Charter Schools Don’t Fiscally Distress Regular Public Schools

Lance Izumi
Senior Director of the Center for Education at the Pacific Research Institute

In their continuing war against charter schools, teacher unions have persistently argued that charter schools, which are mostly non-union, have a large negative financial impact on the regular public school system.  New research, however, contradicts this claim.

In Sacramento, the California Teachers Association is pushing a package of anti-charter-school bills, including AB 1505, recently passed by the State Assembly, which would allow school districts to deny an application for a charter school if it would supposedly produce a negative financial impact on the district’s regular public schools.

CTA president Eric Heins claims that charter schools, which are publicly-funded schools that are autonomous from school districts and have greater flexibility to innovate, are “a drain on many of our public schools.”

This union narrative is undercut, however, by a recently-released series of studies from the Center on Reinventing Public Education at the University of Washington Bothell.

The CRPE studies specifically examined the financial impact of California’s charter schools on the state’s regular public school system since “critics in California and nationwide have claimed charter schools growth undermines school district finances and forces cuts in the quality of schooling districts can provide.”

The researchers’ findings tell a much different story than the claims of union leaders and other charter-school opponents.

They looked for a connection between enrollment in charter schools and county office of education-issued “negative certifications,” which are determinations that a school district cannot meet its financial obligations over a two-year period.

These negative certifications “represent the main indicator of fiscal distress in California school districts and trigger increased state oversight of district finances.”

The researchers found: “On average, charter schools enroll just 3 percent of students in school districts that receive a negative rating from the County Office of Education,” which is “statistically indistinguishable from charter enrollment in school districts that are not in fiscal distress.”

In other words, charter school enrollment does not differ between school districts that are in fiscal distress and those districts that are not, which leads the authors to conclude that there is “no evidence to support the claim that charter schools are to blame for fiscal distress in California school districts.”

Specifically, one of the studies found that between 1998 and 2015, “an average of just 1.5 percent of school districts where charter schools enroll 10 percent of all students entered fiscal distress,” which means that “districts with larger charter school enrollment shares are no more likely to enter fiscal distress.”

If charter schools are not the cause of the fiscal distress in school districts, then what are the real causes?

The researchers noted that the Vallejo City Unified School District had been in fiscal distress longer than any other district in the state.

They cited audit reports showing that Vallejo City Unified’s problems stemmed from “grossly overestimated enrollment figures, underestimated salary expenses and approved union contracts they couldn’t afford.”

More generally, the researchers pointed out, “While many school districts in the state have posted their largest budgets ever, thanks to historic state investments in K-12 education,” key factors such as rising “pension and health care costs, special education expenses, and teacher salaries are putting pressure on school districts’ bottom lines.”

Importantly, “Stopping the growth of charter schools will not address these issues,” which should be a warning to state lawmakers who think that banning new charter schools will somehow improve the fiscal health of mismanaged school districts.

Thus, rather than scapegoating charter schools, which have been shown to improve the achievement of students, especially African Americans and Latinos, school districts should seek to reform themselves.

“When families choose charter schools they do so for a reason,” say the CRPE researchers, and school districts “should be asking why, and what they can do differently to keep those families.”

In other words, the regular public school system should learn from the competition, not destroy it.

–Lance Izumi is senior director of the Center for Education at the Pacific Research Institute and author of the 2019 book Choosing Diversity: How Charter Schools Promote Diverse Learning Models and Meet the Diverse Needs of Parents and Children.

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