Policy Research

The Effects of Charter School Competition on School District Resource Allocation

David Arsen, Yongmei Ni

Summary

Does the introduction of charter schools to a district improve class size, teacher salaries, and budget decisions in traditional public schools? The authors examine data from Michigan from 1994 to 2006 and find no evidence to suggest that charter schools lead to improved resource allocation or to an increase in achievement-related educational services. Michigan is an ideal place to perform this study because the school system’s budget comes entirely from the state; local taxpayers cannot vote to increase taxes that would improve schools.

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Policy Implications

Charter school supporters from school districts like economic marketplaces where increased competition will improve student education. In Michigan, the only option for more funding is to attract more students to the school. However, even in this perfect market scenario, there has not been a shift in budget decisions related to better instructional quality. The presence of charter schools is unlikely to improve student outcomes without other concerted efforts to improve instruction-related funding to schools.