Leandro and the Financial Impact of Charter Schools on Districts | Eastern North Carolina Now

    Publisher's note: The author of this post is Dr. Terry Stoops, who is director of research and education studies for the John Locke Foundation.

    "North Carolina District Schools Are Thriving Fiscally Alongside Charter-School Growth" is a new peer-reviewed article published in the journal Political Economy in the Carolinas. Dr. Erik Root, an executive with the Roger Bacon Academy charter school management organization, raises doubts about the claim oft-repeated claims that public charter schools harm their district school competition.

    Root's article is a response to "The Fiscal Externalities of Charter Schools: Evidence from North Carolina," a much-discussed working paper published in 2017 by Duke University professor emeritus Helen Ladd and University of Rochester economics professor John Singleton. Ladd and Singleton's study examined six of the 59 counties that had one or more charter schools during the 2015-16 school year. The authors found, "large and negative fiscal impact from $500-$700 per pupil in our one urban school district and somewhat smaller, but still significant, fiscal externalities on the non-urban districts in our sample." The six counties in the sample were Durham, Buncombe, Cabarrus, Iredell, Orange, and Union.

    Root takes issue with Ladd and Singleton's limited sample, methodology, classification of expenditures, and data sources. To address these shortcomings, he conducted detailed reviews of local comprehensive annual financial reports (CAFRs) to obtain a more comprehensive account of district expenditures. Root found that district expenditures are outpacing inflation, even as charter schools receive a share of funding to educate children whose parents opt for charter options. "There is no evidence charter schools are causing fiscal harm to the public school system," he concludes.

    While this may seem like a trivial spat between scholars, the proposition that public charter schools unfairly drain money from districts has real-world consequences. For example, members of the Governor's Commission on Access to a Sound Basic Education are formulating recommendations that may be used by the courts to compel the legislature to approve policies and budgets that meet the requirements of the ongoing Leandro court decision. The commission believes that charter schools should be in the conversation, even though Judge Howard Manning, who oversaw Leandro compliance for years, rarely mentioned them.

    Earlier this week, the commission met to discuss their latest draft recommendations. The Finance and Resources Work Group draft included a revised recommendation related to charter schools:

    Public charter schools were created to be laboratories of innovation to help improve public education and provide alternative learning environments for students. Unfortunately, the expansion of charter schools has begun to place a financial and planning burden on public schools in school districts. Given that the state is obligated to ensure that every public school student has access to a sound, basic education, the state should provide adequate funding for all students in a way that does not have an adverse effect on the ability of school districts to provide a sound, basic education. To achieve this goal, the state should conduct a study on the best and most appropriate ways to fund charter schools while maintaining the opportunity for every student to have access to a sound, basic education as required by law and the Court.

    It should come as no surprise that Dr. Helen Ladd is a member of the commission and supports the recommendation. It has not been finalized by the commission, which awaits the release of an action plan by California-based consulting firm WestEd.

    Lindsay Marchello's Carolina Journal story on the commission meeting included my objection to the implicit assumption in the recommendation that charter schools are all cost and no benefit. The members of the commission appear to assume that charter schools impede the ability of school districts to provide a sound, basic education, even though research on the fiscal impacts of charter schools in North Carolina is very limited. After all, the Ladd and Singleton study examines only six counties in the state. It would be foolish to base a recommendation on research that has such a limited sample. More importantly, Root's analysis offers a counterpoint worthy of consideration by the commission.

    Of course, the issue of student achievement remains. In my initial response to Ladd and Singleton's analysis, I pointed out that there was no discernable drop in student performance among the six school districts in their sample. Even if we granted that charter schools introduced negative fiscal impacts on these districts, there was no apparent academic harm to students who remained in them. If the court adopts a recommendation to "study on the best and most appropriate ways to fund charter schools," it should also address whether there is any relationship between funding mechanisms and academic outcomes.

    Overall, the draft reports published by the Governor's Commission on Access to a Sound Basic Education contain a handful of very good ideas, but the commission's inexplicable treatment of charter schools discredits the overall effort. They would be wise to consult with Dr. Root and others to consider the ways that charter schools have benefitted families and improved North Carolina's system of public schools.