Charters Outperform Public Schools in Cost Effectiveness and Return on Investment

August 1, 2014

Researchers at the University of Arkansas' Department of Education Reform have produced a report on the productivity of public charter schools: Do people get more "bang for their buck" from charters than from traditional public schools, the study asks? The six researchers who conducted the study said yes: the average charter school outperforms the traditional public school both in terms of cost effectiveness and return on investment.

To calculate cost effectiveness, the researchers compared students' National Assessment of Educational Progress (NAEP) scores per every $1,000 per pupil investment in 21 states and Washington, D.C. They found:

  • Charter schools had a 40 percent productivity advantage in math, providing students with 17 additional NAEP points for every $1,000 invested in math.
  • In reading, charters gave students an extra 16 NAEP points per $1,000 invested -- a 41 percent productivity advantage over traditional public schools.
  • The cost effectiveness of charters varied from state to state. In Hawaii, charters had just a 7 percent advantage over public schools in math, while Washington, D.C. charters had a 109 percent advantage.

Return on investment was calculated by determining the amount of learning that took place during charter school or public school years. With that, the researchers could estimate expected lifetime earnings and compare it to the cost of the education. According to the study:

  • Charter schools provided a larger ROI over public schools in all states.
  • The ROI of a charter school exceeds that of a public school by 3 percent with just one year of charter schooling.
  • 6.5 years of charter schooling produces a ROI that is 19 percent higher than public schools.

The authors suggest that charters are more disciplined in their use of education funds, and thus more productive, because they receive less of them than public schools do.

Source: Patrick J. Wolf et al., "The Productivity of Public Charter Schools," School Choice Demonstration Project, Department of Education Reform at the University of Arkansas, July 2014. 

 

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