The effects of charter school proliferation on public district school spending: evidence from New Jersey

Until now, there has been little study of how the rapid growth of charter schools in the United States may affect the finances of public school districts that lose enrollments to charters. Leveraging a detailed dataset from New Jersey, I use fixed-effects models to show that public school district spending increases during the early stages of charter proliferation: in the most detailed model, spending rises $625 per pupil at 10 percent charter proliferation for the typical school district. Spending then appears to fall at a “turnaround” point; different models place this point between 11 percent and 24 percent charter proliferation. Variations in estimates of the effects of charter proliferation on categorical spending and categorical staff intensity suggest resources vary in their elasticity to charter growth, providing an explanation for spending increases and decreases. This paper contributes to the small body of literature on the fiscal effects of charter proliferation on public district schools, showing that any benefits from charter growth should be balanced against the costs of extra spending at district schools