Charter Schools: How Many Bucks for the Desired Bang?

Do charter schools live up to their supporters’ claim that they deliver a better education for less money?

While previous research has focused on the first half of that claim – education quality -- a new report published by the National Education Policy Center examines the second half – what charters spend.

Schools operated by major charter management organizations (CMOs) generally spend more than surrounding public schools, according to Spending by the Major Charter Management Organizations: Comparing Charter School & Local Public District Financial Resources in New York, Ohio and Texas.

The finding is significant, especially when programs such as the U.S. Department’s “Race to the Top” are directing more resources to charters deemed to be successful. The NEPC report presents new research on this question by Rutgers University Education Professor Bruce Baker, working with University of Colorado Boulder doctoral students Ken Libby and Kathryn Wiley. The research team examined spending in New York City, Ohio and Texas.

“Charter school finances are hard to measure,” says Baker. “Charters generally receive both public and private funds. Also, in-kind assistance and resources from districts and states to charters vary greatly. Yet we can see that the most successful charters, such as KIPP and the Achievement First schools, have substantially deeper pockets than nearby traditional schools.”

The report explains that most studies highlighting or documenting a successful charter school have sidestepped or downplayed cost implications while focusing on specific programs and strategies in those schools. The broad conclusion across these studies is that charter schools or traditional public schools can produce dramatic improvements to student outcomes in the short- and long-term by implementing “no excuses” strategies and perhaps wrap-around services. Most charter school studies conclude that these strategies either come with potentially negligible costs, or that higher costs, if any, are worthwhile since they yield a substantial return.

But according to Spending by the Major Charter Management Organizations, a “marginal expense” may be larger than it sounds. An additional $1,837 expense in Houston for a KIPP charter school, where the average middle school operating expenditure per pupil is $7,911, equals a 23 to 30 percent cost increase.

“A 30 percent increase in funding is a substantial increase by most people’s definition,” says Baker.

The study compares per-pupil spending of charter schools operated by CMOs to the spending in nearby district schools. The report’s authors examined three years of data, including information on school-level spending per pupil, school size, grade ranges and student populations served. For charter schools, the report’s authors drew spending data from government (and authorizer) reports as well as IRS non-profit financial filings (IRS 990s). Notably, the data from these two different sources matched only for New York City; the data reported for Texas and Ohio from the two sources varied considerably.

The study found many high-profile charter network schools to be outspending similar district schools in New York City and Texas. But it also found instances where charter network schools are spending less than similar district schools, particularly in Ohio. In Ohio, charters across the board spend less than district schools in the same city.

In contrast, KIPP, Achievement First and Uncommon Schools charter schools in New York City, spend substantially more ($2,000 to $4,300 per pupil) than similar district schools. Given that the average spending per pupil was around $12,000 to $14,000 citywide, a nearly $4,000 difference in spending amounts to an increase of some 30 percent.

Similarly, some charter chains in Texas, such as KIPP, spend substantially more per pupil than district schools in the same city and serving similar populations. In some Texas cities (and at the middle school level), these charters spend around 30 to 50 percent more based on state reported current expenditures. If the data from IRS filings are used, these charters are found to spend 50 to 100 percent more.