Do Charter Schools Cause Fiscal Distress in School Districts?

Center on Reinventing Public Education:

Districts must no longer pay to educate students who transfer to publicly funded charter schools but they must still pay costs that can’t be adjusted immediately as school enrollment changes. Since 2017 critics in California and nationwide have claimed charter school growth undermines school district finances and forces cuts in the quality of schooling districts can provide.

These claims have gathered momentum, especially in California districts, where in 2019 teachers unions made stopping charter school growth part of their collective bargaining agendas. As part of a settlement with the United Teachers of Los Angeles, the local school board released a statement in support of a temporary moratorium on charter school growth, and the State Superintendent of Schools has convened a task force to consider charter costs and the impact on school districts. The Legislature is now considering various bills on charter school policy.

Despite the level of political activity around charter schools, evidence about their growth and effects on district enrollment is fragmentary. One study has tried to estimate what it costs a district when students transfer to charter schools, but its methods and uses of data do not follow professional norms for cost analysis. As a result, public discussion is spirited but not well informed.

Because CRPE has done pioneering work on estimating and mitigating costs to districts in times of charter growth, we sought to provide the best evidence available for California in time to inform the current debate. We have written short briefs on three topics:

As charter school enrollments have grown, what has happened to district enrollment, statewide and in critical localities like Oakland and Los Angeles? Are charters the main drivers of enrollment loss, such that ending charter school growth will stabilize district enrollment? Or is enrollment decline a deeply- rooted phenomenon that will continue regardless of what happens with charter schools?

Does the loss of students to charter schools create escalating financial challenges for school districts, increasing the risk of fiscal distress as critics claim? Or can school districts adapt to changes in enrollment and meet their financial commitments in the face of enrollment loss? What factors shape school districts’ ability to navigate changing financial circumstances?

The paper: A Wise Investment: The Productivity of Public and Private Schools of Choice in Wisconsin