Fiscal and Education Spillovers from Charter School Expansion

Abstract

Do charter schools drain resources and high-achieving peers from noncharter schools? We provide new evidence on the fiscal and educational consequences of charter expansion for noncharter students in Massachusetts, which temporarily compensates districts losing students to charter schools. Exploiting a 2011 reform that lifted caps on charter schools for underperforming districts, we use complementary synthetic control (SC) and differences-in-differences instrumental variables (IV-DiD) estimators. Our results suggest charter expansion leaves districts’ overall per pupil revenue and expenditure unchanged, but induces districts to shift expenditure from capital investment and support services to instruction and salaries and ultimately increases noncharter students’ achievement in math.