneven consequences of austerity associated with budgetary stress. As Bifulco and Reback (2014) noted, closing schools is the primary way to reduce fixed costs. In Chicago, these closings are spatially associated with charterization (see Figure 2) and have exacerbated the adverse effects of population loss. ...
Article
Corporate education reformers take for granted that market competition in the public schools system will improve education conditions. We conducted a spatial analysis of Chicago Public Schools, examining the spatial features of charter school expansion in relation to under-18 population decline, school utilization, and school closure locations. Our findings indicate that 69% of new charter schools were opened in areas with significantly declining under-18 population and approximately 80% of charter schools were opened within walking distance of closed school locations. Our findings show, contrary to corporate education reform logic, that a competitive charter school market created spatial and financial inefficiencies resulting in school closures and systemwide budgetary cuts primarily impacting distressed neighborhoods. We explain the overproduction of charter schools through the lens of the firm-like behavior of charter school operators driven by a self-interested growth mandate that can undermine the stability of the public schools system as a whole.
... Second, the very mechanism of competition for public resources through enrollment driven funding for charter schools raises concerns that charters may divert resources from TPS, particularly those serving disadvantaged students, further exacerbating funding inequities. The literature investigating this possibility is more limited, but suggests charter entry carries significant negative impacts on TPS revenues (Dee and Fu, 2004;Bifulco and Reback, 2014;Ladd and Singleton, 2017). For instance, using school-level data from Arizona, Dee and Fu (2004) observe an increase in TPS student-teacher ratios associated with charter entry, suggesting TPS may lose resources to charter schools (see also Bifulco and Reback, 2014 for a detailed description of the fiscal impact in Albany and Buffalo). ...
... The literature investigating this possibility is more limited, but suggests charter entry carries significant negative impacts on TPS revenues (Dee and Fu, 2004;Bifulco and Reback, 2014;Ladd and Singleton, 2017). For instance, using school-level data from Arizona, Dee and Fu (2004) observe an increase in TPS student-teacher ratios associated with charter entry, suggesting TPS may lose resources to charter schools (see also Bifulco and Reback, 2014 for a detailed description of the fiscal impact in Albany and Buffalo). ...
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Since their introduction in the 1990s, charter schools have grown from a small-scale experiment to a ubiquitous feature of the public education landscape. The current study uses the legislative removal of a cap on the maximum number of charters, and the weakening of regulations on these new schools, in North Carolina as a natural experiment to assess the intensive impacts of charter school growth on teacher quality and student composition in traditional public schools (TPS) at different levels of local market penetration. Using an instrumental variable difference-indifferences approach to account for endogenous charter demand, we find that intensive local charter entry reduces the inflow of new teachers at nearby TPS, leading to a more experienced and credentialed teaching workforce on average. However, we find that the entry of charters serving predominantly White students leads to reductions in average teacher experience, effectiveness, and credentials at nearby TPS. Overall these findings suggest that the composition of the teacher workforce in TPS will continue to change as charter schools further expand, and that the spillover effects of future charter expansion will vary by the types of students served by charters.
... Second, the very mechanism of competition for public resources through enrollment driven funding for charter schools raises concerns that charters may divert resources from TPS, particularly those serving disadvantaged students, further exacerbating funding inequities. The literature investigating this possibility is more limited, but suggests charter entry carries significant negative impacts on TPS revenues (Bifulco & Reback, 2014;Dee & Fu, 2004;Ladd & Singleton, 2017). For instance, using school-level data from Arizona, Dee and Fu (2004) observe an increase in TPS student-teacher ratios associated with charter entry, suggesting TPS may lose resources to charter schools (see also Bifulco & Reback, 2014 for a detailed description of the fiscal impact in Albany and Buffalo). ...
... The literature investigating this possibility is more limited, but suggests charter entry carries significant negative impacts on TPS revenues (Bifulco & Reback, 2014;Dee & Fu, 2004;Ladd & Singleton, 2017). For instance, using school-level data from Arizona, Dee and Fu (2004) observe an increase in TPS student-teacher ratios associated with charter entry, suggesting TPS may lose resources to charter schools (see also Bifulco & Reback, 2014 for a detailed description of the fiscal impact in Albany and Buffalo). ...
Article
Since their introduction in the 1990s, charter schools have grown from a small-scale experiment to a ubiquitous feature of the public education landscape. The current study uses the legislative removal of a cap on the maximum number of charters in North Carolina as a natural experiment to assess the impacts of charter school growth on teacher quality and student composition in traditional public schools (TPS) at different levels of local market penetration. Using an instrumental variable difference-indifferences approach to account for endogenous charter demand, we find that intensive local charter entry reduces the inflow of new teachers at nearby TPS, leading to a more experienced and credentialed teaching workforce on average. However, we find that the entry of charters serving predominantly White students leads to reductions in average teacher experience, effectiveness , and credentials at nearby TPS. Overall these findings suggest that the composition of the teacher workforce in TPS will continue to change as charter schools further expand, and that the spillover effects of future charter expansion will vary by the types of students served by charters.
... Further, the effect of charter schools on funding levels of traditional public schools is also worrisome, as a number of school systems have lost large amounts of public education dollars to charters (Bifulco & Reback, 2014;Ladd & Singleton, 2018;Ravitch, 2014). To provide an illustrative example, the Los Angeles Unified School District is unique in that it "has the most charters-221-and the highest number of charter students-more than 100,000-of any school system in the nation" (Blume, 2016, para. ...
Article
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Individualism and competition are central neoliberal concepts that have profoundly altered the U.S. public education system. This article draws on poststructuralist theory and advances the argument that these concepts have produced problematic policies and deeply flawed school choice mechanisms such as charter schools and school vouchers. I also explore how educational activists contested neoliberal ideology and reshaped reality as they defeated a neoliberal education policy in North Carolina.
... Despite the number and complexity of factors impacting charter environments and research methodologies that make estimating charters' competitive impacts on TPS challenging (Epple, Romano, & Zimmer, 2015), several studies have looked at how TPSs adjusted to these lost monies (Bifulco & Reback, 2014;Schafft, et al. 2014). Effects include: shrinking enrollments and closing schools to reduce excess capacity; reducing administrative and teaching staff levels; and addressing seniority requirements in teacher employment and tenure contracts without the same proportion of reduced salary costs (because longer-tenured staff place higher on the salary scales than less senior staff). ...
... ABD'de ise bazı devletler kupon [voucher] sistemiyle, velilere devletin sunduğu ortalama okul maliyetini çek olarak vermekte ve özel okullara bu kuponları bozma garantisi vermektedir (Sutton & King, 2013). ABD'deki diğer bazı devletler ise sözleşmeli okullar [charter schools] emlak vergisi gelirlerinden finanse etmektedir (Bifulco & Reback, 2014 (Çokgezen ve Terzi, 2008). Devlet okullarında birim öğrenci maliyeti düşük çıkmakla birlikte, özel okulların daha etkin çalıştığı, devlet okullarına devam eden öğrenciler açısından ise açığın kurs vb. ...
... Looking beyond Michigan, several studies have looked at how TPSs adjusted to these lost monies (Bifulco & Reback, 2014;Schafft et al., 2014). These effects include losing enrollments and closing schools to reduce excess capacity, reducing administrative and teaching staff levels, and addressing requirements in teacher employment and tenure contracts (often specifying that layoffs must occur in reverse order of seniority) without the same proportion of reduced salary costs (because longer tenured staff have higher salaries than less senior staff). ...
Article
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Betsy DeVos, the new U.S. Secretary of Education, has a reform agenda to advance school choice. Her track record includes enabling charter school growth in Michigan at taxpayers’ expense with little oversight or accountability. Although an effective advocate, DeVos represents a broader policy movement to privatize American education, much of it happening beneath public awareness. Understanding Ms. DeVos’s policy goals, how the President and Congress are supporting these, and how privatization is occurring in states can help principals and education leaders recognize the stakes, learn what to watch for, and take appropriate actions to preserve and strengthen America’s public schools.
... y limited research providing systematic evidence of how TPSs adapt to the loss of finances associated with charter school growth. There are, however, studies that enumerate impacts and challenges of adjustment. IMO (2013) summarizes financial impacts onMinneapolis-St. Paul. Schafft, et al. (2014) study funding and financial impacts in Pennsylvania.Bifulco and Reback (2014) provide instructive case studies of TPSs' financial adaptation to enrollment declines in Albany and in Buffalo New York. ...
Chapter
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The charter school movement is nearing its 25th anniversary, making this an opportune time to take stock of the movement by addressing the following questions: Where do charter schools locate? Who do they serve? Who manages them? Who teaches in them? Most importantly, what are the effects of charter schools on the academic performance of students who enroll in charters and on students who remain in traditional public schools? We review research findings that shed light on these questions.
... Estimates of this revenue loss due to lower student enrollment, charter school opening or expansion, and/or overall impact of charter schools range from 23.6-26.1 USD million in the Albany School District and 57.2-76.8 USD million in the Buffalo School District in New York (Bifulco & Reback, 2014) to 142 USD million in three large urban school districts in California (Lafer, 2018). This evidence collectively suggests charter schools can have a negative fiscal impact on district schools. ...
Article
50 free prints publicly available: https://www.tandfonline.com/eprint/Q747YQFF8KQ2BRJMHYMI/full?target=10.1080/15582159.2021.1944838
... ABD'de ise bazı devletler kupon [voucher] sistemiyle, velilere devletin sunduğu ortalama okul maliyetini çek olarak vermekte ve özel okullara bu kuponları bozma garantisi vermektedir (Sutton & King, 2013). ABD'deki diğer bazı devletler ise sözleşmeli okullar [charter schools] emlak vergisi gelirlerinden finanse etmektedir (Bifulco & Reback, 2014 (Çokgezen ve Terzi, 2008). Devlet okullarında birim öğrenci maliyeti düşük çıkmakla birlikte, özel okulların daha etkin çalıştığı, devlet okullarına devam eden öğrenciler açısından ise açığın kurs vb. ...
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Despite the rosy image projected by child-centered reformers, zealots and profiteers are really driving the charter school movement. Charter schools cannot flourish without drastic wage reductions or huge spending increases, nor will they benefit America's poorest children. The market, which has already destroyed kids' neighborhoods and parents' livelihoods, should stay out of schools. (12 references) (MLH)
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In theoretical models of residential sorting, a household's location decision is closely linked to its demand for local public services, such as schooling. Since school choice programs weaken the link between residential location and schooling options, they have the potential to affect both property values and residential location choices. Results derived from computable general equilibrium models suggest these effects could be large, but there is limited empirical evidence concerning whether they actually occur. This paper develops and tests predictions concerning the impact of inter-district choice programs on housing values and residential location decisions. Our empirical results strongly confirm our theoretical predictions and the findings of the computable general equilibrium literature: after their states adopt inter-district choice programs, districts with desirable nearby, out-of-district schooling options experience relatively large increases in housing values, residential income, and population density.
Article
Charter schools have seen dramatic growth over the last decade. However, we know little about how they affect traditional public schools. I look at how charters affect student outcomes in public schools using data from a large urban school district in the southwest. Unlike prior work that relies on school fixed effects, I address the endogenous location of charter schools using an instrumental variables strategy that relies on plausibly exogenous variation in local building supply. Results show that charters induce modest but statistically significant drops in math and language test scores, particularly for elementary students. However, results for middle and high school students show improvements in discipline.
Article
This paper estimates the effect of charter schools on both students attending them and students at neighboring public schools. Using school-level data from Michigan's standardized testing program, I compare changes in test scores between charter and public school students. I find that test scores of charter school students do not improve, and may actually decline, relative to those of public school students. The paper also exploits exogenous variation created by Michigan's charter law to identify the effects of charter schools on public schools. The results suggest that charter schools have had no significant effect on test scores in neighboring public schools.
Article
Texas has been an important player in the emergence of the charter school industry. We test for a competitive effect of charters by looking for changes in student achievement in traditional public schools following charter market penetration. We use an eight-year panel of data on individual student test scores for public schools students in Texas in order to evaluate the achievement impact of charter schools. We estimate a model that includes student/campus spell fixed effects to control for campus demographic and peer group characteristics, and to control directly for student and student family background characteristics. We find a positive and significant effect of charter school penetration on traditional public school student outcomes.
Article
This paper uses general-equilibrium simulations to explore the role of residential mobility in shaping the impact of different private-school voucher policies. The simulations are derived from a three-district model of low-, middle-, and high-income school districts (calibrated to New York data) with housing stocks that vary within and across districts. In this model, it is demonstrated that school-district targeted vouchers are similar in their impact to non targeted vouchers but vastly different from vouchers targeted to low-income households. Furthermore, strong migration effects are shown to significantly improve the likely equity consequences of voucher programs.