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A neighborly welcome? Charter school entrance and public school competition on the capital margin

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Abstract

In 1999, the Utah State Legislature allowed charter schools to enter and be administered under the broad oversight of school districts. The structure of the Utah Charter School provides a natural experiment to study a unique way that traditional public schools compete against new charter schools. Using data from the 1992–2012 waves of the Common Core of Data, we estimated fixed effect models to measure the increase in capital expenditures by traditional public schools when faced with competition by new charter schools. We find that total capital outlay and spending on improving existing structures increases with charter competition, but new construction and instructional spending does not increase at a statistically significant level.

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Notes

  1. Stoddard and Corcoran (2007) show that publicly funded charter schools are more likely to enter in places where income inequality is higher and school performance is poorer. In addition, research suggests that teachers’ unions are effective in slowing down or preventing policies that are helpful to charter schools.

  2. Toward the end of the nineteenth century, similar references can be found to the imprudence reflected in the over-investment in bank buildings. Townsend (1881) shares the following insight, “Extravagant amounts spent for palatial buildings to be used simply for banking offices, or even if a part of the bank is rented, has an ill effect on its depositors and the community. It is not only unwise and unjust to expend deposits or surplus in this way, but the example taught is unqualifiedly bad. When depositors see the costly buildings, and on entering are startled at the sumptuous furnishings, one lesson of economy or thrift is taught them, even if the portrait of Franklin larger than life is posted in a conspicuous place, with the motto ‘Save your pennies.’ They learn rather that trustees who build such banking houses are not the proper custodians of their savings...”.

  3. Gronberg et al. (2015) find that while school district consolidation can take advantage oft economies of scale, especially in student transportation, increased market concentration causes school districts to become more cost inefficient. Glomm et al. (2005) show that charter schools tend to enter districts with poorer preforming schools. However, whether those schools capture efficiency gains from increased competition is unclear since charters tend to enter markets where private schools already are operating. Couch et al. (1993) show that an increase in competition from private schools increases algebra test schools in public schools in North Carolina. Thus, increased competition for students can cause efficiency gains and better student outcomes in public schools.

  4. Compare these findings to the literature showing a clear improvement in student outcomes when districts increase spending on instruction and teachers (Jackson et al. 2016).

  5. School districts could also want to increase bureaucracy since hierarchy increases an administrator’s influence. Some bureacucracy can be helpful since it can help systematize and scale learning; increasing economies of scale. However, Anderson et al. (1991) find that states having larger school administrations tend to graduate less students and perform worse on standardized tests.

  6. See https://le.utah.gov/interim/2019/pdf/00000282.pdf.

  7. We dervice the result by dividing each side by \(x_{j}\) and multiplying each side by \(k_{j}\).

  8. United States Census Bureau (2014).

  9. Weber, Davis, Salt Lake and Utah counties all are considered to be Wasatch Front counties. These counties also comprise the Ogden, Salt Lake City, and Provo metropolitan areas.

  10. See http://www.schools.utah.gov/charterschools/School-Directory.aspx.

  11. See http://www.schools.utah.gov/charterschools/Annual-Report/2014-Public-Report-Final.aspx.

  12. While not located along the Wasatch Front, Washington County is one of the most rapidly growing counties in the United States (United States Census Bureau 2013).

  13. Previous studies on the effects of charter schools entry or vouchers on traditional public schools that use a similar district fixed effects model include Bettinger (2005), Figlio and Rouse (2006), Booker et al. (2011), Bifulco and Buerger (2015), Chakrabarti and Roy (2016) and Brehm et al. (2017).

  14. Private school enrollment is less than 3% of K-12 enrollments in Utah—so the private school influence on competition is ignored.

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Authors and Affiliations

  1. United States Military Academy, 607 Cullum Road, West Point, NY, 10996, USA

    Michael S. Kofoed

  2. Utah State University, 3565 Old Main Hill, Logan, UT, 84322, USA

    Christopher Fawson

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  1. Michael S. Kofoed
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  2. Christopher Fawson
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Correspondence to Michael S. Kofoed.

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Michael S. Kofoed: The views expressed herein are those of the authors and do not reflect the position of the United States Military Academy, the Department of the Army, or the Department of Defense.

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Kofoed, M.S., Fawson, C. A neighborly welcome? Charter school entrance and public school competition on the capital margin. Public Choice 188, 75–94 (2021). https://doi.org/10.1007/s11127-020-00812-7

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