Charter Schools Continue to Prove More Academically Cost-Effective

By Jason Mandell

Charter schools are more academically cost-effective and yield a greater return on investment than traditional public schools in eight urban cities featured in a new report by researchers at the University of Arkansas Department of Education Reform that specializes in the analysis of K-12 academic outcomes and school funding. A Good Investment: The Updated Productivity of Public Charter Schools in Eight U.S. Cities examines cost-effectiveness and return on investment (ROI) in Atlanta, Boston, Denver, Houston, Indianapolis, New York City, San Antonio, and Washington, D.C., finding that charters yield more learning per education dollars spent in each city.

In the eight cities, researchers found that, on average, charter schools produce higher student achievement gains than traditional schools, as measured by the National Assessment of Educational Progress (NAEP). In reading, charters average 4.80 points higher—per $1,000 funded—than traditional schools, making charters 40 percent more cost-effective in reading. In math, charters average 5.13 points higher per $1,000 funded, making them 40 percent more cost-effective in math.

At the top of the list is Atlanta, where charter schools are 96 percent more cost-effective in both reading and math. Indianapolis came in second, with charters 59 percent more cost-effective in both reading and math than traditional public schools. Washington, D.C. charters are third at 43 percent more cost-effective in both subjects.

“Given the limits of public education funding, policymakers have a responsibility to ensure that they are investing in the types of schools that work the best – schools that provide the greatest amount of learning relative to their cost,” said Patrick J. Wolf, Ph.D., Distinguished Professor and 21st Century Chair in School Choice, Department of Education Reform, University of Arkansas. “For the second year in a row, in every city we studied, we found that public charter schools deliver more impact than traditional public schools when we take into account the amount of funding devoted to each sector.”

Charters also deliver a greater academic ROI in all eight cities. Charters’ ROI exceeds that of traditional public school by an average of 53 percent over the course of a 13-year investment in a K-12 education. Atlanta is first, with charter schools delivering an ROI that is 102 percent greater than traditional schools. Indianapolis came in second, with charters’ ROI 73 percent greater than traditional schools, followed by Washington, D.C. charter schools at 58 percent greater, and Boston charter schools at 53 percent greater.

The report also finds that charter school students secure greater lifetime earnings than students in traditional schools. For each dollar invested in a student enrolled in traditional schools, that student secures $4.41 in lifetime earnings. The same dollar invested in a student enrolled in charter schools yields $6.37 in lifetime earnings for that student.

“Our research shows that in a variety of urban environments across the country, charter schools are more productive – in some cases significantly more productive – than traditional schools,” said Corey A. DeAngelis, Ph.D., education policy analyst at the Cato Institute and lead author of the report. “Elected officials and policymakers have a choice about where to invest educational resources, and our research highlights the added value of investing in charter schools.”

To measure cost-effectiveness and ROI, the authors matched performance data from NAEP and research findings from CREDO at Stanford University with comprehensive data regarding the total funding received by schools in the public charter and traditional public-school sectors in the 2015-16 academic year.

The report is a follow-up to the first-ever national study to tie charter school funding to achievement at the city level. That study, Bigger Bang, Fewer Bucks? The Productivity of Public Charter Schools in Eight U.S. Cities, was released by University of Arkansas in February 2018 and examined the same cities. The research team’s most recent funding study, Charter School Funding: (More) Inequity in the City, found that the average disparity in per-pupil funding between traditional public schools and their public charter school counterparts in these cities reached $5,828 in 2016, representing a funding discrepancy of 27 percent, a slight increase over the previous two years.