Putting Dollars Before Scholars? Evidence from For-Profit Charter Schools in Florida

Source: John D. Singleton, Economic Research Initiatives at Duke (ERID) Working Paper No. 212, March 3, 2016

This paper compares for and non-profit operation of charter schools in Florida, where the for-profit share has grown by 80% since 2004-5 to nearly half of all charter schools. The unique dataset assembled combines the annual independent financial audits and accountability reports filed by all Florida charter schools with enrollment data and student proficiency on end-of-grade exams. Comparisons reveal that independent for and non-profit charter schools locate in similar markets and serve similar student bodies, whereas for-profits belonging to a network locate in lower income, denser, and more Hispanic areas relative to network non-profits. Bearing out the concerns of parents and policymakers, regression estimates indicate that, among independent charters, for-profits spend 6% less per pupil on instruction and achieve lower student proficiency gains. By contrast, among charter schools belonging to a network, for-profits spend over 10% less per pupil (around $800), but expenses on student instruction are not being cut. The estimates, which control for differences across schools in student composition and other characteristics, imply that an equivalent level of per pupil expenses purchases 0.029σ higher student proficiency in reading and 0.028σ higher in math at network for-profit charter schools. These findings suggest that network for-profit operated charter schools are able to economize without compromising student education.