Are Choice Schools Worth The Money?

“School Choice: Future of New Magnet Schools Uncertain” ¹ – a headline in the CT Mirror early this year questions the worth of school choice after the US Department of Education reported that Connecticut’s public school enrollment is projected to decrease by 5% over the next decade. ² The debate around choice schools, which consist primarily of magnet and charter schools, is often dominated by intellectual considerations of educational equity. Waiting for Superman, a pro-school choice documentary, depicts the failures of the American public education system and glorifies charter schools as the only way out for underprivileged children. Choice proponents advocate school choice as a fundamental right that parents should have to advance their children’s education, while choice opponents argue that choice schools benefit a small proportion of students at the expense of the majority. However, policy decisions are often made from both political and economic standpoints, and it is imperative to address them in the context of school choice.

Looming debt problem

One of the reasons why choice school expansion is up in the air is due to the massive state budget deficit. Using Census Bureau’s 2012 population estimates, the state debt is equal to $16,178 for every resident of a U.S. state. ³ But if we base the state debt in terms of percentage of Gross State Product, Connecticut ranks seventh on the list of most indebted states with 49% as compared to the state average of 33%.

The budget deficit is projected by the Office of Fiscal Analysis to exceed $1.3 billion in 2015-2016 and $1.4 billion in 2016-2017. ⁴ With this economic landscape in mind, it is worth questioning the decision to increase spending for choice school expansion. Can the state afford to expand choice schools at a time when district schools are in need of more funding? This is a question that the Connecticut General Assembly has to answer, and this piece will offer an economic perspective on choice school spending and deliver proposals for the state legislature to promote educational equity in a fiscally responsible manner.

While policymakers may point out that painting an ugly picture of state budget deficit argues against costly expansion of choice schools and at the same time warrants a reduction in educational spending, I seek to lay out my argument more explicitly by saying that I am not advocating for less spending on education. What I am suggesting is to shift funding away from choice school expansion towards district schools that require more funding per pupil. Since the state budget deficit is substantial, every dollar counts, and every additional dollar should go to the most needy district schools, where the greatest positive impact can be made.

Charter schools cost more

Choice proponents claim that choice schools are able to serve their students at a much lower cost, which might imply that they are more cost-effective in providing the same if not better quality of education than their district counterparts. Based on data available online, I have decided to show graphs for school expenditures in 2008-2009, a period where graphs for magnet, charter, and district schools are readily available. After excluding expenditures for transportation and special education services, Prof. Bruce D. Baker, a professor of education at Rutgers University, made an observation that deserves attention from choice proponents. The following graph compares the expenditure-per-pupil between charter and district schools in Connecticut.

Data points for district schools revolve around $10,000 per pupil, while most data points for charter schools are located above $10,000 per pupil. This shows that charter schools have received more state funding than district schools. Prof. Baker excluded transportation and special education expenditure for a fair comparison between charter and district schools because transportation and special education expenses for charter school students are booked as district expense. In reality, charter schools are even more costly to run if they do not remit transportation and special education expenditure back to the district.

Since district schools incur less expenditure-per-pupil, shifting funding away from choice schools towards district schools is an attractive and economical option for Connecticut. To showcase a more specific comparison between district and charter schools, the graph above illustrates spending between a district school and a charter school in Hartford and Bridgeport. If we look at the bars that exclude transportation and special education services, charter school spending per pupil is actually higher than district school spending per pupil.

Impact of charter schools

Since charter schools do not present a cost benefit for the state, perhaps the state could justify the increase in spending for charter schools through the positive impact on student performance. The National Charter School Study conducted by CREDO ⁵ revealed that students in charter schools have shown an upward trend in their performance over the past five years. However, the study did not address the fact that charter schools might be cream skimming, a process of selecting more academically able students for enrollment. This selection bias is accounted for in another study of charter schools ⁶ by the National Center for Education Evaluation, in which students who won the lottery were compared with students who lost the lottery, eliminating the selection bias of intrinsic motivation. They found that on average, charter schools did not have a statistically significant impact on student achievement. The following graph shows the substantial increase in state funding for charter schools over a 14-year period, and every increase in charter school funding represents an opportunity cost for district schools that could have used the funds to serve more disadvantaged students. Given the fact that the impact of charter schools is questionable even when the state has increased funding over time, it does not make economic sense to expand the type of schools that will benefit only a small proportion of students, if any benefit can be found at all.

Impact of magnet schools

Magnet schools are the state’s go to solution to comply with the Sheff mandate of at least 25% white enrollment. Casey D. Cobb, a professor of educational leadership at the University of Connecticut, Robert Bifulco, Associate Professor of Public Administration at Syracuse University, and Courtney Bell, an associate research scientist at the Educational Testing Service, conducted research ⁷ on the improvement in academic performance of students in Connecticut magnet schools in 2009 by comparing test scores for city students who attended magnet schools and those who applied but did not get in. Even though the report concludes that interdistrict magnet high schools have positive effects on mathematics and reading achievements of urban students, I find it difficult to draw reliable conclusions due to the small sample size and the potential for unobservable selection bias. If similar results were obtained after using a larger sample size, we need to ask ourselves whether millions of state dollars spent on magnet schools could have been used by district schools to produce similar if not better results.

Magnet schools are expensive 

State funding for magnet schools has increased drastically over time, and with features such as specialized sciences or arts programs, magnet schools also cost more to run. Using Connecticut Department of Education data, the CT Mirror reported that magnet schools in Hartford region incur a higher expenditure-per-pupil at an average of $12,845 per pupil, which is about $2,500 more than the average expenditure-per-pupil for Connecticut district schools.

Since magnet schools cost more than charter schools and district schools, in order to justify an increase in funding from the state, the rate of return of magnet schools has to be substantially greater than suggested in the Bifulco paper. More complete research involving a larger sample size of schools should be conducted to evaluate the effectiveness of magnet schools and the costs associated to run them.

Choice schools under-serve needy communities

With the questionable impact of choice schools in mind, more funding should be given to cash-strapped district schools given the fact that they enroll more English language learners (ELL) and special education students who need access to more costly resources. Robert Cotto Jr., the Director of Urban Educational Initiatives, and Kenneth Feder, a policy analyst at Connecticut Voices for Children, reported ⁸ that magnet and charter schools have a lower percentage of ELL and special education students.

The lower percentage of ELL could result from cream skimming practices or the lack of conducive environments for disadvantaged students. In a CT Mirror article ⁹, Jenifer Colon, an eighth grader from Puerto Rico said that magnet schools “are not really focused on English language learning students,” which explains why it made sense for some students like her to attend a district school to learn the language. Cotto’s report also found that charter schools are hyper-segregated by race, serving more than 90% minority students.

In all four towns on the graph above, charter schools have the highest percentage of student body that identified as students of color. Since it is not clear whether charter schools improve student performance, the lack of racial integration should be a strong signal to the state that perhaps charter schools are not worth further investments.

Expand Open Choice program

Despite the fact that Connecticut could ill afford to spend more money on choice school expansion at a time when limited conclusions can be drawn about choice school impact on educational outcomes, the proposal to shift funding from choice schools towards urban district schools may still be unpopular in the Connecticut state legislature, which is dominated by suburban lawmakers who represent constituents less inclined to want their taxes spent on more urban children. My first proposal is to increase financial incentives for suburban district schools to enroll more urban students through the Open Choice program. Suburban districts get an average of $2000-$6000 from the state for every urban student that they enroll, which is substantially lower than the average expenditure per pupil for magnet schools in meeting the court-mandated Sheff requirement. In light of the fact that mandatory participation in the program is “not on the table right now” ¹⁰, the state should increase funding for Open Choice by another $3000 or more per pupil, which is still more cost effective than choice school spending, to improve educational resources for current district schools. This would also promote racial integration and allow a higher proportion of urban students to benefit from richer educational resources that suburban district schools possess. Since suburban schools would be incentivized to enroll more urban kids, the increase in state funding would benefit both suburban and urban students and dispel some resistance from suburban legislators. Educationists could then study educational models of successful suburban district schools and replicate them in the city to help improve urban student performance. I should also note that Open Choice might incur higher transportation expenses that may not appear in the district schools’ budgets, since the state bears those costs. However, this caveat applies to choice schools as well as they require transportation expenditure that would be incurred by districts.

Funding disparity between districts

We need to be aware of the funding disparity between school districts, because Open Choice is likely to increase funding for rich districts more so than for poor districts. This may be a bitter pill that policymakers have to swallow, as suburban lawmakers have to be incentivized to pass a bill that would benefit district schools in both suburbs and cities. The following graph illustrates the most advantaged school districts and the most disadvantaged school districts in Connecticut.

Ironically, two of the most disadvantaged school districts, Bridgeport and New Britain, have higher percentages of students who are ELL, who receive FRPM, or identify as Black or Hispanic, but the nominal current expenditure per pupil and average teacher salary is relatively lower than their suburban counterparts.

Increase funding for under-resourced district schools

Ultimately, the main driver behind educational inequality in Connecticut still lies with urban district schools that require the most state funding. My second proposal, albeit less popular than the first one if proposed as a bill in the state legislature, is to directly allocate more funds to urban district schools. Based on the previous graph, the expenditure per pupil in the most disadvantaged districts, which happened to be urban districts, is significantly lower than advantaged districts. Even though channeling more funds into district schools should improve educational resources, improving student performance is not a direct result of simply spending more money. Drawing on a national longitudinal dataset collected over 12 years, W. Norton Grubb, the author of Money Myth ¹¹, makes a crucial distinction between “simple” resources such as higher teacher salaries and “abstract” resources such as school culture that cannot be readily bought. While an inefficient use of state funds that improve only simple resources will not necessarily improve performance, it does not detract from the fact that on average, expenditure per pupil is positively correlated with improved student outcomes. ¹² While the effect of increased financial resources may be larger for some students than others, “money matters, resources that cost money matter, and more equitable distribution of school funding can improve outcomes”.

Ethical implications

Open Choice Program could potentially draw more bright and motivated students away from urban schools towards suburban schools, and worsen the average student performance in urban schools. Moreover, the burden of busing through the Open Choice Program falls primarily on minority urban students as they have to experience long bus rides every morning to get to suburban schools. Many white suburban students do not have great incentives to travel to urban schools for their education and could comfortably go to suburban schools in their neighborhoods, escaping the burden of busing. Magnet schools in suburbs and cities distributed the burden of busing more evenly, as suburban students would bear the burden of long bus rides to get to urban magnet schools. However, if funding for urban district schools significantly exceeded funding for suburban district schools, more suburban parents would be incentivized to send their children to enroll in urban schools to take advantage of greater educational resources that arise from higher expenditure.

Choice school expansion may not be the way forward to achieve educational equity for many children in Connecticut. Increasing funding for choice schools reveals a dark implication that we no longer believe in district schools as the hallmark of American public education. It reveals our preference for abandoning poor district schools and leaving children trapped in those schools to fend for themselves while a small group of students well-poised to take advantage of school choice leave their struggling classmates behind. We need to start questioning the effectiveness of choice schools in providing quality education to our children and to pay more attention to district schools that have been pushed to the sidelines. Policies should aim to achieve educational equity for as many students as possible rather than to concentrate on improving academic outcomes for a small subset of the student population at the expense of the majority. Are choice schools really worth our money? The answer to this question contains implications for efforts that could reduce the income gap in Connecticut. After all, if policymakers were able to reform struggling district schools into exemplary providers of first-rate public education, Davis Guggenheim, director of Waiting for Superman, would have less of a sob story to tell.