Helping Education and the Economy
Charter Schools Can Improve Education in Tough Economic Times

Family North Carolina Magazine—January/February 2009

By R. Matthew Lytle, Ph.D.

As the General Assembly reconvenes, it faces a large budget deficit that numbers in the billions of dollars. This impacts all areas of public policy in North Carolina, which means that lawmakers face the task of making budget cuts in almost every department and program. The State’s educational system is not immune to these fiscal concerns. Demographic studies indicate that North Carolina has some of the fastest growing metro areas in the nation.¹ This influx of new citizens means increased demand for seats in public schools that are already operating at or near capacity. While many schools have converted to year-round schedules, this strategy will not be able to accommodate North Carolina’s rapidly growing population. The steadily declining economy means that there are fewer funds available to ensure that North Carolinians have access to public education.

Fortunately for lawmakers, there is a way to improve the state of North Carolina’s educational system while at the same time potentially saving millions of dollars. The answer lies with charter schools.

Charter Schools Defined

Charter schools are public schools that enjoy a greater amount of autonomy than traditional public schools. Each school is organized as a nonprofit organization with its own board of directors. Because of the school’s independent nature, charters have greater freedom on budgetary, personnel, and curricular issues than traditional public schools. Each charter school can even cater to specific populations such as those “who are identified as at risk of academic failure or academically gifted.”²

Increased autonomy comes at a price, however. Unlike traditional public schools, charter schools do not receive government funds for building facilities, meaning that the charter’s board of directors must find funds for building facilities and upkeep. Because of their status as public schools, charters receive a per-pupil allowance from the State. In addition, as public schools, charters cannot charge tuition, nor can they choose students based on merit. If there are more potential students than seats, charters must choose students by a lottery, while the remaining students are put on a waiting list.

Even with a higher level of autonomy, charter schools are still accountable to the state for academic and financial results. Charter schools are required to give end-of-year tests and hold to whatever attendance standards are spelled out in the charter. If a charter school does not meet these standards, it runs the risk of having its charter revoked or not renewed. The State Board of Education (SBOE) has the final say on such matters.

A Success Story

Before discussing charter schools in North Carolina, it is instructive to examine how charter schools have transformed education in Louisiana—a state ravaged by natural disaster.

In late August 2005, Hurricane Katrina devastated the city of New Orleans, displacing some 64,000 public school students in the process.³ As part of its “new model for public education,” which began in late 2005, New Orleans uses its two existing independent school boards to govern its public schools, nearly half of which are charter schools. Indeed, a June 2007 study notes that “New Orleans has 57 percent of its students in charter schools—the largest percentage of any district across the country.”⁴

Before Katrina, New Orleans was among the worst performing school districts in Louisiana,⁵ also ranking among the worst in the nation.⁶ A 2008 study notes that as tragic as Katrina was, the storm also provided an opportunity for public education in the city:

“While no one would have desired such damage and disruption to the lives of students, parents, teachers, and staff, the storm offered the people of New Orleans a rare opportunity to remake one of the nation’s lowest-performing public school systems.”⁷

While it is still too early to make definitive conclusions about how successful the “new model” has been or will be, early indicators suggest that this model is already beginning to yield positive results.
Because so many schools were destroyed by Katrina, charter schools allowed the New Orleans School Board to open a larger number of schools in a relatively short period of time, with fewer resources, since charters do not require as much money from school boards. According to the study, “[i]ndividual charter schools have secured between $10,000 and $25,000 in supplemental funding through private donations and foundation grants.”⁸ Charter schools also helped to further decentralize the education landscape in New Orleans.⁹

New Orleans’ charter schools offer more than merely economic benefits, however. Preliminary data indicate academic successes as well. Many of these successes arise from the freedom charters have to set their own curricular programs. The New Orleans public education study notes that many charters “have adopted school calendars designed to increase instructional time. … Many charters have longer school days and supplemental after-school tutoring, and some even offer summer school.”¹⁰ Additionally, “[c]ommunity members frequently name specific … charter schools as some of the strongest in New Orleans.”¹¹ One notable example is Benjamin Franklin High School, a New Orleans charter that ranked 16th nationally on U.S. News and World Report’s list of “America’s Best High Schools.”¹²

On average, New Orleans charter schools performed better than their district school counterparts in 2007. In the struggling Recovery School District (RSD), charters outperformed district schools by a large margin in reading and math scores for both 4th and 8th grades. Results between charter and district schools in the Orleans Parish School Board (OPSB) tended to be much closer, although charters still met or exceeded district school scores in every area except 4th grade math. In 4th and 8th grade reading and math scores, OPSB charter schools exceeded the Louisiana state passage rate on end-of-year exams. While RSD schools did not meet the state passage rate, charter schools came significantly closer to the average than did RSD district schools.¹³

It is important to note that the RSD schools (charter and traditional) have a much higher ratio of special needs students in relation to talented and gifted students than OPSB schools.¹⁴ This consideration leads to several conclusions regarding charter schools. First, low end-of-year scores do not necessarily signify failure, especially when the scores come from schools made primarily of at-risk students. Second, charters in New Orleans appear to benefit at-risk students more than district schools. Finally, charter schools perform on par with district schools when it comes to talented or gifted students.

Charter school successes are not limited to New Orleans, however. Of the 40 longitudinal statewide studies surveyed by an October 2007 study, 31 studies show some kind of gain by charter schools over district schools.¹⁵ An additional five studies find “comparable gains” between charter and district schools.¹⁶ Other research concurs with this overall assessment of charter schools,¹⁷ meaning that charter school successes are not isolated phenomena. On the contrary, charters are succeeding across the nation, meaning better education choices for parents.

North Carolina Charters

When assessing the low scores certain North Carolina charter schools have received in national studies, it is important to bear in mind that performing statistical studies is an inexact science, and finding precise and realistic results is often elusive. Education studies must consider a large number of variables, many of which are not supplied by the data. In these cases, researchers must make certain assumptions and corrections in order to present a closer correspondence to reality. Since no hard data exist in most of these cases, the assumptions and corrections are necessarily speculative and subjective. These corrections therefore will often have huge effects on the outcome of the study. This does not mean that educational studies do not present reliable findings, but rather that each study has its own strengths and weaknesses, which must be considered when analyzing these studies.¹⁸

One of the most cited studies on charter schools in North Carolina finds that “students make considerably smaller achievement gains in charter schools than they would have in public schools.”¹⁹ Robert Bifulco and Helen F. Ladd, who authored the study, used an extensive model designed to give an accurate picture of charter schools. The merits of the research model and the large sampling size make this study appealing to those conducting national analyses of charter school performance, but Bifulco’s and Ladd’s model is not without its problems.

After Bifulco and Ladd released their study, Craig Newmark, Associate Professor of Economics at North Carolina State University’s College of Management, wrote a policy report on Bifulco and Ladd’s findings and research methodology.²⁰ Newmark’s analysis finds that Bifulco and Ladd’s “research faces serious problems: some of which [Newmark’s] report attempts to adjust for, some of which are revealed by statistics that the researchers do not report, and others that serve to question the relevance of the comparisons being made.”²¹

One of the major problems Newmark found with Bifulco’s and Ladd’s research is that they “do not distinguish among types of charter schools, many of which were established to serve ‘at risk’ students [sic].”²² Newmark identifies four target populations served by North Carolina charter schools: (1) at-risk students, (2) economically disadvantaged students, (3) students with special needs or disabilities, and (4) academically gifted and/or college-bound students.²³ A 2001 study notes, “[O]f these four types of targeted charters, at-risk charters were by far the most numerous. At least during the period 1998 through 2000, the number of at-risk charters was greater than the number of the other three categories combined.”²⁴

Because Bifulco and Ladd do not include this important distinction in their analysis, they judge the performance of all of North Carolina’s charter schools based on a vast majority of schools that cater to at-risk students. The unique problems faced by at-risk students lend themselves to lower scores on end-of-year tests. While these scores may be below—even well below—the state average, the question that must be answered is whether these students would fare better in a traditional public school in their district. Moreover, the scores of at-risk students are likely to be more concentrated in charter schools designed specifically to teach at-risk students than they would be in a more diverse traditional school.

In many ways, the very existence of these charter schools demonstrate that these students are better served by charters than they would be by district schools. The main indicator of this is the fact that parents of at risk students choose to put their children in these schools instead of keeping the children in district schools—even though scores are still well below the state average. In January 2009, Jack Moyer, director of the state Office of Charter Schools, recommended that charters for two schools, PreEminent Charter and Torchlight Academy, not be renewed. Parents of students in these schools implored Moyer to renew the charters, even though the scores were low.²⁵

Economic Benefits

The North Carolina Department of Public Instruction’s five year estimate of facilities needs for 2006 was $10 billion, up from the 2001 estimate of $6 billion.²⁶ As the demand for school seats increases throughout the state, so will the cost to build new and larger facilities—a cost funded by taxpayer dollars. School systems are taking steps, such as increasing the capacity of new school facilities, to meet the increasing demand. According to the Wake County Public School System estimate for 2008, “[i]t will now take $21.7 million to build a 1,124-student capacity year-round elementary school set to open in July 2008, $41 million for a 1,663-student capacity year-round middle school set to open in July 2009, and $69.4 million for a 2,223-student capacity high school that will open in July 2009.”²⁷ These estimates do not include land costs.

Charter schools receive state education funding, but at a far smaller rate than district schools because North Carolina’s charter school law stipulates that charters must pay for their own school building and grounds, as well as provide their own transportation.²⁸ This means that while each new district school will cost the state tens of millions of dollars in building costs, each new charter would virtually eliminate these building costs.

Because of this, charter schools, along with private and home schools, offer impressive tax savings for the state. A July 2007 report found that “charter, private, and home school students saved taxpayers nearly $900 million or approximately $5,600 per student in capital costs since 2000.”²⁹ Moreover, “[t]he upfront capital costs—that is, the one-time cost that would have been required to provide the initial seats for choice students—totaled nearly $775 million.”³⁰

Conclusion

North Carolina’s public education system currently faces two significant fiscal challenges: increased demand for public school seats and an economic downturn. With the state budget deficit reaching the $2 billion range,³¹ lawmakers are looking for ways to cut spending in order to reduce the shortfall. New Orleans’ educational initiative in the wake of Hurricane Katrina has shown that charter schools are one way to revitalize an education system in a timely and cost-effective manner. North Carolina lawmakers can learn from New Orleans’ example.

North Carolina’s charter school legislation currently caps the number of available charters in the state to 100, a limit that has been met for years. The only way to start a new charter school is if the SBOE revokes or fails to renew a school’s charter or if the school relinquishes its charter. What is more, there are over 15,000 students on waiting lists for charter schools in North Carolina,³² demonstrating that large numbers of parents throughout the state want their children in charter schools. There simply are not enough charter schools in the state to accommodate citizen demands.

The sensible resolution to this problem is to eliminate the arbitrary cap on charter schools in North Carolina. Removing the cap will not cost taxpayers any money, and it stands to save them a considerable amount of taxpayer dollars. Moreover, research shows that on average, North Carolina charter schools are performing at least on par with their district school counterparts—a finding that is corroborated by the citizen demand for charter schools. In tough economic times, where every taxpayer dollar counts, making charter schools more available to the citizens who want them can help the educational system meet new demands, as well as saving millions of taxpayer dollars in the process.

Endnotes:

1. “Dallas-Fort Worth Tops Population Growth,” CNN Money (March 27, 2008). <http://money.cnn.com/2008/03/26/real_estate/Metropolitan_Population/index.htm?cnn=yes>. Accessed February 9, 2009. The Charlotte-Gastonia-Concord metro area is among the top ten areas with the biggest population growth in the nation. Additionally, Raleigh-Cary and Charlotte-Gastonia-Concord rank among the top ten fasting growing metro areas.
   
2. NC G.S. § 115C-238.29A.
   
3. “The State of Public Education in New Orleans [SPENO],” The Greater New Orleans Education Foundation, Scott S. Cowen Institute for Public Education, The New Orleans City Council Education Committee (June 2007), 2.
   
4. Ibid.
   
5. SPENO, The Scott S. Cowen Institute for Public Education Initiatives at Tulane University (April 2008), 30.
   
6. Ibid., 2.
   
7. Ibid.
   
8. SPENO (2007), 17.
   
9. Ibid., 11.
   
10. Ibid., 22.
    
11. Ibid.
    
12. “Best High Schools: Gold Medal List,” U.S. News and World Report (December 4, 2008). <http://www.usnews.com/articles/education/high-schools/2008/12/04/best-high-schools-gold-medal-list.html>. Accessed January 22, 2009.
    
13. SPENO (2008), 31.
    
14. Ibid., 19.
    
15. “Charter School Achievement: What we Know,” 4th ed, National Alliance for Charter Schools (October 2007), 9.
    
16. Ibid.
    
17. See Robin J. Lake, ed., “Hopes, Fears, & Reality: A Balanced Look at American Charter Schools in 2008,” National Charter School Research Project (December 2008).
    
18. See “Making Sense of Charter School Studies: A Reporter’s Guide,” National Charter School Research Project (March 2007).
    
19. Robert Bifulco and Helen F. Ladd, “The Impacts of Charter Schools on Student Achievement: Evidence from North Carolina,” Education Finance and Policy (2006), 50. See also their working paper “Charter Schools in North Carolina,” presented at the National Conference on Charter School Research at Vanderbilt University, September 29, 2006.
    
20. Craig M. Newmark, “Another Look at the Effect of Charter Schools on Student Test Scores in North Carolina,” John Locke Foundation (April 2005).
    
21. Newmark, “Another Look,” 2.
    
22. Ibid.
    
23. Ibid., 8. Newmark gets these target populations from George W. Noblit and Dickson Corbett, “North Carolina Charter School Evaluation Report,” Submitted to the North Carolina state Board of Education (November 2001).
    
24. Noblit and Corbett, “Evaluation Report,” III–6. See also Newmark, “Another Look,” 8.
    
25. T. Keng Hui, “Parents Urge charter School Renewals,” News & Observer, January 7, 2009. See also T. Keng Hui, “Black Charters at Risk of Closure,” News & Observer, January 8, 2009.
    
26. Terry Stoops, “The Solution is School Choice,” Spotlight No. 326, The John Locke Foundation (July 12, 2007).
    
27. “How Much Does it Cost to Build a School?” <http://www.wcpss.net/faqs/590.html >. Accessed January 26, 2009.
    
28. NCGS § 115C 238.29F.
    
29. Stoops, “Solution.”
    
30. Ibid.
    
31. “Perdue: Budget deficit will reach $2B,” WRAL.com (January 13, 2009), <http://www.wral.com/news/state/story/4306089/>. Accessed January 26, 2009.
    
32. Kristen Blair, “For Charter Schools in N.C., High Demand and Long Waits,” Carolina Journal Online (December 22, 2008), <http://www.carolinajournal.com/exclusives/display_exclusive.html?id=5143>. Accessed January 26, 2009.