The Effects of Charter School Competition on School District Resource Allocation

Purpose: This article examines two questions: (a) How does resource allocation change in school districts experiencing sustained charter school competition? (b) Among districts exposed to charter competition, are there differences in the resource allocation adjustments between those that do and do not succeed in stemming further enrollment loss to charters? Research Design: The authors utilize fixed effect models to analyze a statewide panel data set of Michigan school districts from 1994 to 2006. The authors consider several dimensions of resource allocation-for example, average class size, teacher salaries, and spending shares devoted to a variety of disaggregated instructional and noninstructional functions, including administration. Findings: Overall, the results do not support the hypothesis that competition from charter schools spurs regular public schools to shift resources to achievement-oriented activities. Charter competition has had remarkably little impact on standard measures of district resource use in Michigan schools. On the other hand, higher levels of charter competition clearly generate fiscal stress in districts. Moreover, changes in resource allocation cannot explain the differing trajectories of districts that do and do not turn back the competitive challenge. There are no significant differences in the resource allocation changes made by districts that stabilize enrollment loss to charters and those that continue to spiral down. Conclusions: The authors find no support for the hopeful prediction that competition from charter schools will compel school district leaders to shift resources to achievement-oriented activities.