New Study Analyzes Spending of For-Profit Charter Schools

This week my colleague Sean Cavanagh wrote about an interesting new report out of the National Center for the Study of Privatization in Education on spending among charter schools in Michigan. The study, “Is Administration Leaner in Charter Schools? Resource Allocation in Charter and Traditional Public Schools” seems to answer its own question: no.

The study, which analyzes budget allocation for the more than 265 charter schools in Michigan, one of the largest charter offerings in the country, finds that charters spend $774 more per pupil on administration, and $1,140 less on instruction than traditional public schools. In Michigan, operational funding for charter school and traditional public school budgets are about equal, the report says.

From Sean’s post:

more than 80 percent of traditional public schools’ spending goes to personnel costs, mostly salaries and benefits—’which would presumably drive instructional costs up. Charters, on average, pay lower salaries for teachers with similar credentials to those hired by traditional publics, and also employ a less experienced and less costly teaching force, the authors say, which would keep instructional costs down.

What I found interesting is that in Michigan, about 80 percent of charter schools are managed by for-profit education management organizations (EMOs), more than most states, the report, authored by researchers David Arsen, of Michigan State University, and Yongmei Ni, of the University of Utah, said. Most of the difference in expenditures between charters and traditional schools go to “general administrative services,” which includes EMO fees. And, in turn, EMO-managed charters spend $312 per pupil more on administration than self-managed charters, the report says.

As the report notes, administrative costs are not a sign of inefficiency, or even poor academic performance. (And here’s an interesting rebuttal to the report.) But if coupled with another highly publicized but controversial report on charter schools by the National Education Policy Center earlier this year—which showed that only 48 percent of for-profit charter schools met adequate yearly progress, lower than nonprofit EMOs—the value provided by for-profit EMOs could come into question.

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