How Do Weighted Funding Formulas Affect Charter School Enrollment?

• In Event: Charter School Operations: Finance, Governance, and Classrooms

Abstract

States have increasingly adopted weighted student funding formulas, increasing subsidies to schools for students deemed to have costlier educational needs. A recent reform in California substantially increased the compensatory subsidy most charter schools could expect for the low-income students they enroll. This could have affected the incentives of charter schools, potentially ameliorating concerns that they will “cream skim” students from traditional public schools. Difference-in-difference and triple-difference analyses indicate that these larger funding weights increased the rate at which charter schools enrolled low-income students. This effect was concentrated among charter schools initially enrolling low-income students at relatively low rates, suggesting that “cream skimming” behavior varies across charter schools and can be mitigated by appropriately weighted school funding systems.

Author

• Paul Bruno, University of Illinois at Urbana-Champaign