School Finance 101: Pondering Chartering: On Market Forces & Innovation?

One of the original premises of chartering as a competitive market tool was that introducing independently governed competitors and relaxing regulations on those competitors would induce innovation, which could then be shared for the good of the whole. This premise is flawed on many levels.

First, if innovation is to be induced by competition, there exists no incentive for competitors to share their innovations.

Second, if one subset of competitors is granted relaxation of regulations such that they can innovate, then that subset of competitors is granted an unfair advantage in that the regulations imposed on their competition (“district” schools) may inhibit their ability to “counter-innovate.”

Further, this system creates an incentive for the unregulated competitors to lobby for even stiffer regulation on their competition (“district” schools). [for example, lobbying in favor of test-driven teacher evaluation requirements to be imposed on “district” schools in a climate of public concern over the influence of testing – and then seeking exemption from those requirements for charter schools]

Of course, as I explained on a previous post, from ongoing writings, growth of the charter sector is hardly based on a competitive market model in the first place. Rather, that growth in many markets is already built on aggressive lobbying and manipulation of public policy:

It is important to acknowledge that charter school market shares are not, in recent years, expanding exclusively or even primarily because of market demand and personal/family preferences for charter schools. Traditional district public schools are being closed, neighborhoods left without options other than charters, district schools are being reconstituted and handed over to charter operators (including entire districts), and district schools are increasingly deprived of resources, experience burgeoning class sizes, reductions in program offerings sending more families scrambling for their “least bad” nearest alternative. [i]These are conscious decisions of policymakers overseeing the system that includes district and charter schools. They are not market forces, and should never be confused as such. These systems are being centrally managed without regard for equity and adequacy goals or the protection of student, family, taxpayer and employee rights, but instead, on the false hope that liberty of choice is a substitute for all of the above (including, apparently, loss of individual liberties). [ii]

Further, for all the talk that this model of competition (which really isn’t) would yield innovations not previously conceived, a growing body of research, including that most favorable to the charter sector suggests that truly novel innovations are hard to come by. Again from ongoing work:

While charter schooling was conceived as a way to spur innovation – try new things – evaluate them – and inform the larger system, studies of the structure and practices of charter schooling find the sector as a whole not to be particularly “innovative.” [iii]Analyses by charter advocates at the American Enterprise Institute find that the dominant form of specialized charter school is the “no excuses” model – a model which combines traditional curriculum and direct instruction with strict disciplinary policies and school uniforms, in some cases providing extended school days and years.[iv]Further, charter schools raising substantial additional revenue through private giving tend to use that funding to a) provide smaller classes, and b) pay teachers higher salaries for working longer days and years.[v]For those spending less, total costs are held down, when necessary, through employing relatively inexperienced, low wage staff and maintaining high staff turnover rates.[vi]In other words, the most common innovations are not especially innovative or informative for systemic reform.

Which leads me further down the road that we really need to rethink this “chartering” thing!



[i]See, for example:

Mezzacappa, Dale (2015, Oct. 1) Hite Plan: More charter conversions, closings, turnarounds, and new schools. Philadelphia Public School Notebook.

Weber, Mark (2015) Empirical Critique of “One Newark”: First Year Update. New Jersey Education Policy Forum.

Weber, Mark (2015, Jun. 5) Camden’s “Transformation” Schools: Racial & Experience Disparity in Staff Consequences.

[ii]   Green, P.C.; & Baker, B.D.; & Oluwole, J. (2015, forthcoming). The Legal Status of Charter Schools in State Statutory Law- University of Massachusetts Law Review.

Green, P.C., Baker, B. D., & Oluwole, J.O. (2013). Having it both ways: How charter schools try to obtain funding of public schools and the autonomy of private schools. Emory Law Journal, 63, 303-337.

Mead, J.F. (2015). The Right to an Education or the Right to Shop for Schooling: Examining Voucher Programs in Relation to State Constitutional Guarantees, 42 Fordham Urban Law Journal 703.

Civil Rights Suspended: An Analysis of New York City Charter School Discipline Policies (2015). Advocates for Children of New York.

[iii]Preston, C., Goldring, E., Berends, M., & Cannata, M. (2012). School innovation in district context: Comparing traditional public schools and charter schools. Economics of Education Review, 31(2), 318-330.

[iv]Michael Q. McShane and Jenn Hatfield (2015) Measuring Diversity in Charter School Offerings. Washington, DC: American Enterprise Institute.

[v]Baker, B. D., Libby, K., & Wiley, K. (2012). Spending by the Major Charter Management Organizations: Comparing Charter School and Local Public District Financial Resources in New York, Ohio, and Texas. National Education Policy Center.

[vi]Epple, D., Romano, R., & Zimmer, R. (2015). Charter schools: a survey of research on their characteristics and effectiveness (No. w21256). National Bureau of Economic Research.

Toma, E., & Zimmer, R. (2012). Two decades of charter schools: Expectations, reality, and the future. Economics of Education Review, 31(2), 209-212.

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Bruce D. Baker

Bruce D. Baker is a Professor in the Graduate School of Education at Rutgers, The State University of New Jersey, where he teaches courses in school finance policy and district business management. His recent research focuses on state aid allocation policies and practices, with particular attention to the equity and adequacy of...