Analysis: Charter Schools Yield 53% Greater Return On Investment Than Traditional Public Schools

Analysis: Charter Schools Yield 53% Greater Return on Investment Than Traditional Public Schools

Charter schools have been a subject of extensive nationwide discussion, but this should not be the case. The data indicates that public charter schools are a worthwhile investment.

Over the past few years, we have conducted five studies comparing traditional schools and charter schools in various U.S. cities where a significant number of families are choosing charters. We have analyzed the funding each sector receives as well as the learning outcomes they produce. The facts are crystal clear.

Charter schools achieve more with fewer resources.

Our initial report, "Inequity in City Charter School Funding," highlighted a considerable funding disparity between traditional public schools and charter schools in 14 cities across the country, including Washington D.C., Memphis, and Los Angeles. On average, charter schools received $5,721 less per pupil compared to traditional schools, which means families had to sacrifice about one-third of their educational resources when enrolling in charter schools.

Two years later, in our follow-up study of these same 14 cities, we found that the funding gap had slightly increased to an average of $5,828 per pupil. The main contributors to this disparity were local funding sources such as property and sales taxes. Our research in New York City also produced similar findings.

At the same time, we wanted to examine academic achievement. In 2018, we conducted a study to measure the cost-effectiveness of charter and traditional schools in terms of learning outcomes per educational dollars spent. To assess academic performance, we used data from the National Assessment of Educational Progress and the Center for Research on Education Outcomes at Stanford University.

This study focused on eight cities with substantial charter sectors, including Atlanta, Boston, Denver, Houston, Indianapolis, New York City, San Antonio, and Washington, D.C. In each city, we discovered that charter schools were more academically cost-effective compared to traditional schools.

In our most recent report, we confirmed that charter schools continue to demonstrate greater value than traditional schools. "The Updated Productivity of Public Charter Schools in Eight U.S. Cities" revealed that in reading, charter schools outperformed traditional schools by an average of 4.80 points per $1,000 funded, making them 40 percent more cost-effective. In math, charter schools achieved an average of 5.13 points higher per $1,000 funded, equating to a 40 percent greater cost-effectiveness.

Furthermore, we analyzed the return-on-investment for taxpayers in each sector. Our latest report showed that charter schools had an average ROI that exceeded that of traditional public schools by 53 percent over a 13-year span of K-12 education.

While our research demonstrates that charter schools achieve more with less, it also raises the question of whether charters should receive less funding in the first place.

If policymakers believe in the principle of equity, they should address the funding structures that currently result in significantly fewer resources for charter schools. Education dollars should be allocated in a way that ensures equal resources for both charter and traditional school students.

To improve academic performance throughout the public education system, policymakers should explore why charter schools, despite receiving less funding, achieve higher academic outcomes than traditional schools. What strategies do charters employ differently? Researchers like Philip Gleason of Mathematica Policy Research, Mark Berends of the University of Notre Dame, and our report co-author Patrick Wolf have conducted initial studies on best practices in charter schools. It is vital to expand and deepen this line of research.

Why are Washington, D.C. charters 43 percent more cost-effective than traditional schools in the city? And why do they generate a 58 percent higher ROI? Similarly, why are charter schools in New York City 26 percent more cost-effective with a 53 percent higher ROI compared to nearby traditional schools?

In light of the evidence, these are the questions policymakers should be asking. The sooner they find answers, the sooner they can discover how charter schools can effectively contribute to improving all public schools.

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