If school vouchers bettered the educational opportunities only of children who use the vouchers to attend private schools or schools in another district, many reformers would be left holding cups half empty. For the animating theory of school choice has always been that it will not only serve as an escape hatch from dysfunctional public schools but also will spark public schools to improve. Thus far this theory remains mostly untested. Through caps on enrollment, chronic underfunding, and legal attacks, voucher programs have been kept artificially small, restraining any influence they might have on local districts, The combined enrollment of all the publicly and privately financed voucher programs in the nation was still only 0.1 percent of public school enrollment in the fall of 2000. The statewide voucher program in Florida affected only two public schools directly.
Despite the limited data, scholars have found creative ways of teasing out the effects of competition on public schools. Elsewhere in this issue, Harvard economist Caroline Hoxby reports that cities with many low-cost private school options tend to elicit better performance from their public schools. Hoxby also finds that urban areas with a large number of school districts, and therefore many options for families choosing where to reside, tend to have higher test scores than cities like Miami, where one school district covers anyone living close enough to work in the city. However, the options of choosing a private school or locating in a suburb with high-performing public schools are mainly closed to low-income students.
Charter schools, by contrast, are tuition free and, in many states, rake per-pupil funding away from local school districts. They therefore present a threat--and a real source of competition--to traditional public schools. As of the spring of 2001, the Center for Education Reform estimated that 1,750 charter schools were educating about 520,000 students in 36 states and the District of Columbia, more than seven times the number of students in all the public and private voucher programs combined. And certain cities and states have been so supportive of charter schools that they have nurtured education markets competitive enough to warrant study.
Why Study Arizona?
During the past three years, Kansas City, Philadelphia, and Washington, D.C., have used charter schooling to create somewhat competitive systems at the city level, Arizona alone offers a statewide free market in education, a result of its being the only state that has not placed caps on the number of charter campuses that can be opened. From 1994 to 2000, two state-level boards were each able to issue up to 25 charters annually, and a single charter holder can open multiple campuses. Local school districts could grant a charter to schools operating in other districts, (In 2000 the charter law was amended to remove the 25-charter cap while ending the practice of local districts' chartering schools in other districts.)
As of the fall of 2001, Arizona's charter law had spawned about 295 operators with 431 campuses among them. About one in four Arizona public schools is a charter school. Nationwide, only about 1 percent of public school students are in charters. The charter-school share is about 7 percent in Arizona, with some districts losing more than 20 percent of their potential enrollment to charters. One of the main reasons why the charter movement has spread so quickly in Arizona is that per-pupil funding in charter schools is about 95 percent of what traditional public schools receive-- which is still not much in Arizona, but it is at least enough to be competitive with traditional public schools. Moreover, district schools lose state funding equal to 57 percent of their per-pupil funding for every student who leaves the district for a charter school. So traditional schools have incentives to compete for students. In other words, Arizona is a virtual laboratory for researchers looking to study the effects of competiti on on public schools. …