Charter Schools in Arizona: Does Being a For-Profit Institution Make a Difference?
King, Kerry A., Journal of Economic Issues
The need to improve the public education system in the United States has almost always been a source of debate among policymakers and the general public. Although not everyone agrees on the extent to which public schools are in need of reform, recent evidence from the Third International Math and Science study in 1999 finds that eighth-grade students in the United States scored significantly below the cross-national mean. (1) This finding in particular seemed to ignite a series of questions regarding the quality of K-12 education in the United States. Given the importance of education policy, all levels of government work continuously and diligently to find equitable solutions for improving education to appease the majority, and at the same time increase academic achievement.
One of the more recent proposals for improving public education involves an institutional change that calls for the adoption of policies that allow for increased competition in the K-12 education market. One of those policies in particular deals with the concept of charter schools, which are defined by the U.S. Department of Education as "independent public schools of choice, designed and operated by educators, parents, community leaders, and other educational entrepreneurs." Charter schools have a governing board and a sponsoring entity that monitors the quality and effectiveness of the school. In addition, even though charter schools must comply with everything in their charter contract with the state, as well as all applicable federal and local laws and regulations, they retain some autonomy when it comes to setting policies related to discipline, personnel, attendance, and curriculum. Charter schools can be organized as either nonprofit corporations or they can hire for-profit education service providers to perform some part of their school operations.
Charter schools cannot charge tuition but do receive state funds on a per student basis. It is important to note that charter schools do not receive additional funding for capital costs such as buildings and equipment and thus, must use student funding or rely on donations (or investors) to pay for these kinds of expenses. Although all charter schools must implement open enrollment, some target specific student populations such as teen mothers, students with disabilities, students interested in the arts, or students who do not perform well in a formal school setting.
The literature on charter schools generally focuses on whether these schools have been able to improve student achievement relative to traditional public schools, or whether the competition created by charter schools contributes to improvements in the traditional public schools setting. Unfortunately, the results thus far have been somewhat mixed. Part of the problem in finding consistent results is most likely due to the differences in student (or parental) characteristics that exist between charter students and traditional public school students and the many different methodologies used to correct for them. Even after including a variety of control variables to account for some of these differences, measurement errors may still occur and can contribute to bias in the estimates. Evidence of this claim can be found in the current literature, given that for every empirical study that argues there are positive impacts from charter schools, you can be certain to find another study that says they have either little or no positive impact. Instead of trying to measure student achievement of charter school students relative to students in the traditional public school setting, this paper takes a different approach. The literature on charter schools has neglected to analyze whether the organizational structure of charter schools makes any difference when it comes to student outcomes. More specifically, using data from Arizona, I compare student outcomes in nonprofit charter schools to student outcomes in charter schools that hire educational management organizations (EMO's) on a for-profit basis. …