The Fiscal Effects of School Choice Programs on Public School Districts. National Research
Author: Scafidi, Benjamin
Date: 2012-03-00
Type: Reports - Evaluative
Subjects: Expenditures,Small Schools,Public Schools,Private Schools,Teacher Effectiveness,School Choice,School Administration,School District Size,Expenditure per Student,School Districts,Enrollment,Educational Finance,Financial Support,Instructional Effectiveness,Academic Achievement,Educational Vouchers

In this report, the author constructs the first ever estimates for each state and the District of Columbia of the short-run fixed costs of educating children in public schools. He endeavors to make cautious overestimates of these short-run fixed costs. The United States' average spending per student was $12,450 in 2008-09. The author estimates that 36 percent of these costs can be considered fixed costs in the short run. The remaining 64 percent, or $7,967 per student, are found to be variable costs, or costs that change with student enrollment. The implication of this finding is that a school choice program where less than $7,967 per student is redirected from a child's former public school to another school of his or her parents' choosing would actually improve the fiscal health of the average public school district. And, it would provide more resources for students who remain in public schools. New York has the highest estimate of short-run variable costs per student at $13,741 per student. Utah has the lowest, at $5,192 per student. The estimates of variable costs per student vary widely among states for two reasons. First, some states devote more taxpayer funding to public education. Second, some states spend much higher proportions of their education dollars on instruction (a variable cost) relative to other states. In the interest of creating an overestimate of fixed costs, this report treats the following as fixed costs in the short-run: expenditures on capital, interest, general administration, school administration, operations and maintenance, transportation, and &quot;other&quot; support services. The key question for this analysis is the following: If a significant number of students left a public school district for any reason from one year to the next, then is it feasible for the district to reduce some of its expenditures commensurate with the decrease in its student population? The answer that comes from analyzing the finances of large and small school districts that lost students is &quot;yes.&quot; Both the large school districts and the small ones were able to reduce the combination of instructional and support expenses at a higher rate than the losses in students. Thus, these costs were variable, even in the short run. The rationale as to why a loss of students and the funding associated with those students could increase the performance of traditional public schools is twofold. First, a large number of empirical studies have found very large differences in teaching effectiveness across public school teachers. If public schools lose students and funding, they could choose to lay off the least effective teachers. The remaining students would be reassigned to more effective teachers, which would lead of a significant improvement in their academic achievement. Second, Chakrabarti (2007) has shown theoretically and empirically that when more money follows the child, the incentives are stronger for public school leaders to improve their schools. In Milwaukee, they did improve the public schools when there was an increase in the amount of money that followed voucher students to private schools. Appended are: (1) Definitions of Cost Categories in the Common Core of Data (CCD); and (2) Does Enhanced School Choice Cause Academic Harm to Students who Remain in Public Schools? (Contains 6 tables and 21 notes.)