Charter schools offer high return on investment, study claims

By Eric Schulzke, Deseret News National Edition

Published: Sat, Aug. 2, 2014, 8:40 a.m. MDT

 A new study out of the University of Arkansas argues that charter schools produce a significantly high return on investment when compared to traditional public schools.

A new study out of the University of Arkansas argues that charter schools produce a significantly high return on investment when compared to traditional public schools.


Charter schools offer more bang for the buck than traditional schools, say a group of researchers at the University of Arkansas. Comparing per pupil cost and test scores in 22 states and the District of Columbia, the study found that charters offer about 40 percent better results in both math and reading scores per dollar spent.

While charters generally perform on par with regular public schools in student performance, they receive far less in per pupil spending, says Patrick Wolf, a professor of Education Reform at the University of Arkansas and the lead researcher on the study. In the 2010-11 school year charter students nationwide received $3,814 less per student, a 28.4 percent gap.

To say that these findings are hotly contested is an understatement. Charter schools are taking on an ever larger chunk of students: roughly half of students in New Orleans, Detroit and Washington D.C. now attend them. Not surprisingly, defenders of traditional public schools responded quickly and vehemently to Wolf's findings.

Responding to the study, Rutgers professor David Baker issued a blistering blog post arguing that the data was fundamentally flawed, greatly understating the revenue that charter's receive. If the cash flows were properly parsed, he argued, charters would get much more funding than Wolf and his coauthors claim.

Baker accused Wolf and his colleagues of a “baffling degree of arrogance and complete disregard for legitimate research.” The study, Baker said, is either an “egregious display of complete ignorance and methodological ineptitude” or “a blatant and intentional misrepresentation of data.”

No love lost

No love is lost between the dueling sides on this debate.

Responding to Baker’s comments, Jay May, CEO of EduAnalytics, an educational consulting firm, argued that lower funding for charter schools is a “generally known fact,” and the data and details state by state are easily available to the public.

“We credited all revenues to the school sector where they ended up and were spent, not where they initially were sent,” Wolf said. “So Baker is wrong about that criticism as well.”

Wolf and his research team say they were scrupulous about accounting for any funding that was passed through from a district to a charter school, and they erred against charters whenever a doubt arose.

“That's a very conscious decision on our part,” said Meagan Batdorff, one of the researchers, “as we knew the immediate shouts and criticism we would encounter.”

“But this revenue data is painstakingly assembled and we consider and talk about everything under the sun for our accounting to present the most fair and accurate data possible given the data that is available,” Batdorff said.

Costs and benefits

Not everyone sees the data as controversial or counterintuitive.

It’s broadly understood that most charters are on par with traditional public schools in performance and most receive significantly lower funding, said Frederick Hess, director of Education Policy Studies at the American Enterprise Institute.

“Most people recognize that public school systems have been around for decades, and that there is lots of accumulated detritus,” Hess said. “That is a recipe for inefficiency in any sector. It seems plausible that schools that start fresh without decades of rules, and regulation and contract provisions can educate kids more effectively and more cost-effectively.”

But Hess argues that even though there is nothing really surprising here, the conversation the researchers are aiming to launch is badly needed and long overdue. For too long, Hess says, dialogue about education reform has occurred in a fiscal vacuum, even as pensions and entitlement spending have increasingly squeezed school funding.

For many years people resisted applying cost benefit analysis to education out of a sense that it was too important to be reduced to such measures, Wolf said. “But that’s unrealistic in an age of scarce resources,” he said. “There are necessarily going to be limits on how much we spend, and we owe it to the children to make that spending as efficient as possible.”

“Some of the most significant research makes clear things we should already know,” Hess said. “The fact that they have so carefully documented the outsized return on investment across two dozen states is probably going to have a real impact on the policy debate.”


The most common critique of charter schools is that they skim cream off the education milk bucket and then brag about churning better butter.

Critics argue that charters shunt aside economically disadvantaged students — who tend come from less academically ready environments — and special education students, who are costly to care for.

“Of course charter schools receive less money,” said Gerry Miron, a professor at Western Michigan University who has extensively studied charter school performance. “They don’t do special education, especially children with moderate and severe disabilities.”

Miron points to a 2010 study he did that found that charters received 25 to 27 percent less money than traditional schools. “But most of that difference was explained by spending on special education and student support services.”

“The great news is that charters can have more money, but they would have to recruit kids with severe and moderate disabilities,” Miron said. “Children with special needs don’t perform well on standardized tests, but they are very expensive.”

Wolf counters that charter schools are not as advantaged as some suppose. His study found that in 16 of 31 states studied, charters enroll a higher percentage of "free lunch students" than traditional schools.

Traditional schools enroll more special education students, Wolf acknowledged, but he argues that nationwide the difference is just 3 percent, far too small a gap to account for higher efficiency returns in charters.

Nonetheless, the authors argue, this new study does control for both student poverty levels and special education enrollment, removing both from the equations.

Consider the source

Critics of charter schools are acutely aware they are playing defense against some powerful players on both sides of the political divide, including not just the Walton Family Foundation, but also Bill & Melinda Gates and the Obama era Department of Education.

So it is no surprise that a report like this draws attacks not just on the merits but also on the source — including the source of funding.

“You should know, of course, that their work is funded by the Walton Foundation,” Miron notes, adding that the Walton Family Foundation fiercely supports both charters and school choice.

This is true. The University of Arkansas pretty much concedes simply by having a Department of Education Reform, a highly unusual department name that signals its purpose. And it’s not a coincidence that the program is in Arkansas, Walton family owned Walmart’s home base.

Wolf offers two defenses against these attacks. First, he points to a curriculum vitae with 24 major co-authored publications, mostly in highly ranked peer-reviewed journals.

Wolf will be submitting this study for peer-reviewed publication, he says, as he has his other work. All of his major school choice studies, he says, have eventually been published in such journals.

“People will say, yes, but this wasn’t peer reviewed,” Wolf said. “Well, it takes three to four years to get work published in top peer reviewed journals. Meanwhile, the world needs to know these things.”

Email: eschulzke@desnews.com

1. Brio
Alpine, UT,
Aug. 2, 2014

Almost every study shows a similar conclusion... that charter schools give substantially more bank for the buck and with its students learn much more quickly... especially compared to inner city public schools.

It's both sad and pathetic that the Obama administration is still denying the reality of the situation and fighting against charter schools and allowing student vouchers.

There is no longer any doubt that Obama is putting his allegiance to teachers unions ahead of the best interest of students. That's the one of the evils of accepting campaign funds from special interest groups.

2. Monsieur le prof
Sandy, UT,
Aug. 2, 2014

I think we are comparing oranges to apples here. Charter schools benefit from the same characteristic that private schools do, involved (and usually wealthier and more educated) parents who care about their child's education. Studies show that students from the same socio-economic environment will succeed equally well in any kind of school, be it public, private, or charter.

Public schools are required to accept every child that applies, regardless of his or her culture, legal status or ability, because we believe in universal education. Because of this, public school teachers face large classes with a wide spectrum and variety of kids. It's difficult to customize an educational plan for each individual student. That's why parents are so incredibly important.

On the other hand, students benefit from this wide variety of kids and cultures and develop social and coping skills that will benefit them throughout the rest of their lives. Strangely enough, some studies show that if public schools were allowed to force (gasp!) their students to wear uniforms (as private and some charter schools do), their scores would rise significantly and violence and bullying would drop.

3. Hamath
Omaha, NE,
Aug. 2, 2014

This study fails to account for parent initiative. The study says it controls for social economic issues, but it takes a specially motivated poor parent to jump through all the hoops to get their students in a charter school. In some locations, it takes years to get into one of the elite charters. You fail then to compare apples and oranges.

Poor parent A who is actually goes through the hoops to get their student in a charter school is a much more engaged parent than poor parent B who doesn't go through the hoops.

Parent A likely interacts with their child and has different standards at home than parent B. This study could very well be measuring the impact of engaged parents more than anything.

4. tabuno
Clearfield, UT,
Aug. 2, 2014

Sociological studies and test effectiveness are very complex and involve many variables that are easy to manipulate. Until more research is conducted it is way too early to allow just one study to be a basis for any drastic policy changes. Statistics can be a very sticky thing. It will take years to establish and confirm the validity of any simple statements regarding Charter Schools. In the meantime, students and parents will just have to make their own informed decisions on less than reliable information.

5. Tyler D
Meridian, ID,
Aug. 2, 2014

Public schools have been spared the realities of economics for too long and studies like this are a welcome addition in the fact & evidence based effort to reform our education system.

That both the Gates Foundation and the Obama Administration are generally supportive of reform efforts should tell us everything we need to know about this glaringly obvious problem, something that both France and Sweden (hardly hotbeds of right-wing ideology) figured out more than a decade ago (i.e., they both have voucher systems).

And I'm sorry, but it is insane to spend three times as much (or more) per pupil on special needs kids than on everyone else. There are tradeoffs to every economic decision in life and faced with this reality other kids (especially low income high achievers) are being short changed.