The Influence of Charter School Competition on Public School District Revenues across the U.S.

Since Minnesota passed the first charter school law in 1991, charter schools have become one of the most prominent school reforms in the U.S. While charter schools educate a small portion of public school enrollments, their existence has prompted various responses from traditional public school (TPS) districts. This paper explores education finance implications for charter schools and their encompassing TPS districts. Using a dataset comprised of U.S. TPS districts over seventeen years, I examine the average TPS district's revenue response to the establishment of a charter school. Using geographic information system software to map charter school locations, I estimate the TPS district's revenue response to various measures of charter school competition. Results from the estimation suggest that as a charter school moved closer to the TPS district, revenues from local and state sources decreased. The effect size of charter school competition was marginal, however, and may reflect the variation in policy environments across states.