RESOURCEALLOCATIONANDCOMPETITION:

ACASESTUDYOFCHARTERANDTRADITIONALPUBLICSCHOOLSPENDING

INTHENEWORLEANSEDUCATIONALMARKETPLACE

by

JosephLawrenceDaschbach

DissertationCommittee:

ProfessorLuisHuerta,SponsorProfessorJeffreyHenig

ApprovedbytheCommitteeontheDegreeofDoctorofEducation

Date 16May2018

SubmittedinpartialfulfillmentoftheRequirementsforthedegreeofDoctorofEducationin

TeachersCollege,ColumbiaUniversity

2018

ABSTRACT

RESOURCEALLOCATIONANDCOMPETITION:

ACASESTUDYOFCHARTERANDTRADITIONALPUBLICSCHOOLSPENDING

INTHENEWORLEANSEDUCATIONALMARKETPLACE

JosephLawrenceDaschbach

SchoolreformsinNewOrleanshavebroughtsweepingchangestotheway

publicschoolsaregovernedandmanaged,andtothewayinwhichstudentsare

assignedtopublicschools.Non-profitcharterschoolboardsnowgovernover90%

ofpublicschools,andfamiliesareabletochoosethepublicschoolinwhichthey

enroll.Competitionwithinthesystemofschoolsisexpectedtocompelschoolsto

differentiatethemselvesfromeachotherinordertoattractandretainstudents.

School-levelbudgetarydataprovideonesourceofinformationwithwhichto

examinetheprioritiesschoolsestablishastheyseektodifferentiatethemselves.

Thereisasignificantbodyofresearchcomparingtheresourceallocationpatternsin

traditionalpublicschoolstothoseincharterschools.Often,however,these

comparisonsaredrawnbetweenschoolsthatdonotoperateinasingleeducational

marketplace.Rather,theycompareschoolswithindifferentgeographicareasthat

maynotbeindirectcompetitionwitheachother.Manyofthestudiesalsofailto

distinguishbetweennon-networkcharterschoolsandthoserunbycentralized

charterschoolnetworks.ThisquantitativecasestudyusestheNewOrleanspublic

schoolmarketplaceasacriticalcaseforexamininghowgovernanceand

managementstructuresimpactschoolspending.Specifically,thestudyaimsto

identify,describe,andunderstandwhetherandhowschool-levelresourceallocation

patternsdifferacrossschoolsofdifferentgovernanceandmanagementstructures,

andhowthosepatternsmightbeinfluencedbymarketcompetition.

Thisresearchuseslinearregressionmodelstoestimatedifferencesin

resourceallocationbetweentraditionalpublicandcharterschoolsinthe

educationalmarketplace,aftercontrollingforstudentandschool-level

characteristics.Schoolexpendituresareexaminedoveravarietyofexpense

categoriesandhumanresourceindicators.DatafromNewOrleanssuggestthat

privatizationanddecentralizationhaveasignificantimpactonhowresourcesare

allocatedattheschoollevel.Importantly,however,nosignificantspending

differencesemergewhendataareaggregatedtothelevelofthelocaleducation

agency.Inotherwords,spendinginthetraditionalpublicschooldistrict,charter

managementorganizations,andsinglesitecharterschoolsappearsimilar,

irrespectiveofgovernanceandmanagementstructureofthoseorganizations.

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©CopyrightJosephLawrenceDaschbach2018

AllRightsReserved

iii

TABLEOFCONTENTS

I-INTRODUCTION.................................................................................................................................... 1

ContextoftheStudy................................................................................................................... 3

ProblemStatement..................................................................................................................... 6

II–LITERATUREREVIEW.................................................................................................................. 11

TheoreticalFoundationsofChoiceandCompetition............................................... 11

CompetitionandSchoolPerformance.............................................................. 12

CompetitionandResourceAllocation.............................................................. 13

ConceptualFrameforAnalysis .......................................................................................... 22

AccountClassificationinEducationalRevenuesandExpenditures ... 22

MarketStructure........................................................................................................ 27

MeasuringCompetition .......................................................................................... 30

EducationalMarketStructureinNewOrleans............................................. 32

TheMarketMetaphor.............................................................................................. 35

RespondingtoCompetitionWithResources................................................. 38

III–DATAANDMETHODOLOGY..................................................................................................... 41

CaseStudyApproach.............................................................................................................. 41

StudyContextandPopulation ............................................................................................ 42

MeasuringCompetitioninNewOrleans ........................................................................ 48

DataSources............................................................................................................................... 49

School-levelStructuralCharacteristics .......................................................................... 50

ResourceAllocationIndicators .......................................................................................... 52

ModelComparisonGroups .................................................................................................. 54

IV–ANALYSISANDDISCUSSION .................................................................................................... 58

ModelResults............................................................................................................................. 58

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ModelOne:ComparingResourceAllocationinIndividualPublicSchools ........................................................................................................................... 58

ModelTwo:ComparingResourceAllocationinLocalEducationAgencies......................................................................................................................... 62

ModelThree:ComparingResourceAllocationinCentralizedandDecentralizedSchools ............................................................................................. 64

ModelFour:ComparingResourceAllocationWithintheCharterSchoolSector ............................................................................................................... 66

ModelInterpretationandAnalysis................................................................................... 69

TotalCurrentExpenditures .................................................................................. 69

InstructionalExpenditures ................................................................................... 71

SupportServices ........................................................................................................ 72

TransportationExpenditures............................................................................... 75

SchoolAdministrationandCentralOfficeOverhead ................................. 76

HumanResourceIndicators ................................................................................. 79

DiscussionofTrendsinResourceAllocation............................................................... 82

School-levelExpenditurePatternsintheEducationalMarketplace... 84

Instructionalspendinginthemarketplace...................................... 84Loweradministrativeandoverheadspendinginthemarketplace................................................................................................... 85Supportservicesspendinginprivatizedandcentralizedschools ............................................................................................................. 87Spendingontransportationtofacilitateschoolchoice.............. 89School-levelhumanresourcepatternsintheeducationalmarketplace................................................................................................... 90

Governance,managementstructure,andschoolpersonnel ......................................................................................... 90

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LEA-levelResourceAllocationPatternsintheEducationalMarketplace ................................................................................................................. 91

Spendingvariationswithincentralizedorganizations............... 92

V–CONCLUSIONS,IMPLICATIONS,ANDRECOMMENDATIONS ...................................... 94

TheEducationalMarketplaceinNewOrleans ............................................................ 94

LimitationsoftheStudy ......................................................................................... 95

SummaryofFindings.............................................................................................................. 97

School-levelResourceAllocationPatterns..................................................... 97

LEA-levelResourceAllocationPatterns.......................................................... 98

TheEducationalMarketplace:LessonsLearnedFromNewOrleansPublicSchools ............................................................................................................. 99

Recommendation#1:Improveschool-levelfinancialreportingtoidentifyspecificresourcesallocatedtoschoolsbycentraldistrictoffices,charterschoolnetworks,andotherorganizations ..............................................................................................105Recommendation#2:Connectspendingtooutcomestodeterminethetruecostofachievingparticulargoals ..............107Recommendation#3:Evaluatespendingpatternsbothwithin,andacrossLEAs.........................................................................................108

Conclusion.................................................................................................................................110

REFERENCES ..........................................................................................................................................112

AppendixA:StatisticalTables.........................................................................................................121

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LISTOFTABLES

Table Page

3-1 PopulationDescriptiveStatistics,OrleansParish,2014-15................................ 44

3-2 IndependentandControlVariables ............................................................................... 523-3 DependentVariables ............................................................................................................ 533-4 ResourceAllocationRegressionModelComparisonGroups...............................55

A-1 PopulationCurrentExpendituresPerPupil...............................................................121

A-2 HumanResourcesinTPSandCharterSchools .........................................................122

A-3 ComparingResourceAllocationinIndividualPublicSchools............................123A-4 ComparingResourceAllocationinIndividualPublicSchools-

CategoricalSpending............................................................................................................124

A-5 ComparingResourceAllocationinIndividualPublicSchools-HumanResources ..................................................................................................................125

A-6 ComparingResourceAllocationinLocalEducationAgencies ...........................126A-7 ComparingResourceAllocationinLocalEducationAgencies-

CategoricalSpending............................................................................................................127

A-8 ComparingResourceAllocationinLocalEducationAgencies-HumanResources ..................................................................................................................128

A-9 ComparingResourceAllocationinCentralizedPublicSchools .........................129A-10 ComparingResourceAllocationinCentralizedPublicSchools-

CategoricalSpending............................................................................................................130

A-11 ComparingResourceAllocationinCentralizedSchools-HumanResources ..................................................................................................................131

A-12 ComparingResourceAllocationinCharterSchools ...............................................132

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A-13 ComparingResourceAllocationinCharterSchools-

CategoricalSpending............................................................................................................133

A-14 ComparingResourceAllocationinCharterSchools-HumanResources ..................................................................................................................134

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LISTOFFIGURES

Figure Page

2-1 PublicSchoolTypesinNewOrleans(2014-15)........................................................33

4-1 School-levelSpendingTrends ...........................................................................................62

4-2 LEA-levelSpendingTrends.................................................................................................64

4-3 CentralizedManagementSpendingTrends ................................................................66

4-4 CharterSectorSpendingTrends ......................................................................................68

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I-INTRODUCTION Sincetheirinceptionin1992,thenumberofcharterschoolsintheUnited

Stateshascontinuedtoincrease.In2014-15,charterschoolsservednearly3million

studentsin43statesandtheDistrictofColumbia,representingmorethansix

percentofthetotalnumberofstudentsinpublicschoolsacrossthecountry.(NAPCS,

2015).Asschoolsofchoice,chartersofferamarketapproachtoeducationthat

contendsthatschools,forcedtocompeteforstudents,willbemotivatedto

differentiatethemselvesinnewwaysandtomaximizeacademicqualitytoattract

andretainstudents(Chubb&Moe,1990;Friedman,1955;Hoxby,2001;Levin,

2002).Asdecentralizedorganizations,chartersarealsoexpectedtobemore

responsivetolocalneeds,1moreaccountabletothepublic,andmoreefficientwith

theirresources(Brown,1990;Finnetal.,2000;Hilletal.,1997).

Theextenttowhichcharterschoolsfulfilltheseexpectations,andtherole

competitionplaysincharterschooldecision-making,isasourceofdebate,

particularlyasitrelatestoschoolresourceallocation.Criticsandsupportersmake

varyingclaimsregardingthebehaviorofcharterschoolsascomparedtotraditional

publicschools(TPS’s),thecostadvantageordisadvantagethatcharterschools

purportedlyface,andthespendingpatternsthatemergewithineachtypeofschool

(Arsen&Ni,2012a,2012b;Bakeretal.,2012;Baker&Miron,2015;Bettinger,2005;

1Levin(2001)notesthattheprivategoalsofparentconsumersmaynotalwaysbeconsistentwiththesocietalgoalsofprovidingacommoneducationalexperiencetoallstudents.

2

Bohte,2004;Booker,2008;Carr&Ritter,2007;Hanushek&Rivkin,2003;Holmes

etal.,2003;Imberman,2007;Mironetal.,2011;Ni,2009;Sass,2006).Muchofthe

existingresearchexaminestheresponsetocompetitionbycomparingoverall

trendsinTPSandcharters,oftencomparingthebehaviorofschoolsoperatingin

differentgeographicareas,ratherthanwithinamarketwhereschoolsinthesample

aredirectlycompetingwitheachotherforstudents(Arsen&Ni,2012;Hoxby,2003;

Miron&Nelson,2002;Miron&Usrchel,2010).Bycomparingschoolsthatarenot

operatingwithinthesamemarketplace,thesestudiesarelimitedintheirabilityto

provideinsightsintohowTPSandchartersallocateresourcesdifferentlywhen

subjecttodirectcompetitionwitheachother.Thisresearchwillexaminewhether

andhowtraditionalpublicschoolsandcharterschoolsallocateresourcesdifferently

withinasinglehighlycompetitiveeducationalmarketplace,usingNewOrleansasa

criticalcase.

TheschoolsysteminNewOrleansrepresentsauniqueopportunityfor

examiningmarketforcesineducation.OrleansParishnowreliesalmostcompletely

ondecentralizedmanagementofschools,ratherthanthetraditionaldistrictmodel

ofschoolmanagement.In2014-15,76of83publicschoolswerecharterschools.

Only6schoolsweremanagedbytheOrleansParishSchoolBoard2(LDE,2015a).In

addition,100%ofschoolsinNewOrleansnowcompetewitheachotherfor

studentsandforthefundingthataccompaniesthem.Thetraditional,residence-

basedsystemofschoolassignmenthasbeenreplacedwithanenrollmentsystem

basedentirelyonindividualfamilyandstudentchoice.Thisuniquecombinationof2Oneadditionalschool,theNewOrleansCenterforCreativeArts(NOCCA),reportsdirectlytotheLouisianaLegislatureasanindependentpublicschool.

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choiceanddecentralizedmanagementprovidesanimportantopportunityfor

examininghowcompetitionforstudentsmightimpactschoolbehavior.Thepurpose

ofthispaperistoidentifypatternsthatmayexistaspublicschools,bothTPSand

charter,allocateresourcestocompetewithintheeducationalmarketplaceinNew

Orleans.

ContextoftheStudy

PriortoHurricaneKatrina,theNewOrleanspublicschoolsystemresembled

atypicalurbanschooldistrict.Moststudentsattendedtheneighborhoodschoolto

whichtheywereassigned,andparentsinNewOrleanshadlittleopportunityto

choosethepublicschooltheirchildrenattended.Oneexceptiontothispracticewas

magnetschools,whichofferedalternativestothetraditionalneighborhood-zoned

publicschoolonaselectivebasis.Sevencharterschoolsalsoexisted,operating

undertheauthorizationofLouisiana’sBoardofElementaryandSecondary

Education(BESE).TwocharterschoolscontracteddirectlywithBESE,andfive

wereunderthejurisdictionoftheRecoverySchoolDistrict(RSD),astate-runentity

createdin2003toreconstitutefailingschools.Allnon-charterpublicschoolsin

NewOrleans,withtheexceptionoftheNewOrleansCenterforCreativeArts,were

undermanagementoftheOrleansParishSchoolBoard(OPSB).Thesystemofpublic

schoolsthathasemergedpost-Katrinalooksdramaticallydifferentfromthepublic

systemofschoolsthatprecededit(LDE,2015a;Mironetal.,2015;RecoverySchool

District,2015;Sims&Rossmeir,2015).

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InNovember2005,theLouisianaLegislaturepassed‘Act35’,which

expandedtheRSD’sabilitytotakeoverschools.Allbutthreeofthe15Orleans

Parishlegislatorsvotedagainsttheamendment,butthelawpassed(Louisiana

Legislature,2005).Thelegislationresultedin107schoolsinNewOrleansbeing

placedunderthecontroloftheRSD,bringingthetotalnumberofschoolsunderRSD

controlto112.Only16schoolswereleftunderthecontrolofOPSB.Lacking

adequateresourcestooperateall16schools,OPSBdecentralizedoperationof12

schoolstonon-profitcharterschoolboards.Onlyfourschoolsremainedopenand

underthedirectoversightofthelocalschoolboard(Sims&Rossmeir,2015).

Beginninginthe2006–07academicyear,theRSDbegandecentralizing

managementoftheNewOrleansschoolsunderitscontroltoprivatecharterschool

boards(Mironetal.,2015;Sims&Rossmeir,2015).TheOPSBalsoopenedtwonew

traditionalpublicschools,andgrantednewcharterstoseveralotherschools.By

2014-15,over80publicschoolswereoperatinginNewOrleans,servingnearly

44,000studentsinOrleansParish.But,inadramaticshiftfromthepre-Katrina,

centralizeddistrictmodel,over90%ofthoseschoolswerecharterschools,

representingover40differentcharteroperators,manyofwhomoperatemultiple

schoolsitesaspartoflargerchartermanagementorganizations.NewOrleanshad

becomeaschoolsysteminwhichanoverwhelmingmajorityofpublicschool

studentswerebeingeducatedinschoolsoutsidethedirectcontrolofacentralized

localschooldistrict(Sims&Rossmeier,2015).

NewOrleanshasalsochangedhowstudentsenrollinpublicschools.

Neighborhoodcatchmentzones,thetraditionalformofschoolassignmentbasedon

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residence,havebeenreplacedbyachoicesysteminwhich,withfewexceptions,

studentsmayattendanypublicschoolinthecity,regardlessofitslocation.3All

publicschools,whetherlocallyorstatecontrolled,traditionalorcharter,now

competewitheachotherforstudentsandresources.

TheextensivechangestothepublicschoolsysteminNewOrleanshave

createdoneofthemostdiversifiededucationalmarketplacesintheUnitedStates.

Non-networkcharterschoolscompetewithcharterschoolsoperatedbycharter

managementnetworks,andallcharterschoolscompetewithasmallsectorof

traditionalpublicschools.Thesechangeshaveimportantimplicationsfortesting

theoriesonhowchoiceandcompetitionimpactbehavioronboththesupplyside

anddemandsideofthemarketplace.Parentsandstudents,asbuyersinthe

educationalmarketplace,mustactivelychoosefromtheavailablesupplyofschools

withintheCity.Schools,asserviceproviders,mustcompeteforthosestudents

withinanopenenrollmentsystemthatnolongerguaranteesenrollmentina

particularschoolbasedongeography.Schoolsmayseektodifferentiatethemselves

throughavarietyofmechanisms,includingbycreatinguniqueacademic

programmingforstudentsandfamilies,byconnectingtospecificneighborhood

communities,orbyprovidingstudentswithservicesthatgobeyondformal

academics,suchasmentalhealthservices,afterschoolprogramming,athletics,or

otherprograms.ByexaminingthesystemofschoolsinNewOrleans,thisstudyaims

3Fiveselectiveadmissionschoolsstillexistinthecity,whichrequirestudentstomeetspecificacademicorlanguageproficiencystandardstoenroll.Mostschools,however,areopenenrollment.Beginningin2012-13,schoolshadtheoptiontorequestpriorityadmissionforstudentsbasedonattendancezones(upto50%ofseatscanbereservedforstudentslivingwithinaschool’szone).Studentsarenot,however,requiredtoattendaparticular“neighborhoodschool”basedonresidence.

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tobetterunderstandtheimpactofcompetitionandchoiceonhowschoolsallocate

theirresourcestowarddifferentprioritiesastheyseektoattractandkeepstudents

intheeducationalmarketplace.

ProblemStatement

Byintroducingdecentralizedmanagementandschoolchoicereformsinto

thepublicschoolsysteminNewOrleans,localandstatepolicymakersaimtobring

aboutwidespreadschoolimprovementthroughcompetition.Specifically,one

objectiveofLouisiana’scharterschoollawisto“providecompetitionwithinthe

publicschoolsysteminordertostimulatecontinuedimprovementinallpublic

schools“(28La.Admin.Code,Bulletin126).Somedatasuggestthatsystem-wide

academicachievementinNewOrleanshasimprovedsince2005.Intheirreviewof

publicschoolperformancesinceKatrina,SimsandRossmeier(2015)reportthatthe

numberofpublicschoolstudentsconsideredongradelevel,basedonstate

standardizedtestperformance,hasincreasedsince2005.Thenumberofschools

consideredfailing,basedonLouisiana’sSchoolPerformanceScore(SPS),hasalso

droppedsince2005.Whiletheauthorsacknowledgethedifficultyofcomparingtest

resultsovertime,theirresultssuggestthattheachievementgainsmadebystudents

inNewOrleanshaveoutpacedtheaveragegainsmadebyLouisianastudentsin

generaloverthesametimeperiod.

HarrisandLarsen(2015)alsosuggestthatpost-Katrinareformshave

improvedacademicoutcomesforstudents.“Usingoutcomesbeforeandafterthe

hurricaneandreformsinNewOrleansandamatchedcomparisongroupthat

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experiencedhurricanedamagebutnottheschoolreforms,[theauthorsfind]large

cumulativeeffectsonachievementof0.2–0.4standarddeviations”(p.1).

EvidencesuggestingthatacademicoutcomeshaveimprovedinNewOrleans

isconsistentwithclaimsthatmarket-basedreformsexertapositiveinfluenceon

studentandschoolperformance(Bohte,2004;Booker,2008;Hanushek&Rivkin,

2003;Holmesetal.,2003;Sass,2006).Otherresearch,however,suggeststhat

competitionmaynotalwayshaveapositiveeffectonachievement(Arsen&Ni,

2012;Bettinger,2005;Bifulco&Ladd,2006;Buddin&Zimmer,2009;Carr&Ritter,

2007;Imberman,2007;Ni,2009).Jabbar(2015)acknowledgesthesemixed

findings,noting“[a]lthoughexistingresearchhasexaminedwhethercompetition

improvesstudentachievement,itisalsoimportanttoexaminehowthatmightoccur

andwhattheconsequencesofsuchpoliciesare”(p.638).Schoolbudgetarydata

fromNewOrleansprovideuswithanopportunitytoexaminehowschoolsmightbe

changingtheirbehaviorinthepresenceofintensecompetition.Morespecifically,

examiningresourceallocationpatternsacrossavarietyofstudentandschool-level

indicators,andacrossawidevarietyofschooltypes,hasimportantimplicationsfor

policymakerstounderstandhowschoolresourcesmightbeconnectedtoasystem-

wideincreaseinstudentachievement,andhowtheallocationofthoseresources

withinparticulartypesofschoolsmightbeinfluencedbythecompetition.

ResourceallocationpatternsinNewOrleanscanbeexaminedwithinthe

contextofmarketcompetitionandchoice.Muchoftheexistingresearchexamining

resourceallocationinthecontextofmarketreformsisfocusedonidentifyinghow

charterschoolsspenddifferentlythantraditionalpublicschools(Bifulco&Ladd,

8

2006;Holmesetal.,2003;Miron&Urschel,2010;Nelsonetal.,2000;Ni,2009).

Often,however,thesestudiesexaminespendingdifferencesbetweenschoolsand

districtsofvaryingsize,andinsidemarketswithvaryinglevelsofcompetition

(Arsen&Ni,2012a,2012b;Belfield&Levin,2002;Carpenter,2013).Insomecases,

schoolsanddistrictsinasamplemaynotevenbelocatedinthesamegeographic

area,therebycomparingschoolsanddistrictsthatdonotcompeteforthesame

studentswithinalocalmarket(Arsen&Ni,2012a;Bakeretal.,2012;Miron&

Urschel,2010;Nelsonetal.,2000;Ni,2009).Studiesalsousevaryingmeasuresof

competitiontodefinetheintensityofcompetition,relyingonthemarketshareof

studentswithinasample(Arsen&Ni,2012;Hoxby,2003;Imberman,2007;Winters,

2012),densityofschoolsinanarea(Bifulco&Ladd,2006;Marlow,1997)orthe

proximityofnearbycharterschools(Bettinger,2005;Holmesetal.,2003;Sass,

2005).Importantly,“[d]ifferentmeasuresofcompetitionmeasuredifferent

subjects;marketsharemeasuresmaybeappropriateformeasuringthelevelof

competitionfeltbyapublicschooldistrict[…]whereasproximitytoagivenschool,

ordensityaroundagivenschool,ismoreappropriateformeasuringtheeffects

facinganindividualschool”(Linick,2014,p.9).

Competitionbetweenschoolsexistsnotonlybetweencharterschoolsand

TPS,butalsobetweenschoolswithinthecharterschoolsectorthataremanaged

differently.InNewOrleans,overhalfofthecharterschoolsoperateaspartof

chartermanagementorganizations(CMO’s).This“recentralization”ofschool

management(seeBulkley,2002;Huerta&Zuckerman,2009)hasthepotentialto

createdecentralizedorganizationsthatemployacombinationofthesite-based

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decision-makinginherentinthechartermovement(Hannaway,1993;Malen,Ogawa,

&Kranz,1990;Wohlstetteretal.,1995)withpotentialadvantagesofcentralized

management,suchasopportunitiesforcollaborationacrossschools,costreduction

througheconomiesofscale,andreplicationofsuccessfulstrategies(Farrelletal.,

2012;Hendrie,2005;Miron,2010),Byexaminingdifferencesinspendingbehavior

notonlybetweenTPSandcharters,butalsobetweenhownetworkchartersallocate

resourcesascomparedtonon-networkcharters,thisstudyhasimportant

implicationsforunderstandinghowschoolmanagementstructuresmayimpact

resourceallocation.

InNewOrleans,regardlessofhowitismeasured,thecompetitionbetween

TPSandcharterschools,andwithinthechartersectoritself,isintense.In2014-15,

charterschoolsinNewOrleansenrolled93.0%ofallstudents.76of83public

schoolswerecharterschools.Theonlyresidencyrequirementforenrollmentinany

publicschoolistheparishboundary,givingallstudentsinOrleansParishaccessto

thefullchoicesetofavailableschools.Withinthechartersector,12charter

networksoperate45differentschools,allofwhichcompeteforstudentswith31

non-networkcharterschools,6TPS,andoneindependentpublicschool(NOCCA).

Theadoptionofdistrict-wideschoolchoicepoliciesanddecentralizedmanagement

structuresafterKatrinamakeNewOrleansacriticalcaseforexamininghowschools

allocateresourceswithinasingle,highlycompetitiveschoolsystem.

Thepurposeofthisquantitativecasestudyistoexploreschool-level

resourceallocationwithintheNewOrleanspublicschoolmarketplace.Specifically,

thestudyaimstoidentify,describe,andunderstandwhetherandhowschool-level

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resourceallocationpatternsdifferacrossschoolsofdifferentgovernanceand

managementstructures,andhowthosepatternsmightbeinfluencedbymarket

competition.Assessingthesepatternsinthecontextofmarket-basedreformswill

requireansweringthefollowingcentralquestion:

• WhatdospendingpatternsinNewOrleans’publicschoolssuggestabout

theimpactofcompetitionandchoiceonschoolresourceallocation?

Asetofsub-questionsfollows:

• Howdotraditionalpublicschoolsandcharterschoolsallocateresources

towarddifferentpriorities?

• Withinthecharterschoolsector,howdostand-alonechartersallocate

resourcesdifferentlythanschoolsrunbychartermanagement

organizations?

• Whatsimilaritiesordifferencesinschoolspendingpatternscanbe

discernedfromacomparativeanalysisofschoolsoperatingwithina

highlycompetitivemarketplace?Whatdothepatternsthatemerge

indicateabouthowschoolsseekdifferentiatethemselves?

Theanswerstothesequestionswillbehelpfulforpolicymakerswhoare

interestedinunderstandinghowschoolchoiceandmarketcompetitionmight

initiatechangesinthewayschoolsallocateresources.Thestudywillbeinformed

byliteratureonschoolresourceallocation,schoolchoice,andmarketcompetitionin

schools.

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II–LITERATUREREVIEW

ThecontinuedgrowthofcharterschoolsintheUnitedStatespresentsan

increasinglevelofcompetitiontotraditionalpublicschools.Asignificantbodyof

researchexiststoexaminehowpublicschoolsarerespondingtothatpressure.This

literaturereviewbrieflysummarizesthetheoryofactionbehindcompetitionand

choiceinschoolmarketsandexistingresearchthatexplorestheimpactofmarket

reformsonstudentachievement,followedbyamoredetailedsummaryofresearch

thatexaminestheimpactofcompetitiononschoolresourceallocation.

TheoreticalFoundationsofChoiceandCompetition

Schoolchoiceadvocatesarguethatimplementingchoicepolicieswillresultin

anoverallimprovementofschoolperformancebyintroducingcompetitionto

traditionalpublicschools(Friedman,1962).Inthisview,traditionalpublicschool

districtsoperatewithinamonopolisticmarketand,asthesoleproviderofpublic

education,havenoincentivetoimprovethequalityortheefficiencyofthe

educationtheyprovide(Chubb&Moe,1990).Inaddition,aselectedrepresentatives,

schoolboardsarevulnerabletothedemandsofmanydifferentconstituentgroups

withmanydifferentinterestsandgoalsforpubliceducation,whichmaydistract

fromthesimplegoalofimprovingschools(Chubb&Moe,1990;Kolderie,1990;

Nathan,1996).

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Advocatessuggestthatschoolchoicereformswillfreetraditionalpublic

schoolsfrombothbureaucracyandmonopolybyprovidingamarketincentiveto

improveandtobecomemoreefficient.Publicschools,forcedtocompetefor

studentsandfunding,areexpectedtoimprovetheiroverallperformanceand

efficiency,inordertoattractmorestudents.Schoolsthatcontinuetoperformpoorly

willseeenrollmentsdrop,willlosefunding,andwillultimatelycloseduetolackof

demand.Bythisview,competitionwillimproveschoolsbyencouragingthemto

eliminatewastefulprogramsandfocusingtheirresourcesmoreintensivelyon

instructionandprogramsthatmoredirectlyimpactstudentoutcomes(Finn,Manno

&Vanourek,2000;Hilletal.,1997).

CompetitionandSchoolPerformance

Thereisasubstantialbodyofresearchontheimpactofchoiceand

competitiononeducationaloutcomesintraditionalpublicschoolsanddistricts,and

thefindingsaremixed.Thesestudies,whichexamineawidevarietyofeducational

marketplaces,suggestthattheimpactofcompetitiononacademicoutcomesis

positive(Bohte,2004;Booker,2008;Hanushek&Rivkin,2003;Holmesetal.,2003;

Sass,2006),negative(Arsen&Ni,2012;Bettinger,2005;Carr&Ritter,2007;

Imberman,2007;Ni,2009),orinsignificant(Bifulco&Ladd,2006;Buddin&

Zimmer,2009;Urquiola,2016).Theseinconsistentresultssuggestthatmorework

isneededtofullyunderstandtheimpactofcompetitiononschooloutcomes.

Intheircomprehensivereviewofresearchoneducationalmarketsinthe

UnitedStates,BelfieldandLevin(2002)examinedthecorrelationbetween

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competitionandawidevarietyofschooloutcomes(includingacademic

performance,educationalattainment,expenditures,andefficiency).Studies

includedintheirreviewlookedateducationalmarketsacrossawidevarietyof

areas,withvaryingmeasuresofcompetition,includingtheHerfindahlIndex,private

schoolenrollment,marketdensity(numberofcompetitorswithinanarea),and

proximity(distancetonearestcompetitor).Evidenceontheeffectsofgreater

competitiononacademicoutcomeswasmixed,butwas“generallyconsistentin

suggestingmodestgainsinachievementasaresultofcompetition”(p.286).

BelfieldandLevinalsoreviewedlinksbetweencompetitionandeducational

attainment,educationalexpenditures,andeducationalefficiency.Theirreview

suggested“[t]herewerebenefitsfromhighercompetition,butthesubstantive

effects–acrossthesetofoutcomesandbasedonanincreaseincompetitionofone

standarddeviation–appearedtobemodest”(p.294).

Whiletheirresultssuggestthatcompetitionmayhaveanimportantroleto

playineducationpolicy,BelfieldandLevinstressthatfullyunderstandingthe

impactofcompetitionmustbesituatedwithinabroaderpolicycontext.Important

factorstoconsiderincludethesustainedimpactofcompetitionovertime,andthe

levelofmarketconcentrationbelowwhichtheeffectsofcompetitionmaynotbe

detectable(p.297).

CompetitionandResourceAllocation

Improvingschoolefficiencydoesnotnecessarilyrequireschoolstoimprove

theiracademicperformance.Linick(2014)notes"[d]oingmorewithless,isnot

14

requiredtoimproveefficiency,infact,doingthesamewithless,ordoinglesswitha

lotless,canallrepresentincreasedefficiency"(p.9).Thus,examiningthewaysin

whichschoolsdeploytheirresourcescanprovideimportantinsightsintoevaluating

schoolefficiency.Researchhasbeguntoexaminetheimpactofcompetitionon

educationalexpendituresinmoredetailbyexaminingschoolspendingacross

differentfunctionalcategories.BycomparingthespendingpatternsofTPS’swith

thoseofcharterschools,thesestudiesseektoidentifyhowdifferentschoolsmight

responddifferentlytocompetitivemarkets.

MironandNelson(2002)usestatewideexpendituredatafrom1995-96

through1999-2000tocomparethespendingpatternsofcharterschoolswithnon-

charterpublicschoolsinMichigan.BecauseEMO’smakeupsuchalargeportionof

charterschoolswithinthestate,thethreelargestEMO’sarealsoincludedas

separatepointsforcomparison.

Statewide,theauthorsfindthatcharterschoolsspendasmallerproportionof

overallspendingoninstruction,particularlyonaddedneedsprograms.Thethree

EMO’sexamineddevotedanevensmallerproportionofspendingtoinstruction

thantheaverageforallcharterschools.Onaverage,overthefiveyearsstudied,the

proportionofcharterschoolspendingallocatedtowardsinstructiondeclinedby

over7%(Miron&Nelson,2002).

Inadditiontotheirstatewidecomparison,theauthorsalsoexaminedasmaller

samplethatcomparedspendinginfourcaseschoolsdirectlywiththefour

correspondinghostdistricts.Theauthorsagainfindthatcharterschools,

particularlyEMO’s,spendasmallershareoftheirresourcesoninstruction.They

15

alsoappeartospendalargerproportiononadministration,whencomparedtotheir

homedistricts.Theauthorsalsoexaminedthepurportedcostadvantagesor

disadvantagesofthecasestudyschoolsovertheirhostdistricts,basedonper-

studentexpendituredifferences.Theauthorsconcludethatchartersenjoyavariety

ofcostadvantagesovertheirhostdistrictsbyfocusingservicesonlesscostly

students.Importantly,however,noeffortismadetostatisticallycontrolfor

characteristicsofeachschoolorthestudentswhoattendtheschoolsanddistricts.

BydistinguishingbetweenindependentchartersandEMO’s,thisstudydraws

importantdistinctionsbetweenresourceallocationindecentralizedcharterschools,

andchartersthathavebeen“recentralized”undermanagementorganizations.

Comparingcharterschoolsdirectlytohostdistrictsalsoacknowledgesthe

importanceofcomparingschoolsthatdirectlycompetewitheachotherforstudents.

However,theuseofrawspendingdatafromcharterschoolsanddistricts,without

usingstatisticalanalysistocontrolforstudentandschoolcharacteristics,limitsthe

overallusefulnessofthefindingsforuseinbroaderpolicydiscussions.

MironandUrschel(2010)usenationaldatatocompareexpendituresacrossa

widerangeofpublicschooldistrictsandcharterschools,givingspecificattentionto

chartersmanagedbyeducationalmanagementorganizations(EMOs).Using2006-

07data,theyfindthatinmoststates,charterschoolsnotonlyspendlessmoneyper

pupilthantraditionalpublicschooldistricts,butthattheyalsospendlesson

instruction,studentsupport,andteachersalaries.Chartersalsoappeartospend

moreonadministration,bothasapercentageofoverallspendingaswellasfor

administrativesalaries.

16

Severallimitationsexistwithrespecttothedataandmethodsusedinthis

study.First,thesampledrawsfromincompletedata,inasmuchasschool-leveldata

wasnotavailableformorethanhalfofthecharterschoolsinthefederaldataset

selectedforthestudy.Inaddition,comparisongroupsweredrawnacrossdifferent

states,withcomparisongroupsincludingdatafromsomestatesinanalysis,butnot

inothers.Thelackofdetailonsite-specificschooldata,includinginconsistent

measuresofpolicyconditions,makesitdifficulttogeneralizethesefindings.For

example,competitionisnotquantifiedinanyparticularway.Rather,itissimply

recognizedasexisting,ornot,withoutdiscussionofthemagnitudeofcompetition

withinaparticulararea.

Finally,theuseofrawfinancedatadoesnotaccountforthewiderangeof

othervariablesthatmightimpactspending.Theauthorssuggesttheneedfor

greateroverallprecisionincreatingcomparisongroupstogainabetter

understandingofthedifferencesinhowTPSandcharterschoolsallocateresources.

Thisstudy,situatedwithinasinglecompetitivemarket,willprovidesomeofthat

precision.

ArsenandNi(2012a)usestatewidedatafromschooldistrictsinMichiganto

examinespendinginschooldistrictsinwhichTPS’sexperiencecompetitionfrom

bothcharterschoolsandinterdistrictchoice.Usingdatafrom1994to2006,the

authorsuseafixedeffectmodeltoestimatetheeffectofchartercompetitionon

schoolresourceallocationovertime.Dependentvariablesincludethepercentageof

totalexpendituresforavarietyofareas,includingbasicinstruction,added-needs

instruction,instructionalsalaries,businessandadministration,andoperationsand

17

maintenance.Independentvariablesinthemodelcontrolforstructural

characteristics,studentcharacteristics,andthemeasuresofcompetition

experiencedbyschools.

TheauthorsfindthatTPSdistrictsshowlittlesignofrespondingtocharter

competition,whetherbyshiftingresourcestobasicinstructionalpurposes,to

added-needsprograms,toinstructionalsalaries,orbyreducingclasssize.Nordoes

chartercompetitionappeartoimpactTPSspendingonsupportservicefunctions.

Higherlevelsofcompetitiondoappeartobeconnectedwithdecliningfundbalances

inTPSdistricts,whichisconsistentwithbasicmechanismofchoicepoliciesin

whichfundingfollowsthestudentwhentheyexitadistrict.

TheauthorsalsoexploredhowTPSrespondtochanginglevelsofcompetition

byexaminingresourceallocationpatternsovertime.Comparisongroupswere

createdbycategorizingtheamountofcompetitionindistrictsasnone,low(less

than6%ofdistrictresidentsincharterschools),orthreatening(greaterthan6%of

residentstudentsincharterschools).Districtswerefurthercategorizedas

‘stabilized’,fordistrictsseeingnoincreaseincompetitionoverthe12yearperiod,

or‘increasing’fordistrictsthatsawtheshareofstudentsinchartersincreaseover

thattime.

Whilesomespendingdifferencesexistedindistrictsexperiencingthreatening

levelsofcompetition,thedifferencesexistedevenbeforethedistrictsexperienced

highlevelsofcompetition,andappearedstableovertime.Becausethedifferences

precededanysignificantcompetitionfromcharterschools,theauthorssuggest

thesetrendsmayberelatedtothespecificneedsofstudentsinthosedistricts,

18

ratherthanfromaspecificresponsetocompetition.Insummary,theauthors

suggestthatresourceallocationindistrictsexperiencingcompetition“was

essentiallyindistinguishablefromthatindistrictswithnocompetitionbothbefore

andaftertheythemselvesconfrontedcompetition”(p.30).

Theauthorsconcludebysuggestingthatmoredetailedschool-leveldatamight

behelpfulinidentifyingTPSresponsestochartercompetition.Thisstudywill

addressthosesuggestionsbyincludingschool-leveldemographicsandother

resourceindicatorsinitsresourceallocationmodel.

ArsenandNi(2012b)buildontheirpreviousworkinMichiganbyusing2007-

08datatodirectlycomparethespendingpatternsofcharterschoolsandTPS

districtstoidentifyanydifferencesthatmightexistwithinthestate.Theauthors

beginwithastraightforwardcomparisonofrawdatafromschoolsinthesample.

Theyfindthat,despitereceivingsimilarfundinglevels,charterschoolsandTPS

districtsexhibitlargedifferencesinhowtheyspendallocateresources.Onaverage,

charterschoolsspendover$1,600lessperpupiloninstruction,andaround$400

lessoninstructionalsupportthandistrictsstatewide.Michiganchartersalsoappear

toallocatemoreresourcestowardadministration,spendingabout$900moreper

pupilthanalldistricts.Asapercentageofspending,Michigandistrictsspendan

averageoflessthan10percentonadministration,comparedtocharterspendingon

administrationofaround23percent.Overallspendingdifferencesarealsoquite

stark,withcharterschoolsspendnearly$1,000perpupillessoverall,despite

similarlevelsoffunding.

19

TheauthorsalsouseOLSregressionmodelstoidentifypossibledeterminants

ofresourceallocationdifferences.Thebasicmodelexaminesasetofinstructional

andadministrativespendingcategorieswhilecontrollingforavarietyoffactors

representingbothschool-levelandstudent-levelcharacteristics.Theauthorsfind

thatcharterschoolsinMichiganspend$774moreper-pupilonadministrationthan

TPS’s,witharoundtwo-thirdsofthishigherspendingcomingintheareaofgeneral

administrationandbusinessservices.Severalfactorsappeartoaccountfor

differencesamongcharterschools,includingtheageoftheschool.Estimated

administrativeexpensesdeclinethelongeraschoolremainsopen.Othersignificant

factorsincludegradeconfiguration(secondarychartersspendaround$120less

overallonadministrationthanelementarycharters)andEMOstatus(schools

managedbyEMO’sspendover$300perpupilmorethannon-EMOcharters).These

findingsareconsistentforthemodelthatestimatesdependentvariablesasa

percentageofoverallspending.Importantly,themodelalsosuggeststhatincreased

schoolsizehasasmall,butsignificantimpactbyreducingadministrativespending.

Thisfindingsuggeststhatsomeeconomiesofscaledoexistforadministrative

expenses“throughthetraditionalcentralofficeadministrativefunctions[…],

ratherthaninschool-leveladministration”(p.11).

Overallinstructionalexpendituresmadebycharterschoolsareestimatedtobe

over$1,140lessthanTPS’s,holdingotherfactorsconstant.Thedifferencesappear

evengreaterwhenincludingEMOstatusinthemodel,whichestimatesafurther

reductionininstructionalspendingofnearly$429comparedtonon-EMOcharters.

20

TheoverallmodelforEMO’ssuggeststhatnearly75%ofthereducedinstructional

spendingendsupasanadministrativeoutlay.1

Theauthorsconcludebysuggestingthatamoredetailedexaminationof

instructionalindicators,includingpersonnelcosts,couldhelpmoreclearlyidentify

specificareaswherecharterandTPSspendingisdifferent.

Twofactorsmaylimittheusefulnessofthesefindingsintermsoftheir

applicationtobroaderschoolchoicepolicies.First,for-profitnatureofmostcharter

schoolsinthestudymayleadthemtooperateinwaysthatarenoteasilyextended

tootherpolicysettings,wheremostschoolsareoperatedbynon-profits.Alsoworth

notingistheabsenceofanymeasureofcompetitionwithinthecomparisongroups

andwithinthemodels.Importanttakeawaysfromthisstudyincludetheimpactof

gradeconfiguration,schoolage,schoolsize,andcentralized(EMO)managementon

schoolspending.Theseindicatorswillbeincludedinthisresearchtohelp

strengthentheresourceallocationmodel.

Carpenter(2013)comparesresourceallocationpatternsusingstatewide,

school-leveldataforcharterandnon-charterschoolsinTexas.Per-pupil

expendituresusingrawdataindicatethatchartersandnon-charterswerealmost

identicalintermsoftotalexpenditures.Minorspendingdifferencesemergedwithin

allocationcategories,includingmorespendingbynon-chartersinareasof

instruction,instructionalservices,andsupportservices,withlargerdifferences

1Overall,theresultsfromArsen&Ni(2012b)suggestthatchartersarespendingmoreonadministrationandlessoninstruction.Basedontheirmacrolevelanalysisofinstructionalexpenditures,theauthorsareunabletodeterminespecificareasthatmaybeseeinglowerallocationsthanothers.Basedonthetraditionallylargeshareofexpendituresrelatedtopersonnelcosts,theysuggestthatmuchofthedifferencemayliethere.

21

appearinginadministration,wherechartersspentaround50%moreon

administration.

Amoresophisticatedanalysiswasperformedusingaregressionmodelto

analyzecategoriesasapercentageoftotalspending.Aftercontrollingforavariety

ofstudentandschoolcovariates,Carpenterfoundthatchartersschoolsspend

aroundtwopercentlessoninstruction,instructionalservices,andsupportservices

thannon-charters,allofwhicharestatisticallysignificantdifferences.2

TheabilitytoapplyCarpenter’sfindingstoabroaderpolicycontextmaybe

limitedastheypertaintotheimpactofcompetitionandchoiceonresource

allocation.First,becauseoverhalfofallcharterschoolsinthesamplearemanaged

byCMOs,thepatternsidentifiedmaynotaccuratelyrepresentthebehaviorof

independent,non-networkcharterschools.Second,becausecomparisonsaremade

usingdatafromacrossthestate,ratherthanfromwithinasinglemetropolitanarea,

orevenasingledistrict,thereisnodirectcompetitionbetweenschoolsincludedin

thestudy.Itissimplyassumedthatcharterandnon-charterschoolsexert

competitiononeachother,withnodiscussionofhowthatmighttakeplacebetween

schoolsindifferentlocales.Themodelsdevelopedinthisresearchwilladdress

thesepossibleshortcomingsbydistinguishingbetweennetworkandnon-network

charterschools,andbyexaminingschoolswithinasinglecompetitiveeducational

market.

2Charterschoolsalsospentmoreonschoolleadershipand“othercosts”.Allofthesedifferences,withtheexceptionofschoolleadershipexpenditures,werestatisticallysignificantaftercontrollingforstudentandschoolcovariates.“Thus,itappearstheflexibilityaffordedcharterschoolsresultsindifferencesinexpenditureallocationpatternsbutnotnecessarilyinawayconsistentwithchoicetheory”(p.315).

22

Thestudiesdiscussedaboveprovideseveralexamplesofhowcharterschools

andTPSmightbehavedifferentlyinresponsetomarketcompetition.However,they

alsohighlighttheneedforfutureresearch.Theframeworkbelowoutlineshowthis

researchwillexamineresourceallocationpatternsinschoolsastheycompetefor

students.

ConceptualFrameforAnalysis

ReformstoimproveK-12schoolsthroughthecreationofaneducational

marketplacearebuiltonthepremisethat,byprovidingincreasededucational

optionstoparentsandstudents,schoolswillbecompelledtocompetewitheach

otherforstudentsandthefundingthataccompaniesthem.Thiscompetitiveprocess

isexpectedimproveschooloutcomesbyalteringthebehaviorofbothschoolsand

studentsanditreliesontheprinciplethat“marketforcesmatter–thatis,that

peoplemayaltertheirbehaviorinresponsetothepressuresandincentivesthatthe

marketgenerates”(Hoxby,2003,p.4).Thefollowingframeworkreviewsthe

accountingsystemsusedtotrackeducationalspending,examinesthestructural

elementsofaneducationalmarketplace,identifiesdifferentwaysthatcompetition

betweenschoolsmightbemeasured,andexamineswaysthatschoolsmight

respondtocompetition.

AccountClassificationinEducationalRevenuesandExpenditures

Accuratelytrackingeducationalspendingrequiresasystemofaccounting

thatclassifiesthefinancialactivitiesundertakenbyschools.TheNationalCenterfor

23

EducationalStatistics(NCES)publishesfederalguidelinesforschoolsinthe

FinancialAccountingforStateandLocalSchoolSystems.Thehandbookrepresents“a

nationalsetofstandardsandguidanceforschoolsystemaccounting”(Allison,2015,

p.1)andprovidesschoolsandschoolsystemswithacomprehensiveanduniform

systemwithwhichtoreportfinancialdata.

TheLouisianaAccounting&UniformGovernmentalHandbook(LAUGH)

establishesa“comprehensiveandcompatiblesetsofstandardizedterminologyfor

useineducationmanagementandreporting”fortheStateofLouisiana,and

conformstoNCESguidelines.Objectcodesareusedtotrackschoolanddistrictlevel

expendituresacrossninemajorcategories:Salaries;EmployeeBenefits;Purchased

ProfessionalandTechnicalServices;PurchasedPropertyServices,OtherPurchased

Services;Supplies;Property;OtherObjects;andOtherUsesofFunds.Function

codesfurthercategorizeexpensesacrossfiveareas,accordingtotheactivityfor

whicheachexpenditureismade:Instruction;SupportServices(including

administrative,technical,andlogisticalsupport);OperationofNon-Instructional

Services;FacilitiesAcquisitionandConstructionServices;andOtherUses.

Ingeneral,schoolshavewidelatitudeonhowtocategorizeexpenditures

withinthebureaucraticcategoriescreatedbyschoolaccountingsystems.Because

mostfundsreceivedareunrestricted,theschoolusesitsjudgmentastohowto

accuratelyaccountforspending.3Yet,theuniformityofformalschoolaccounting

systemsacrossschools,bothcharterandtraditional,andacrossdistricts,isvitalfor

3Somefundsarerestrictedforuseonlywithincertaincategories,basedontheirsource.Somefederalfunds,forexample,mustbespentonat-riskpopulations,orstudentswithspecialneeds.Codingofrestrictedfundswithinrequiredcategories,however,isalsostilluptotheindividualschool.Fundsmightbeusedfordirectinstruction,forsupportprograms,forpersonnel.

24

accuratelyevaluatingandcomparingspendinginschools.Bakeretal.(2012)note

researchonspendingin“charterschoolsascomparedtotheirtraditionalpublic

schoolcounterpartsisplaguedbyatleasttwopersistentandmajorshortcomings”

(p.1).First,accurateanalysisreliesoncompleteandconsistentcodingatboththe

schoolanddistrictlevelacrossallareasofresourceallocation.Iforganizations

categorizespendingdifferently,resourceallocationcomparisonscanbeimprecise.

Thisincludesthefactthat“inmanycases,hostdistrictsofchartersmaintainthe

obligationtofinancecertainoperationalcostsofcharters,includingprovisionof

[facilitiesspace],food,transportationandspecialeducationservices”(Bakeretal.,

2012,p.1).Similarproblemscanarisewhenchartermanagementorganizations

assumesomesitelevelcostsforindividualschools.Accuratefinancialanalysesmay

sufferfromtheseinconsistencies.Second,charterschoolsandCMO’smaysimply

operatedifferentlythantraditionaldistrictsandschoolsbasedonthestudentsthey

serveandtheprogramstheyprovide.Thismaybeparticularlytrueforschools

providingnicheprogramstoserveparticularstudents,orschoolsproviding

innovativeprogramstoprovideandsupporttheirinstructionalpractices.Using

broadspendingcategoriestoanalyzeschoolspending,ratherthanmorespecific,

programleveldata,makedetailedcomparisonsofhowschoolsallocateresources

difficult.Spendingoncapitalinfrastructureandotheroperatingcostscanfurther

complicateschool-levelcomparisons.

Anotherpossibledifficultyinaccuratelycomparingschoolexpenditures

ariseswhencharterschoolsorganizethemselvesasmultiple,relatedentities.When

achartermanagementorganizationexists,servicesandotherschool-levelresources

25

maybeprovidedtoschoolsitesbutallocatedtothecentralizedorganization.

Examplesincludeprofessionaldevelopmentforfacultyandstaff,curriculumdesign,

operationalsupport.Insuchcases,centralizedspendingdatamaynotbeattributed

tothespecificsitethatbenefitsfromthoseresources,ormaybeallocatedtoschool

sitesusingorganizationalaveragesratherthanaccountingfortheactualresources

allocatedtoeachsite.Inthecaseofsomechartermanagementorganizations,

supportmaycomenotonlyfromthelocalCMO,butalsofromthenational

organization(Baker&Miron,2015;Mironetal.,2011).Theinternalaccounting

practicesofeachleveloftheorganizationmaymeanthatresourcesarenotalways

accountedforattheschool-level.Centralmanagementorganizations(andindividual

schools)mayalsoworkwithexternalpartnerswhoprovideequipment,personnel,

andotherin-kindservicesthatarenoteasilyaccountedforbythereporting

processesinplaceforcharterschools.School-basedhealthclinics,forexample,are

oftenmanagedbyoutsideorganizationsandprovidedthroughpartnershipsthat

maynotshowupinfinancialrecords.

Charterschoolsmayalsobenefitfromresourcesprovidedbyoutside

organizations.Commonexamplesincludeparentorganizations,butamoreformal

exampleincludesthecreationofaseparateanddistinctnon-profitsupporting

organization(Mironetal.,2011;Reckhow,2010).TheInternalRevenueService

definesasupportingorganizationasonethatis“organizedexclusivelyforthe

benefitof,toperformthefunctionsof,ortocarryoutthepurposesof”(IRS,2018)

anotherpublicnon-profit.Inadditiontomakinggrantstothesupported

organization,thesupportingorganizationcangenerallymakegrantsandprovide

26

servicestothe“individualmembersofthecharitableclassbenefitedbyits

supportedorganization”(IRS,2018).Ifschoolsdonotreportthefinancial

expendituresmadebytheirsupportingorganizations,anyresearchonschool-level

spendingwillbeincompleteandperhapsmisleadingastotheimpactofthe

marketplaceonequityandefficiency.

Similarchallengesexistwhenlookingatschoolrevenues.BakerandMiron

(2015)identifytwodifferentwaysthatpublicdollarsflowintocharterschools.First,

charterschoolsmayreceivedirectfundingfromstateeducationagencies.Underthis

arrangement,charterschoolsarefinanciallyindependentofthelocalschooldistrict.

Asecondfundingarrangementprovidesfundingdirectlytotheschooldistrict,

ratherthanthecharterschool,withthedistrictservingasapass-throughagencyfor

funding.“Inthelattercase,itisnotuncommonforthelocalpublicschooldistrictto

retaincertainfinancialresponsibilities,suchastheprovisionoftransportation

services,orcostsassociatedwithspecialeducation.Districtsmayalsobe

responsibleforprovidingcurricularmaterials,enrollmentmanagement,oreven

accesstofacilities”(p.15).Insuchcases,charterschools’revenueswillappear

lowerbecausefundingisareattributedtothelocaldistrict,makingaccurate

revenuecomparisonsmoredifficult.

Theflowofprivatedollarsintoschoolsalsocomplicatestherevenuesideof

schoolfunding.“Largefoundationsoftenactas‘institutionalentrepreneurs’or‘field

builders’,byawardinggrantstocertaintypesoforganizations”(Reckhow,2010,p.

279).Thesedollarscanbedifficulttotrack,particularlywhentheyareprovidedto

schoolsupportorganizations(whoprovideprogrammingbutnotdirectdollars),to

27

districtorganizations(ratherthandirectlytoschools),ortochartermanagement

organizations,whooftenmaintainseparateregionalandnationalsupporting

organizationsthatmaynotbesubjecttothesamereportingrequirementsasthe

localschoolsthemselves.

Bakeretal.(2015)suggesttwostepstowardconductingbetteranalysisof

schoolrevenuesandspending,whetherattheschoolordistrictlevel.First,better

precisionmustbeusedtodeterminehowandwhereschoolsanddistrictsare

spending.Applestoapplescomparisonsaresimplynotpossibleifexpendituresare

beingmadeincertainschoolsandnotinothers,orifthosecostsarebeingallocated

todistrictofficesorchartermanagementorganizations,insteadoftotheschool

itself.Second,thecostsofspecificprogramsandservicesmustbebrokenintotheir

parts,ratherthanbeingtreatedasaverageexpendituresacrossbroadcategories

likeinstructionandsupport.Withoutthatlevelofdetail,“onecannotaccurately

comparetherelativeefficiencyinproducingstudentoutcomesofonesetofschools

toanother”(p.32).

MarketStructure

Todefinestructureonthesupplysideofaneducationalmarketplace,Belfield

andLevin(2002)suggest,“aneducationmarketexistswhereparents[andstudents]

haveasetoffeasiblealternatives”(p.281).Basedonthisdefinition,apublic

monopolyexistsincommunitiesinwhichasinglepublicschoolordistrictisthe

onlyalternative(Chubb&Moe,1990).Markets,ontheotherhand,existwhenpublic

schoolscompetewithalternativessuchasprivatetuition-basedschools,orwith

28

alternativesinsidethepublicschoolsystem,suchasmagnetschoolsandcharter

schools.The“feasiblechoiceset”(Belfield&Levin,2002,p.281)ofalternativesmay

alsoincludeschoolsinneighboringcatchmentzones,orinneighboringschool

districts,dependingonlocalpolicy(Hoxby,1998).Accessingneighboringschoolsor

neighboringdistrictalternativesusuallyrequiresfamiliesto“votewiththeirfeet”.

This“Tiebout-typechoice”,isexercisedwhenafamilyselectsapublicschooloption

bychoosingtoliveinaparticularneighborhood(Tiebout,1956).Indoingso,

familiestakeadvantageofschoolcatchmentzones,whichassignstudentstoa

particularschoolbasedonresidence(Hoxby,2001).

Choicealoneisnotenoughtocreatecompetitionwithinaneducational

marketplace.Parentsmustalsobeabletogainaccesstothosechoiceoptions.

Unfortunately,barriersusuallyexistthatpreventsomeofthesealternativesfrom

beingconsidered.Low-incomefamilies,forexample,maybeunabletopayprivate

schooltuition.Somestudentsmaynotqualifyformagnetschools,whichenrollonly

thehighestperformingstudents.Charterschoolsmaybeover-enrolled,requiring

studentstoparticipateinalotterytogainaseat.Familiesmayalsobeunabletogain

accesstosomeneighborhoodschoolsbecausethecostsofmovingintoaparticular

neighborhoodaretoohigh(Belfield&Levin,2002).Inadditiontothecostofa

residencebeingalimitingfactorforsomefamilies’abilitytochooseaschoolby

movingintoaneighborhood,Hoxby(2000)suggeststhatchoicecanalsobe

constrainedbyjoblocation,leadingsomefamilies’toconsideronlythoseschools

withinareasonablecommute.Acknowledgingthesebarriers,MacLeodandUrquiola

(2012)note,“thereisevidencethatTieboutchoicecanleadtostratification”(p.9).

29

Structuresthatcanhelpovercomethesechallengestoexercisingchoiceinclude

scholarships,whichprovidelow-incomestudentswithtuitionvoucherstoattenda

privateschool,andfreestudenttransportation.Transportationoptionscanalso

helpfamiliesexpandchoice,regardlessofwheretheylive,byeliminatingtheneed

forparentstobringtheirchildrentoandfromschooleachday,ortopayanoutside

providerforthisservice.

Anotherkeystructuralelementthatimpactscompetitionwithinachoice

systemistheschoolfundingmechanism.Moststateshaveadistrict-basedfinance

systeminwhichschooldistrictsreceivefundingthroughlocaltaxefforts,andfrom

stateandfederalsources.Thedistrictsoperateschoolsandallocateresources,

ratherthanmoney,toschoolsbasedonthenumberofstudentsateachsite(Baker,

2003;Odden,2001).Inachoice-basedschoolsystem,fundingfollowsthestudent.

Thisshiftinschoolfundingstructuresisacriticalcomponentforcreating

competitionbetweenpublicschools.Districtsincreasinglyfacecompetitionfor

publicfundsfromcharterschools,voucherprograms,andtuitiontaxcredit

programs,eachofwhichdivertfundsawayfromthecentralizedschooldistrict

(Bakeretal.,2012;Baker&Miron,2015;Levin,2001).Onlybyattractingenough

studentswillschools,regardlessoftheirtype,receivethefundingtheyneedto

continueoperation.Thus,whenfundingfollowsthestudent,choicestrengthensthe

competitiveprocess.

30

MeasuringCompetition

Thetheoreticallinkbetweenchoiceandcompetitionisthatparents,by

choosingfromamongavailableoptions,caninfluencewhatgoesoninschoolsby

forcingschoolstoconsiderfamilypreferences.Schools,seekingtoattractand

maintainstudentenrollments,willbemotivatedtoimprovetheirperformanceand

diversifytheirofferingsinordertobettermeettheneedsoftheirstudents(Chubb&

Moe,1990).Thedegreetowhichchoicecreatescompetitionbetweenschoolswithin

amarketisasubjectofdebate.Hoxby(2003)suggests,“schools'conductand

performancewilldependontheavailabilityofalternativeschools,notonwhether

theparentsactuallyusethealternatives"(p.11).Inotherwords,anavailablesetof

optionsfromwhichtochooseisenoughtocreatecompetitionandtocompelschools

torespondinparticularways.Alternatively,Linick(2014)arguesthatcompetition

requiresmorethanjustasetofavailablealternatives.Italsorequiresthatschools

respondtothosealternativesinsomeway.ThisdefinitionisconsistentwithBelfield

andLevin(2002),whoalsosuggest“competitionasaconstructrefersbothtothe

existenceofmultipleeducationsupplierswithinthechoicesetandtohowthese

suppliersbehavestrategically”(p.281).

Existingresearchusesseveraldifferentmethodsforquantifyingthelevelof

competitionthatexistswithinaneducationalmarketplace.Holmesetal.(2003)use

proximityasaproxyforcompetitionbycalculatingthedistancebetweenaTPSand

thenearestcharterschool(seealsoBettinger,2005andSass,2005).Otherstudies

usethenumberofcharterschoolswithinaparticulardistanceofaTPStomeasure

thedensityofcharterpresence(Bifulco&Ladd,2006).Hoxby(2003)defines

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competitionusingmarketshare,orthenumberofstudentswhoattendcharter

schoolswithinagivenmarket,asaproxyforcompetition(seealsoArsen&Ni,

2012;Imberman,2007).Stillotherstudiesaccountforcompetitionusinga

combinationofbothproximityandmarketshare(Buddin&Zimmer,2005;Misraet

al.,2012).

Hoxby(2003)specificallydefinesacompetitiveenvironmentasanydistrict

inwhichcharterschoolsenrollatleastsixpercentofthestudents.Somestudies

estimatethelevelofcompetitionexperiencedbyschoolsbycombiningthismeasure

ofmarketsharewithameasureofthedurationofcharterpresence(Arsen,2007;

Arsen&Ni,2012;Bookeretal.,2008).

Stillanothermetricforquantifyingthelevelofcompetitionbetweenschools

istheHerfindhalIndex(HI),whichusesthe“marketsharesoftheassociatedfirms

withinanindustry[to]capturethedegreeofcompetitioninanindustry”(Borland&

Howsen,1992,p.32).UsingtheHItoquantifycompetitionineducationalmarkets

“reflectsthemarketpowerofpublicschoolsintheareaandthereforethedegreeof

‘choice’thatparentsmayhave”(Barrow&Rouse,2002,p.27).TheHIcanalso

measurecompetitionbetweenbothpublicandprivateschoolsdependingonthe

dataincludedinitscalculations.

TheformulaforcalculatingtheHerfindahlIndexwithinagiveneducational

marketplaceis:

32

WhereHistheHerfindahlIndexvalue,Nisthenumberofschoolswithinadefined

marketplace,andsiisthemarketshareofschooliinthemarketplace.HIvalues

rangefrom0,representingfullcompetition,to1,representingfullmonopoly.In

their2002reviewofstudiesexaminingtheeffectsofcompetitiononeducational

outcomes,BelfieldandLevinreport“HIvaluesineducationmarketsrangefrom

0.11to0.87,withanapproximateaveragefortheconcentrationlevelat0.35,

[indicating]thateducationishighlyconcentratedincomparisonwithothersectors”

(p.283).4Similarly,BarrowandRouse(2002)considerthethresholdforamarket

tobe“somewhatcompetitive”asHIlessthan0.15,withHIabove0.46being

considered“monopolistic”(p.28).

ThisstudywillusetheHerfindahlIndextomeasurethelevelofcompetition

intheNewOrleansschoolmarketplace.OnebenefitofusingHIisthatitisa

dynamicindicatorofcompetitionwithinaneducationalmarketplace.Thevaluewill

changeovertime,reflectinghowcompetitionincreasesordecreasesbasedonthe

enrollmentdecisionsoffamilies(Hanushek,2003;Hoxby,2000).

EducationalMarketStructureinNewOrleans

Onegoalofthisstudyistoidentifypatternsinhowschoolsofdifferenttypes

deployresourcesinresponsetocompetition.Tocreatecomparisongroups,public

4“TheFederalTradeCommission,inaccordancewithininterpretationoftheHI,defines(industrial)marketswithHIvaluesbelow0.1asunconcentrated,thosebetween0.1and018asmoderatelyconcentrated,andthoseabove0.18asconcentrated”(Belfield&Levin,2002,p.336).BarrowandRouse(2002)note“schooldistricts,whichmustexistinallcounties,[will]thereforegeneratemarketsthataremoreconcentratedthanthetypicalproductmarket”(p.28).

33

schoolsinNewOrleanswillbecategorizedaccordingtogovernancetype(publicor

private)andmanagementstructure(centralizedordecentralized).

Thistypologyallowsforpatternstobeidentifiedacrossseveralcomparison

groups.First,schoolsaredividedbetweenpublic(schoolsgovernedbyOPSB,the

publiclyelectedlocalschoolboard)andprivate(schoolscontrolledbynon-profit

charterschoolboards).Schoolsarefurthercategorizedaccordingtomanagement

structure,aseithercentralizedordecentralized.

AllschoolsgovernedbyOPSBareoperatedas“traditionalpublicschools”,

underthecentralizedmanagementofNewOrleansPublicSchools.Withinthe

privatelygovernedcharterschoolsector,bothcentralizedanddecentralized

managementstructuresexist.Networkcharterschoolsoperateaspartofcharter

managementorganizations(CMOs),usingacentralizedmanagementmodel.Non-

networkchartersaredecentralized,standaloneschoolsoperatingasindividual

entities.Figure2-1organizesthepublicschoolsinNewOrleansalongdimensionsof

governanceandmanagementstructure.

Management structure

Centralized Decentralized

Publ

ic

Traditional public

schools

6 schools

G

over

nanc

e

Priv

ate

Network charter

schools

45 schools

Non-network

charter schools

31 schools Figure2-1.PublicSchoolTypesinNewOrleans(2014–2015)

34

Theextenttowhichdifferentresourceallocationpatternsexistforschools

operatingunderthesevariousgovernanceandmanagementstructureshas

importantimplicationsforunderstandinghowschoolsrespondtocompetition.Also

importantforunderstandinghowschoolsbehaveinthemarketplaceisafull

understandingoftheotherreformsthatimpacthowstudentsandfamiliesaccess

schools.TheOrleansParishSchoolBoard,whileithasshifteditsroleawayfromthe

directoperationofschools,stillprovidessomelevelofcoordinationandoversight

forallpublicschools.Fromanenrollmentstandpoint,OPSBmanagestheoperations

ofthreeFamilyResourceCenters,whichprovidefamilieswithalocationtoresearch

schooloptionsandtoutilizetheEnrollNOLAsystem,whichusesacentralized

databasetomanagetheschooladmissionsprocessforallpublicschoolsinNew

Orleans,includingmid-yeartransfers.Fromagovernancestandpoint,OPSBis

shiftingtoaroleasaportfoliomanager,withoversightresponsibilitiesoverareas

suchasschoolopeningandclosure,performancemonitoring,andinterventions.

“Thesetsofdecisionsthatcomealongwithportfoliomanagement–planning,

accountability,andauthorization–leadtothecontinuousimprovementand

innovationthatwillenablethevisionthatagreatpublicschoolisavailableforall

childreninNewOrleans”(OPSB,2016,p.15).InFall2018,thelastofOPSB’s

traditionalpublicschoolswillbecomeacharterschool.OPSB’swillnolonger

directlyoperateanypublicschools.Astheirroleasaportfoliomanagercontinuesto

develop,accountingfortheresourcesOPSBinvestsinschoolswillbeimportantfor

understandinghowandwhereresourcesarereachingschools.Ifthoseresources

arenotattributeddirectlytotheschoolsitestheybenefit,itwillbedifficultto

35

identifyschoolspendingpatternsandtodeterminepossiblecausesforspending

variationsacrossschoolsandcentralizedmanagementorganizations.

TheMarketMetaphor

Accordingtothemarketmetaphor,schoolsprovideasupplyofeducational

optionstofamiliesandstudentswho,asconsumersofeducation,providedemand

forthoseservices.Amarketdynamicexistswhenschoolscompeteforstudents.

Whilethemarketmetaphoriscommonlyidentifiedasthedominantrationalefor

schoolchoice,Henigetal.(2005)suggestcharterschoolscanbecharacterizedas

either“market-oriented–thoseoperatedbyfor-profitEMOs”(p.490)ormission-

oriented,“thoseassumedtosetadirectionmoreinlinewithpurposive,collective,

andphilanthropicmission”(p.489).Withinthemission-orientedchartersector,

schoolsarefurthercategorizedasbeinggovernedbynon-profitswhoareconnected

toprofessionaleducators,afocusonsocialservices,linkstocommunitygroups,or

connectionstothebusinesscommunity.

Henig(1994)notesthatsupportforschoolchoicepoliciesisoftenrooted,not

inabeliefthatmarketcompetitionwillmakeschoolsbetterandmoreefficient,but

ratheronan“allegiancetonon-marketrationales,suchasindividualityandpersonal

growth,culturaldiversity,communityempowerment,andtheopportunitytoshake

uplethargicpublicbureaucracies”(p.188).Totheextentthatthesevalues

representvariedinterestsoffamiliesandstudentsasprivateeducational

consumers,itislogicaltoexpectthatindividualschoolsmayrespondbyprovidinga

productthatalignswiththoseprivateconsumerdemandsratherthanrespondingto

36

themorepublicgoalofsystemwideschoolimprovement.Consideredthroughthis

lens,schools’responsetocompetitionisnotuniform.

Consumerdemandbasedonindividualandpersonalgrowthvaluesthe

principlethatschoolchoicewillalloweducatorstoprovidestudentswithchild-

centeredexperiences,oftenthroughalternativeenvironmentstothetraditionally

structuredclassroom.Theresponseofschools,inthisview,istoprovidethe

individualizededucationdemandedbythemarketofstudents,regardlessofhow

unconventionaltheprogramsmayappear.

Supportforchoicegroundedinculturaldiversityisassociatedwithallowing

parentsandcommunitiestodemand“distinctculturalandintellectualtraditions”

(Henig,1994,p.16)inschools.Thistypeofsupportforschoolchoicemaycompel

schoolstopresentdifferingvaluestodifferentgroupsofstudents,andmayprevent

asinglepublicauthorityfromimposingstandardsuponconsumerswhovalue

somethingotherthanthemajorityviewpoint.Forexample,low-income

communitiesmayvalueaschoolthatfocusesondevelopingjobskillsratherthan

providingacollegepreparatorycurriculum.

Similarly,supportforschoolchoicegroundedinacommunity-power

rationaleisbasedontheprinciplethatschoolsarebestshapedbylocalinterests,

andshouldbeshapedbythepoliticalbeliefsofthosewhousethem,ratherthan

simplybeingorganizedaroundthevaluesofthedominantpoliticalclass(Henig,

1994).Consumerswhodemandchoicesthataregroundedincommunity,for

example,maynotbeinterestedinattractingstudentsfromoutsideoftheirown

neighborhoodboundaries.Normayneighborhoodfamiliesappreciatethe

37

possibilitythatstudentsfromotherpartsofthecitycangainadmissiontothe

neighborhoodschool,infearthatthosestudentswilldisplacespotspreviously

reservedforstudentsandfamiliesinthesurroundingcommunity.

Finally,somesupportersmayseeschoolchoicesimplyasapoliticaltoolthat

canbeusedtoforcereformsuponaninstitutionaleducationalsystemthatisoften

resistanttochange.Becausethistypeofsupportforschoolchoiceismoreclosely

alignedwiththemoretraditionaloutcomesof“higherachievementscores,lower

dropoutrates,basicliteracy,[and]technicalandscientificskills”(Henig,1994,p.

19),itislikelytobealignedwithbothprivateconsumerpreferencesandalsowith

themorepubliclyacknowledgedgoalsoflocalandstateeducationalagencies,

whosemainpriorityistoimprovetheacademicperformanceschoolsasmeasured

byformalaccountabilitysystems.

Totheextentthatschoolsallocateresourcesinordertomeetconsumers’

preferences,theprivateandpublicgoalsofchoicemayleadtovariedbehavioron

thesupplysideofschooling,andtoarangeofspendingondifferentpriorities.Itis

importanttonote,however,thatregardlessofprivateconsumerpreferences,

schoolsmustalsomeettheregulatorydemandsofthepublicsystemasawhole.

Morespecifically,localandstateeducationauthoritiescananddorequireschoolsto

meetspecificacademicperformancetargets,whetherintheformoftestscores,

attendancerates,orothermeasurableoutcomes.Fortraditionalpublicschools,

failuretomeetregulatorydemandsmayresultinschoolclosure,restructuring,or

leadershipchange.Similarrequirementsexistforcharterschools.InNewOrleans

forexample,schoolsmustmeetavarietyofexpectationsrelatedtoschoolfinances,

38

organizationalstructures,andacademicqualityinordertomaintainoperationsand

havetheirchartersrenewed(OPSB,2017).

Baker(2009)notesanotherimportantimpactofcompetitionontheresource

allocationpatternsofschoolsanddistrictsoperatingwithinamarketplace.Because

organizationscompeteforthesamelaborforce,boththequantityandqualityof

teachers,administratorsandotherstaffarecommoditiesforwhichtheymust

compete.Thenumberofqualifiedpersonnelwithinamarketmaybelimited,and

organizationswillbeforcedtocompeteforthoseresources,eitherthroughhigher

salaries,higherqualitysupport,orotherbenefits.“Inshort,veryfewschool

[organizations]aregeographicallyisolatedislandsthatcanaltertheirownspending

levelsordistributionswithoutconsiderationforspendinganddistributionbehavior

oftheirneighboring[organizations]”(p.290).

RespondingtoCompetitionWithResources

BelfieldandLevin(2002)suggestthatboththesupplyside(schools)andthe

demandside(parentsandstudents)havethepotentialtoactstrategicallywithinthe

marketplace,andthatbothareimportantforunderstandinghowcompetitionmight

compelschoolstodifferentiatethemselvesfromoneanother.Thisstudyisfocused

solelyonthesupplysideoftheeducationalmarketplace,andusesresource

allocationpatternstoexaminehowschoolsandcentralizedorganizationsinNew

Orleansactstrategicallywithinahighlycompetitiveenvironment.Thisresearch

followstheapproachofCarpenter(2013)whonotes“allocationstudiesdescribe,

39

explain,and/orpredictresourcepatternsinthecontextunderstudy,leaving

educationaloutcomestothedomainofproductionfunctionstudies”(p.307)

Thereareavarietyofactionsthatschoolsmighttakeinresponseto

competition.Theymayeliminatewastefulprograms,enhancestudentprogramming,

investinfacilitiesorinnovatetoimprovethequalityofinstructionintheirbuildings.

Schoolfinancedatacanprovideadetailedlookathowschoolsaresettingtheir

priorities.Whenexaminingschoolfinances,it’simportanttonotethatsimply

spendingmoreonisnotaguaranteeofbetterstudentperformance(Hanushek,

1997;Ladd&Hansen,1999;Oddenetal.,2006).Alsoimportantisthewayinwhich

thoseresourcesareused,andtheconditionswithinwhicheachschooloperates.

AsschoolsinNewOrleanscontinuetocompeteforresourcesinthe

marketplace,itisimportanttonotethatresourcesnotonlycomefromattracting

students(andtheper-pupilrevenuesthataccompanythem),butalsofromother

publicandprivatesources.Governmentalandprivategrantsmayrequirethe

adoptionofaparticularprogramtoreceivethefunding.Specificreportingand

evaluation,andtheassociatedcosts,mayberequiredforongoingfundingor,in

somecases,fundsmayonlyreimbursediftheyarespentinaccordancewithspecific

guidelines.School-levelresourceswillbeavailablefromtheOrleansParishSchool

Boardthroughitsroleasaportfoliomanager.Asschoolsworktocompeteforthese

limitedresources,fundraising,compliance,andaccountabilitymayallimpacthow

theydeployresourceswithintheirorganizations.

TheNCESframeworkprovidesschoolswithavarietyofspecificschool

resourceindicatorsthatcanhelpidentifyschoolpriorities.Theseincludeper-pupil

40

expenditures,totalenrollmentoftheschool,specialacademicfocusfortheschool,

suchasamagnetoralternativeprogram,studentincomelevel,andtheproportion

ofstudentswithdisabilities.Baker(2003)notestheimportanceofexaminingschool

anddistrictpersonnellevels,includingthenumberofschoolanddistrictlevel

administrators,andinstructionalandinstruction-relatedstaff.MilesandFrank

(2008)highlightadditionalindicatorsthatcanindicateschoolpriorities,including

per-pupilexpenditures,teachereducationlevels,andteacherexperience.Thisstudy

examinesschoolspendingprioritiesacrossavarietyoftheseexpenditurecategories

andresourceindicators.

41

III–DATAANDMETHODOLOGY

Thissectionprovidesabriefoverviewofthecasestudyandthequantitative

methodsIwillusetoexamineresourceallocationpatternsinNewOrleans.First,I

willproviderationaleforusingacasestudyapproachforthisresearch.Second,I

willidentifythedatatobeusedfortheanalysis.Next,Idescribethecontextforthe

study,includingameasureofthedegreeofcompetitionwithintheNewOrleans

schoolmarketplace.Next,Iprovideadescriptionofthemodelusedtoestimate

differencesinschoolallocationpatternswithintheNewOrleanseducational

marketplace.Finally,Iwillshareresultsfrompreliminarytrialsoftheanalysis,and

willprovideabriefoutlineoffurtheranalysistobeconducted.

CaseStudyApproach

Iwilluseanembeddedcasestudyapproachtoconductthisresearch,using

thesystemofpublicschoolsinNewOrleansasprimaryunitofanalysis.Subunits

forthestudywillbepublicschoolsclassifiedaccordingtothegovernanceand

managementstructureofeachschool,whichincludestraditionalpublicschools,

networkcharterschools,andnon-networkcharterschools.Thewholesaleadoption

ofmarket-basedreformsmakethisstudywellsituatedtounderstandthepresumed

linksbetweensystemicreformsandschool-levelspending,acriterionwellsuitedto

thecasestudyapproach(Yin,2003).Acasestudyapproachisalsoappropriatefor

understandingthe“how”and“why”ofacontemporaryphenomenonoverwhichthe

42

investigatorhaslittleornocontrol(Yin,2003).Casestudiesarealsoappropriate

forcomparingtheeffectsoftheinstitutionalenvironmentonsubunitswithinacase

(Schneiberg&Clemens,2006).Thesubunitsinthisstudywillallowmetoexamine

theresourceallocationpatternofschoolsacrossgovernancetype(publicand

private)andwithintheprivatelygovernedchartersector(non-networkand

networkschools).

StudyContextandPopulation

Thisstudyexaminesresourceallocationpatternsacrossthepublicschool

systeminNewOrleans,Louisiana.Schoolsincludedinthestudyarepublicschools

operatingwithinOrleansParish.Schoolsarecategorizedastraditionalpublic

schools(n=6),non-networkcharterschools(n=31),orasanetworkcharterschools

(n=45).1OrleansParishprovidesauniqueenvironmentinwhichtomeasurepublic

schools’responsetocompetitionwithinasingleeducationalmarketplace.Allpublic

schoolsinOrleansParish,regardlessofgovernanceandmanagementstructure,

competewitheachotherforstudents.Publicschoolstudentsarenotassignedto

schoolsbasedonneighborhoodresidence.Rather,familiesmustactivelyapplytoa

particularschooltogainadmission.

BecausetheschooldistrictiscontiguouswiththeOrleansParishboundaries,

nootherdistrictsareincludedinthechoiceset.PrivateschoolsinOrleansParish

arealsonotconsidered.Whilecompetitioncertainlyexistsbetweenpublicand

1TheNewOrleansCenterforCreativeArts,apublichighschoolauthorizeddirectlybytheLouisianaLegislature,isexcludedfromthesample.NOCCAisasatuition-freeartstrainingcenterforhighschoolstudentsthroughoutNewOrleans,andstudentsareadmittedthroughauditiononly.

43

privateschoolswithinOrleansParish,andbetweenOrleansParishandneighboring

districts,thissamplepurposefullyexaminesonlypublicschoolcompetitionwithin

OrleansParish.

Itisimportanttonotethat,whilesomeevidencesuggeststhatschoolsin

NewOrleansareimprovingalongtraditionalacademicachievementmeasures(Sims

&Rossmeier,2015),thisstudydoesnotattempttoaddresstheefficiencyofschools

inNewOrleans.Rather,itlimitsitsanalysistoanexaminationofhowschoolsspend

resourcesinparticularareas.Severalfactorscontributedtothisdecision.First,the

summary-levelfinancialdatausedfortheanalysisdonotidentifyhowschools

spendonspecificprogramsandservices.Thus,itisnotpossibletoconnect

particularoutcomestospecificareasofinvestment.Second,thewidevarietyof

outcomesthatschoolsseektoaccomplishmaydifferacrossorganizations,leading

tocomparisonsthatmaynotaccuratelydescribethecostofachievingaparticular

goal.Aninvestmentinmentalhealthservices,forexample,whileproviding

importantbenefitstostudentsandfamilies,maynotyieldimprovedacademic

outcomes.However,theinvestmentmayimproveschoolculture,reducebehavioral

problems,andincreasefamilyinvolvementattheschool.Thosechangesmay,in

turn,reducecostsinotherareas.Byfocusingsolelyonwhatschoolsspent,

regardlessofoutcomes,thisanalysisseekstoidentifyoverallspendingtrendsin

schoolswiththegoalofinformingfutureworkontheefficiencyofparticular

programs.

Table3-1includesdescriptivestatisticsforschoolsinthestudy.Schooland

classsizesappeartobesimilaracrossschoolsofdifferentgovernancetypes,

44

althoughnetworkcharterschoolsappeartoserveslightlylargerstudentbodiesand

classrooms,ascomparedtonon-networkchartersandTPS.Studentdemographics

showmorenotabledifferences.Networkcharterschoolsappeartoenrollagreater

percentageofspecialeducationstudentsandalargerpercentageofeconomically

disadvantagedstudents,whencomparedtoTPSandnon-networkcharterschools.

Non-networkcharterschoolsappeartoservethelowestpercentageofthesesame

studentscomparedtobothotherschooltypes.

Networkcharterschoolsappeartoemployinstructional,administrativeand

supportstaffmemberswiththeleastamountofexperience,followedbynon-

networkcharters.TPSappeartoemploystaffwiththemostexperience,acrossall

hiringareasexamined.

Table3-1

PopulationDescriptiveStatistics,OrleansParish,2014–2015

NetworkCharterNon-networkCharter TPS

n 45 31 6Category Mean Std.Dev. Mean Std.Dev. Mean Std.Dev.

AverageDailyMembership 576.6 242.1 536.1 319.4 530.9 301.6Studentsperteacher 16.2 3.6 15.0 2.5 14.7 1.8%EconomicDisadvantage 91.8% 4.6% 75.2% 23.1% 88.4% 5.6%

%inSp.Education 13.01% 4.07% 9.25% 4.49% 10.17% 3.43%AverageExperience-Teachers 6.2 3.8 9.1 3.9 16.4 2.4AverageExperience-Pupil/InstrSupport 6.9 3.8 11.0 6.6 20.4 2.9AverageExperience-SchoolAdmin 8.3 5.3 14.1 7.4 13.5 7.2AvgExperience-AllStaff 6.1 2.9 9.1 3.6 14.5 2.3

45

TableA-1(seeAppendixA)showstheaverageper-pupilcurrent

expenditures2forthesampleofpublicschoolsinNewOrleansduringthe2014-15

academicyear.Thetableincludesdataforfivegroupsofschools:allpublicschools,

alltraditionalpublicschools,non-networkcharters,networkcharters,andall

charterschools.SpendingaveragesareshownasTotalCurrentExpendituresand

withinfunctionalcategoriesforInstructional,SupportServices(forPupilsand

InstructionalStaff),SchoolAdministration,TransportationandCentralOffice

Overhead.Allcategoriesareexpressedasbothper-pupilaveragesandasanaverage

percentoftotalcurrentexpenditures.

Earlyproponentssuggestedthatcharterschools,asdecentralized

organizations,wouldshiftspendingclosertotheclassroomsandawayfrom

administration(Finnet.al,2000).InNewOrleans,thechartersectoractually

appearstospend$997lessperpupiloninstruction.Chartersalsospendlessper

pupiloncentralofficeoverhead($1,663)andmoreperpupilonadministrative

costs($142)ascomparedtoTPS.Lowerinstructionalspendingandhigherschool

administrationspendingbychartersisconsistentwithotherstudiesthatshow

similartrends(Miron&Nelson,2002;Miron&Urschel,2010;Nelsonetal.,2003).

Administrativespendinglooksdifferent,however,whenexaminedincombination

withcentralofficeoverhead,afunctionalareathatlikelyincludessomeTPS

administrativespendingthatchartersschoolsidentifyasadministrativespendingat

2NCESdefinescurrentexpendituresasthosemadefortheday-to-dayoperationofschoolsandschooldistricts,includingexpendituresforstaffsalariesandbenefits,supplies,andpurchasedservices.Expendituresassociatedwithrepayingdebtsandcapitaloutlays(e.g.,purchasesofland,schoolconstructionandrepair,andequipment)areexcludedfromcurrentexpenditures.Programsoutsidethescopeofpublicpreschooltograde12education,suchascommunityservicesandadulteducation,arenotincludedincurrentexpenditures(Johnsonetal,2011).

46

theschoollevel.TPSspendacombined$3,708perpupilonschooladministration

andcentralofficeoverhead,comparedto$2,187perpupilspentbycharters.TPS

spend$331lessperpupilonTransportationthanthechartersector.

Inadditiontocomparingperpupilspendingamounts,ArsenandNi(2012a)

andCarpenter(2013)notetheimportanceofcomparingcategoricalspendingasa

percentageofoveralloutlays.Chartersspend10.34%ofoverallexpenditureson

SchoolAdministration,comparedto7.7%byTPS.However,chartersspend17.69%

oncombinedschooladministrationandcentralofficeoverhead,ascomparedtoTPS

spendingof25.13%onthesamecategories.And,althoughtheyspendlessperpupil

oninstruction,chartersspendalargershareofoverallspendingoninstructionthan

TPS,withthechartersectorspending50.49%oftotalcurrentexpenditureson

Instructioncomparedto49.05%ofspendingonInstructionbyTPS.Thesetrends

aremoreconsistentwiththetheorythatcharterschools,“asdecentralized

organizationscompelledtocompeteforstudents,[will]allocatetheirresources

moreintensivelyoninstruction"(Arsen&Ni,2012b,p.2).Thisresearchwillcreate

modelstocomparedifferencesinbothperpupilspendingandspendingasashare

oftotal.

Turningtocomparisonswithinthechartersector,totalcurrentexpenditures

appearsimilaracrossschooltypes,withnon-networkchartersspending$12,530

perpupilandnetworkchartersspending$12,244.Thereisgreatervariationwithin

thecharterschoolspendingacrossexpenditurecategories.Non-networkcharters

spendmorethannetworkchartersonInstruction($290perpupil),School

Administration($130perpupil)andCentralOfficeOverhead($762pupil),andless

47

thannetworkchartersonPupil/InstructionalSupport($292perpupil)and

Transportation($330perpupil).Trendsaresimilarwhenexaminedasapercentage

ofspending.Thegreaterspendingbynon-networkchartersonadministrationand

centralofficeoverheadsuggestthatnetworkcharters,bycentralizingoperationsat

thenetworklevel,areenjoyingsomeeconomiesofscaleforthosefunctions.

Interestingly,theadvantagesofrecentralizationwithinthechartersectordonot

appeartocreateefficienciesinTransportation,wherenon-networkchartersspend

lessthannetworkcharterschools.Thisresearchwilldistinguishbetweennetwork

andnon-networkcharterschoolstohelpunderstandanydifferencesthatexist

withinthecharterschoolsectorasschoolmanagementisrecentralizedtothe

networklevel.

TableA-2(seeAppendixA)showscomparisonsofstaffexperienceand

salariesinNewOrleanspublicschoolsin2014-15.Dataincludeaveragesalaryand

tenureforteachers,supportstaff,andschooladministratorswithinOrleansParish.

Onaverage,TPStendtoemploystaffwithgreaterexperiencecomparedtothe

chartersector,regardlessofposition.And,TPSpayhigheraveragesalariesto

teachersandsupportstaff.TPSadministrators,ontheotherhand,makeanaverage

of$15,654lessthantheirchartersectorcounterparts.Anexaminationofdata

withinthechartersectorrevealsdifferencesbetweennon-networkandnetwork

charterschools.Non-networkschoolsemploymoreexperiencedstaffinall

categories,andpayteachersandadministratorsmorethannetworkcharters.The

largestdiscrepancyinchartersectorsalariesoccurredinadministrativeareas,

wherenon-networkcharterspaidtheiradministratorsanaverageof$10,605more

48

thannetworkcharterschools.Non-networkchartersalsopaidtheiradministrators

$21,933morethanTPSpaytheiradministrators.

SchoolsdonotjustcompeteforstudentsintheNewOrleansmarketplace.

Theymustalsocompeteforteachers.Byexamininghumanresourceindicators

acrossschoolgovernancetypes,andacrosscentralizedanddecentralized

managementstructures,thisresearchwillcontributetoagreaterunderstandingof

howhumanresourcesareallocatedwithinacompetitivesystem.Humanresource

indicatorsinthemodelincludesalaryandexperiencelevelsforteachers,support

staff,andadministrators.OtherresourceindicatorswillincludeTotalCurrent

Expendituresandcategoricalexpendituredata,includingspendingonInstruction,

PupilandTeacherSupport,SchoolAdministration,Transportation,andCentral

OfficeOverhead.

MeasuringCompetitioninNewOrleans

ThisstudyusestheHerfindahlIndex(HI)tomeasurethedegreeofpublic

schoolcompetitionwithinOrleansParish.TheHImeasuresthelevelof

concentrationofschoolenrollmentswithinadefinedarea.Valuesrangefrom0,

representingfullcompetition,to1,representingfullmonopoly.Theformulafor

determiningthelevelofconcentrationis:

49

whereHistheHerfindahlIndexvalue,Nisthenumberofpublicschoolswithin

OrleansParish,andsiisthemarketshareofpublicschooliinthemarketplace.

82publicschoolsareincludedinthestudysample.Marketshareforeach

schooliscalculatedusing2014–15AverageDailyMembership(ADM)dataas

reportedtotheLouisianaDepartmentofEducation.Basedonthesedata,theHI

valueforOrleansParishpublicschoolsis0.015,representingarelativelyhigh

degreecompetitionwithinthemarketplace.3CalculatingHIwithdatafromall

publicschoolsinNewOrleansestablishesasystem-widemeasureofcompetitionfor

theNewOrleanspublicschoolmarketplace,ratherthanasitelevelmeasureof

competitionbasedontheproximityordensityofcompetitionaroundspecific

schools.ThehighlevelofcompetitionbetweenpublicschoolsintheNewOrleans

marketplacemakeitwellsuitedforasingle-casedesign,becausetheNewOrleans

educationalmarketplacerepresentsextremeoruniquecase(Yin,2003).

DataSources

DataforthisstudycomefromLouisianaDepartmentofEducationdatabases

andpublicationsforpublicschoolsoperatinginNewOrleansinthe2014-2015

academicyear.Thesedataincludeschool-levelfinancialanddemographicdatafor

bothcharterandnon-charterpublicschools.Thedatawereassembledfromreports

publishedbytheLouisianaDepartmentofEducationandfromeachschool’sAnnual

FinancialReportandAnnualCharterReview(LDE,2015d).

3Asapointofcomparison,Belfield&Levin(2002)reportanaverageHIvalueof0.35forthestudiestheyreviewed,withalowof0.11andamaximumvalueof0.87.

50

School-levelexpendituredatainthesamplearecategorizedinaccordance

withaccountingguidelinesestablishedintheLouisianaAccountingandUniform

GovernmentalHandbook(LAUGH),whichprovidesastandardizedsetofaccounting

codesforuseineducationmanagementandreporting.TheLAUGHaccountingcodes

areincompliancewithNationalCenterforEducationStatistics(NCES)reporting

requirements.

School-levelStructuralCharacteristics

Schooltypeistheprimaryvariableofinterestinthisanalysis.Thisstudy

categorizespublicschoolsinNewOrleansaccordingtogovernancetype(publicor

private)andmanagementstructure(centralizedordecentralized).Governancetype

allowscomparisonstobedrawnbetweenpublic(TPS)andprivate(charter)schools.

Managementstructureallowscomparisonstobemadebetweencentralized

organizations(TPSandnetworkcharters4)anddecentralizedorganizations(non-

networkcharters).Combined,thedimensionscreatethreedistinctcategoriesof

schoolsforcomparison:1)traditionalpublicschools(public/centralized),2)

networkcharter(private/centralized)and3)non-networkcharter

(private/decentralized).Becausetherearethreecategoriesofschooltypewhen

bothgovernanceandmanagementstructureareconsidered,dummyvariablesare

used5torepresentnetworkandnon-networkcharterschools,leavingTPSasthe

basecategory.Totheextentthattrendsexistwithinschoolsineachgroup,this

4Networkcharters,forthepurposesofthisparticularcomparison,areconsidered“recentralized”becausetheyrelyonacentralofficetoperformavarietyofschool-levelfunctions.5“Whenanon-intervalvariablehasGcategories,useG-1dummyvariablestorepresentit”(Lewis-Beck,1980,p.68).

51

typologycanprovideimportantinsightsintohowvariouscombinationsofschool

governanceandmanagementstructuremightimpactresourceallocationwithina

competitivemarketplace.

Researchindicatesthatseveralschoolandstudentlevelvariablesmaybe

significantlyimpacthowschoolsallocateresources(Baker,2003;Oddenetal.,

2003).Thesevariablesareaccountedforinthemodeltocontrolforanyinfluence

theymayhaveonresourceallocationpatterns.School-levelcovariatesthathave

beenshowntoimpactspendinglevelsincludegradeconfiguration,schoolsize,

schoolage,schooladmissionscriteria,andspecializedprograms(Andrews,

Duncombe&Yinger,2002;Arsen&Ni,2012a,2012b;Baker,2003;Bakeretal.,

2012;Green,Huerta&Richards,2007;Miles&Frank,2008).Studentlevel

covariatesthatimpactspendingincludethepercentofstudentswhoare

economicallydisadvantagedandthepercentofstudentsinspecialeducation

programs(Harwell,2018;Monk&Hussain,2000).Schoolandstudentlevel

variablesprovidecontextabouttheprioritiesandthelevelofneedwithinschools,

andthereforecanimpacttheresourcesallocatedacrossavarietyofindicators.To

theextentthesevariablesareassociatedwithhowdifferenttypesofschoolsspend

differently,theirinclusioninthemodelcanhelpbetterisolatethespecificspending

differencesassociatedwithgovernanceandmanagementstructures.Table3-2

summarizesthelistofindependentvariablesincludedintheanalysis.

52

Table3-2IndependentandControlVariablesStudyVariable CodingNon-networkcharter 1=Charterschoolmanagedbynon-profit.Singlesite

only.Networkcharter 1=CharterschoolmanagedbyaCharterManagement

OrganizationSelectiveadmission 1=Schoolusesstandardizedtestscoresorother

academicindicatorstodetermineeligibilityforenrollment0=Openadmissionschool

Alternativesetting 1=Schoolservesstudentsinanon-traditionalclassroomenvironment.

Elementary/middleSchool 1=SchoolservesPK/K–8thgrade0=Highschool

Combinationgradelevel 1=CombinationElementary/Middle/HighSchoolSchoolage Continuous(0,1,2,…,n)Ageofschool,inyears,since

2005.SchoolPerformanceScore SchoolqualitymetricprovidedbyLouisiana

DepartmentofEducation.AverageDailyMembership Continuous(0,1,2,…,n)Averageschoolenrollment%EconomicDisadvantage Percentstudentsqualifyingforfreeandreducedprice

lunch%StudentswithDisabilities

Percentstudentswithdisabilities

ResourceAllocationIndicators Dependentvariablesinthemodelmeasureavarietyofschool-level

expenditurecategoriesandhumanresourcecharacteristics.Expendituredataare

brokendownbyfunctionalcategories,whichcanserveasindicatorsofthecore

educationalstrategiesandprioritieswithineachschool(Allison,2015;Baker,2003;

Oddenetal.,2003).Otherdependentvariablesincludetheaveragesalaryand

experiencelevelforavarietyofpositionswithintheschool,whichserveas

53

indicatorsofthelevelofinvestmentschoolsmakeinhumancapitalacross

functionalcategories(Baker,2003;Miles&Frank,2008).Table3-3identifiesthe

dependentvariablesincludedinthemodel.

Table3-3

DependentVariablesRegressionModelVariables

Studyvariable CodingTotalCurrentExpenditures

Perpupilexpendituresfortheday-to-dayoperationofschools,includingexpendituresforstaffsalariesandbenefits,supplies,andpurchasedservices.Expendituresassociatedwithrepayingdebtsandcapitaloutlays,andexpendituresoutsidethescopeofpre-Kthrough12publiceducation,areexcludedfromcurrentexpenditures.

Instruction Activitiesdealingdirectlywiththeinteractionbetweenteachersandstudents.TheseactivitiesprovidestudentswithlearningexperiencesandincludeRegularEducation,SpecialEducation,andCo-CurricularActivities.

Pupil/InstructionalSupportServices

PupilSupportServicesincludeAttendanceandSocialWork,Guidance,andHealthServices,includingspeechandoccupationaltherapyandotherrelatedservices.InstructionalStaffSupportServicesareassociatedwithassistingtheinstructionalstaffwiththecontentandprocessofprovidinglearningexperiencesforstudents.

SchoolAdministration

Activitiesconcernedwiththeoveralladministrativeresponsibilityforaschool,includingactivitiesperformedbythePrincipalandAssistantPrincipals.

CentralOfficeOverhead

Activities,otherthangeneraladministration,whichsupporteachoftheotherinstructionalandsupportingservicesprograms.Theseactivitiesincludeplanning,research,development,evaluation,information,staff,andadministrativetechnologyservices.

SchoolAdministrationandCentralOfficeOverhead

Combinedmeasureofschoolandcentralofficeadministrativeactivities,asoutlinedinthistable.

Transportation Activitiesconcernedwithconveyingstudentstoandfromschool,asprovidedbyStateandFederallaw.Thisfunctionincludestripsbetweenhomeandschool,andtripstoschoolactivities,includingfieldtrips.

Instructionalpercent

Instructionalpercentoftotalcurrentexpenditures

Supportpercent Pupil/InstructionalSupportpercentoftotalcurrentexpendituresSchoolAdministrationpercent

SchoolAdministrationpercentoftotalcurrentexpenditures

CentralOffice CentralOfficeOverheadpercentoftotalcurrentexpenditures

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OverheadpercentSchoolAdministrationandCentralOverheadpercent

SchoolAdministrationandCentralOverheadasapercentoftotalcurrentexpenditures

Transportationpercent

Transportationpercentoftotalcurrentexpenditures

Avg.Yrs.Experience-Teachers

Averageyearsexperienceforclassroominstructors.

Avg.Yrs.Experience-Admin

Averageyearsexperienceforschool-leveladministrators.

Avg.Yrs.Exp.–PupilSupport

Averageyearsexperienceforpupilsupportstaff.

Avg.Yrs.Experience–Allstaff

Averageyearsexperienceforallschoolstaff.

Source:LouisianaAccountingandUniformGovernmentalHandbook(2010);NationalCenterforEducationalStatistics(2009).

ModelComparisonGroups Irelyonmultipleregressionmodelstoestimatethedifferencesinallocations

betweenTPSandcharterschools,aftercontrollingforstudentandschool-level

characteristics.Separateregressionsarerunforeachexpenditurefunction,bothas

aperpupilamountandasapercentageoftotalcurrentexpenditures,andforeach

humanresourceindicator.Separatemodelsareusedtodrawcomparisonsbetween

spendinginTPS,non-networkandnetworkcharterschoolsattheschoollevel,and

atthedistrict(LEA)level.Table3-4illustratesthemodelsusedforthisresearch.

55

Table3-4ResourceAllocationRegressionModelComparisonGroupsModel Variablesofinterest ComparisongroupsModel1

Governanceandmanagementstructure(schoolasunit)

TPS(6)Non-networkcharterschool(31)Networkcharterschool(45)

Model2

Governanceandmanagementstructure(districtasunit)

Traditionaldistrict(1)Chartermanagementorganization(12)Non-networkcharters(31)

Model3

Managementstructure(schoolasunit)

Centralized(andrecentralized):TPSandNetworkcharter(51)Decentralized(site-based):Non-networkcharter(31)

Model4

Managementstructurewithinchartersector(schoolasunit)

Centralized:CMO(45)Decentralized:Non-networkcharter(31)

Byexaminingdifferentcombinationsofschoolgovernanceandmanagement

structures,themodelsallowthecomparisonofschoolanddistrict-levelspending

patternswithinthemarketplacefromavarietyofperspectives.

Thebasicmodelforestimatingresourceallocationlevelstakesthefollowing

form:

Yi=a0+b1X1+b2X2+b3X3+…+bkXk+e

56

whereYisthedependentvariableofinterestandXareindependentvariables

representingavarietyofschoolandstudentcharacteristics.

Model1usesschool-leveldatatocompareresourceallocationpatternsin

TPStothoseofcharterschools.ThebasecategoryinthemodelisOPSBschools

(publicgovernance;centralizedmanagement),withcomparisonsmadetoschools

withinthechartersector(privategovernance).Thecharterschoolcomparison

groupisfurtherbrokendownintonon-networkcharterschools(decentralized,site-

basedmanagement)andnetworkcharterschools(recentralizedmanagement).

Model2examinesresourceallocationpatternsindataaggregatedtothe

district,orlocaleducationagency(LEA)level.Thebasecategoryinthemodelis

OPSB(publicgovernance;centralizedmanagement),withcomparisonsmadetothe

charterschoolsector(privategovernance).Charterschoolmanagementstructureis

againusedtodistinguishbetweenrecentralizedchartermanagementorganizations

(networkcharters)anddecentralized,non-networkcharterorganizations(site-

basedmanagement).UsingLEAastheunitofanalysiscanhelpidentifyresource

allocationtrendsthatmaynotbeevidentattheschoollevel.

Model3usesmanagementstructuretocompareresourceallocationpatterns

incentrallymanagedschools(bothpublicTPSandprivatenetworkcharters)with

thoseofdecentralized,non-networkcharterschools.ThebasecategoryinModel3

iscentrallymanagedschools,includingschoolsfrombothOPSBandfromcharter

managementorganizations,whilethecomparisongroupincludessite-base

managed,non-networkcharterschools.Thismodelprovidesinsightintowhether

centralizedschools,whetheroperatedbyatraditionaldistrictoracentralized

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chartermanagementorganization,appeartospenddifferentlythansite-base,non-

networkcharterschoolswithinthemarketplace.

Model4usesmanagementstructurewithinthecharterschoolsectorto

compareresourceallocationpatternsinre-centralizednetworkcharterschools

withsinglesite,decentralizednon-networkcharters.Thebasecategoryincludes

non-networkcharters,withnetworkcharterschoolsservingasacomparisongroup.

Thismodelidentifieshowspendingpatternsdifferacrosstheprivatizedcharter

sector,basedonmanagementstructure,bycomparingrecentralizednetwork

charterschoolstofullydecentralizednon-networkcharterschools.

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IV–ANALYSISANDDISCUSSION

Theregressionmodelsutilizedinthisstudyallowcomparisonstobedrawn

acrossschoolswhocompeteforstudentswithintheNewOrleansmarketplace,but

whooperateunderdifferentgovernanceandmanagementstructures.This

summaryoffindingsprovidesabriefdescriptionofeachmodel,includingtheschool

andstudentcovariatesandresourceindicatorvariablesincludedineachmodel,and

summarizesthemodelresultsforeachregression.Next,overalltrendsforeach

resourceareaareidentified,takingallmodelsintoaccount.Finally,largertrends

acrossallresourceareasarediscussed,withconnectionsmadetotheconceptual

frameworkofthestudy.

ModelResults

ModelOne:ComparingResourceAllocationinIndividualPublicSchools

TheregressionforestimatingresourceallocationpatternsinTPS,network

charterandnon-networkcharterschoolstakesthefollowingform:

Y= a0 + b1(non-networkcharter) + b2(networkcharter) + b3(magnetschool) + b4(alternative setting) + b5(elementary/middle school) +b6(combo/high school) + b7(school age) + b8(SPS score) + b9(%economicdisadvantage)+b10(%specialeducation)+b11(ADM/1000)

WhereYistheexpenditurecategoryorhumanresourceindicator.School

typeisdummycodedasnon-networkcharter,ornetworkcharter,withTPS

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asthebasecategory.Gradelevelisdummycodedaselementary,or

elementary/highschoolcombination,withhighschoolasthereference.

TableA-3andA-4(seeAppendixA)showmeanschool-leveldifferencesin

resourceallocationbetweenTPS,networkcharterschools,andnon-networkcharter

schoolsthatpersistaftercontrollingforschoolandstudentcovariates.TableA-3

expressesthesedifferencesintermsofaverageperpupilexpenditures,whileTable

A-4displaysthosesamedifferencesasapercentageofTotalCurrentExpenditures.

TableA-5(seeAppendixA)showsmeandifferencesinsalaryandexperiencelevels

acrossseveralhumanresourceindicators.

RegressionswereruntoestimateperpupilspendingonInstruction,

Pupil/InstructionalSupport,SchoolAdministration,Transportation,CentralOffice

Overhead,acombinedmeasureofAdministrationandCentralOverhead,andTotal

CurrentExpenditure.Modelestimatesshowmeandifferencesinseveralareas,after

controllingforschool(size,gradelevel,andprogrammaticcharacteristics)and

studentcovariates(includingspecialneedsandat-riskindicators).Onaverage,non-

networkchartersspend$2,503lessper-pupilintotalcurrentexpenditures

comparedtoTPS,whilenetworkchartersspend$3,016lesscomparedtoTPS.These

differencessuggestapossibledisparitybetweenthefundinglevelsprovidedto

publiclygovernedTPSascomparedtoprivatelygovernedcharterschools.Itfollows

thatdifferencesexistwithinseveralexpenditurecategories.

Onaverage,non-networkchartersspendlessperpupiloninstructional

services(-$934.57),onsupportservices(-$1076.73),oncentralofficeoverhead

services(-$1400.61),andonadministration/overhead(-$1146.29),alldifferences

60

thatarestatisticallysignificant.Networkchartersshowsimilarstatistically

significantdifferences,spendinglessoninstructionalservices(-$1396.69),support

services(-$751.46),centralofficeoverhead(-$1775.53)andcombined

administration/overhead(-$1646.83)thanTPS,whilespendingmoreon

transportation(+$233.79).

AllocationpatternsinTPSandcharterschoolslookdifferentwhenmodeling

expendituresasapercentageoftotalspending.Regressionswereruntoestimate

spendingonInstruction,Pupil/InstructionalSupport,SchoolAdministration,

Transportation,andCentralOfficeOverhead,eachexpressedasapercentofTotal

CurrentExpenditures.Thereisnosignificantdifferenceininstructionalspending

betweencharterschoolsandTPSwhenexaminedasaproportionofoverallcurrent

expenditures.Somedifferencesdoexist,however,acrossotherexpenditure

categories.

Non-networkcharterschoolsallocate6%lessonsupportservicesand8.5%

lessoncentralofficeoverhead,ascomparedtoTPS,whilespending3.5%moreon

schooladministrationand2.5%moreontransportation.Whenschool

administrationandoverheadareexaminedasacombinedindicator,non-network

charterschoolsspend4.5%less,suggestingthattheiroveralladministrativecosts

arelowerthantheirTPScounterparts.

Networkcharterschoolsspend11.2%lessoncentralofficeoverheadand

2.8%percentmoreontransportation,ascomparedtoTPS.Differencesinoverall

administrativespendingaresmaller,butstillsignificant,whenexaminedasa

combinationofschooladministrationandcentraloverhead,withnetworkcharters

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spending8.3%lessonthecombinedmeasure.Asisthecasewithnon-network

charters,differencesinInstructionalspendingbetweennetworkchartersandTPS

disappearwhenmeasuredasashareofthetotalcurrentexpenditures.

TableA-5(seeAppendixA)indicatesmeandifferencesacrossseveralareas

ofhumanresources.Regressionswereruntoestimateaverageyearsofexperience

forTeachers,Administrators,andPupilSupportineachsubgroup,andtoestimate

averagesalaryforeachofthosepositions.

Overall,non-networkcharterschoolsappeartoemploylessexperiencedstaff

thanTPS,withoverallstaffaveraging4.9feweryearsofexperience.Onaverage,

teachersarrivewith6.9yearslessexperience,andsupportstaffpossess8.5years

lessexperience,ascomparedtotheirTPScounterparts.Networkcharterschools

showsimilardifferences,hiringteacherswith8.8feweryearsofexperienceand

supportstaffwith12.2yearslessexperience,foranaveragedifferenceof7.5years

lessexperiencethanTPS,acrossallstaff.

Despitethesedifferencesinstaffexperiencelevels,teacherandsupport

salariesinTPSandcharterschoolsappearrelativelysimilar.Onlyadministrative

salariesinnon-networkcharterschoolsappearsignificantlydifferentfromTPS,

withnon-networkadministratorsearning$23,881higherthantheirTPS

counterparts,despitenosignificantdifferenceinexperiencelevel.Figure4-1

summarizesthefindingsfromModelOne.

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Figure4-1.School-levelSpendingTrends

ModelTwo:ComparingResourceAllocationinLocalEducationAgencies

Theregressionforestimatingresourceallocationdifferencesbetween

spendingaggregatedtothedistrict(LEA)leveltakesthefollowingform:

Y = a0 + b1(Non-network charterLEA) + b2(Network charter LEA) +b3(% economic disadvantage) + b4(% special education) +b5(ADM/1000)

WhereYistheexpenditurecategoryorhumanresourceindicator.LEA-typeis

dummycodedasnon-networkcharter,ornetworkcharter,withthetraditional

publicschooldistrict(OrleansParishSchoolBoard)asthebasecategory.Non-

networkcharterLEA’sarecomprisedofasingleschoolsite.NetworkcharterLEA’s

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arechartermanagementorganizationsthatmanagemultipleschoolsites.Atotalof

44organizationsareincludedinthemodel.Onetraditionalpublicdistrictmanages

sixschools.31LEA’saresingle-sitedistricts,managingonlyoneschool.12charter

managementorganizationsmanageatotalof45networkcharterschools.

TableA-6andTableA-7(seeAppendixA)showmeandistrict-level

differencesinresourceallocationthatpersistaftercontrollingforschooland

studentcovariates.TableA-6expressesthesedifferencesintermsofaverageper

pupilexpenditures,whileTableA-7displaysthosesamedifferencesasapercentage

ofTotalCurrentExpenditures.TableA-8(seeAppendixA)showsmeandifferencein

salaryandexperiencelevelsacrossseveralhumanresourceindicators.

Modelestimatesshownostatisticallysignificantper-pupilspending

differencesacrossLEA’s,aftercontrollingforschoolandstudentcovariates.The

modelalsoshowsnosignificantdifferencesinLEAspendingwhenexpressedasa

percentageofTotalCurrentExpenditures,nordoanysignificantdifferencesappear

withinthehumanresourceindicatorsmodeled.Figure4-2summarizesthefindings

fromModelTwo.

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Figure4-2.LEA-levelSpendingTrends

ModelThree:ComparingResourceAllocationinCentralizedandDecentralizedSchools Theregressionforestimatingresourceallocationdifferencesbetween

centrallymanaged,andsite-basedmanagedschools,takesthefollowingform:

Y = a0 + b1(centralized management) + b2(magnet school) +b3(alternative setting) + b4(elementary/middle school) +b5(combo/high school) + b6(school age) + b7(SPS score) + b8(%economicdisadvantage)+b9(%specialeducation)+b10(ADM/1000)

WhereYistheexpenditurecategoryorhumanresourceindicator.Schooltypeis

dummycodedascentrallymanaged,withsite-basedmanaged(SBM)schoolsasthe

basecategory.Centralizedschoolsincludebothnetworkcharterschoolsand

traditionalpublicschoolgovernedbythelocalschooldistrict,andsite-based

managedschoolsincludingallnon-networkcharterschools.Atotalof82schoolsare

includedinthemodel.51schoolsinthesampleareschoolsundercentralized

management,while31schoolsaresite-basedmanaged,non-networkcharter

65

schools,Gradelevelisdummycodedaselementary,orelementary/highschool

combination,withhighschoolasthereference.

TableA-9andTableA-10(seeAppendixA)showmeanschool-level

differencesinresourceallocationbetweencentralizedandSBMschoolsthatpersist

aftercontrollingforschoolandstudentcovariates.TableA-9expressesthese

differencesintermsofaverageperpupilexpenditures,whileTableA-10displays

thosesamedifferencesasapercentageofTotalCurrentExpenditures.TableA-11

(seeAppendixA)showsmeandifferenceinsalaryandexperiencelevelsacross

severalhumanresourceindicators.

Modelestimatesshownosignificantper-pupildifferencesinTotalCurrent

ExpendituresbetweencentralizedandSBMschools,aftercontrollingforschooland

studentcovariates.Aper-pupilspendingdifferencedoesappearwithinthe

Pupil/InstructionalSupportcategory.Centralizedschoolsappeartospend$508

moreperpupilthanSBMschools,aftercontrollingforstudentandschoolcovariates.

WhenmodeledasapercentageofTotalCurrentExpenditures,thisspending

differencerepresents4.1%inadditionalspendingbycentralizedschoolsonPupil

andInstructionalSupport,whichisalsostatisticallysignificant.

TableA-11summarizesmeandifferencesinavarietyofhumanresource

characteristicsbetweencentralizedandSBMschools.Nosignificantdifferences

appearbetweentheexperiencelevelandsalariesofteachersandpupilsupportstaff,

includingallstaffonaverage.Significantdifferencesdoappearwithinschool

administration,withcentralizedschoolshiringschooladministratorswith5.1fewer

yearsofexperience.Schooladministratorsincentralizedschoolsalsoappeartoearn

66

$12,548lessinsalarythantheirsite-basedmanagedcounterparts.Figure4-3

summarizesthefindingsfromModelThree.

Figure4-3.CentralizedManagementSpendingTrendsModelFour:ComparingResourceAllocationWithintheCharterSchoolSector

Theregressionforestimatingresourceallocationdifferencesinnetwork

charterandnon-networkcharterschoolstakesthefollowingform:

Y = a0 + b1(network charter) + b2(magnet school) + b3(alternativesetting) + b4(elementary/middle school) + b5(combo/high school) +b6(schoolage)+b7(SPSscore)+b8(%economicdisadvantage)+b9(%specialeducation)+b10(ADM/1000)

WhereYistheexpenditurecategoryorhumanresourceindicator.Schooltypeis

dummycodedasnetworkcharter,withnon-networkcharterasthebasecategory.A

totalof76schoolsareincludedinthemodel.45schoolsinthesamplearenetwork

67

charterschools,while31schoolsarenon-networkcharterschools,Gradelevelis

dummycodedaselementary,orelementary/highschoolcombination,withhigh

schoolasthereference.

TableA-12andTableA-13(seeAppendixA)showmeanschool-level

differencesinresourceallocationbetweennetworkandnon-networkcharter

schoolsthatpersistaftercontrollingforschoolandstudentcovariates.TableA-12

expressesthesedifferencesintermsofaverageperpupilexpenditures,whileTable

A-13displaysthosesamedifferencesasapercentageofTotalCurrentExpenditures.

TableA-14(seeAppendixA)showsmeandifferenceinsalaryandexperiencelevels

acrossseveralhumanresourceindicators.

Modelestimatesshownosignificantper-pupildifferencesinTotalCurrent

Expendituresbetweennetworkandnon-networkcharters,aftercontrollingfor

schoolandstudentcovariates.However,differencesdoemergewithinspending

categories.Onaverage,networkcharterschoolsspend$367moreon

Pupil/InstructionalSupportthantheirnon-networkcounterparts.And,network

chartersspend$433lessthannon-networkchartersonCentralOfficeOverhead.

LowerCentralOverheadspendingbynetworkchartersremainssignificantwhen

combinedwithSchoolAdministrationexpenditures,withnetworkcharters

spending$507lessperpupilonthecombinedmeasureofadministrationand

overheadthannon-networkcharters.

Spendingpatternswithinthechartersectorlooksimilarwhenexpressedasa

percentageofTotalCurrentExpenditures.TableA-13summarizesthesedifferences,

withnetworkcharterschoolsspending3.7%moreonPupilandInstructional

68

Supportservices,andlessonbothCentralOfficeOverhead(-3.2%)andthe

combinedmeasureofSchoolAdministrationplusCentralOverhead(-3.7%).

TableA-14summarizesmeandifferenceswithinthecharterschoolsector

acrossavarietyofhumanresourcecharacteristics.Althoughnetworkcharter

schoolsappeartohigherteacherswithlessyearsofexperience,thisdifferenceisnot

statisticallysignificant.Networkchartersappeartoemployadministrativestaffwith

5.7feweryearsofexperience,andpupilsupportstaffwith4.2feweryearsof

experience,bothofwhicharestatisticallysignificantaftercontrollingforcovariates.

Figure4-4summarizesthefindingsfromModelFour.

Figure4-4.CharterSectorSpendingTrends

69

ModelInterpretationandAnalysis

TotalCurrentExpenditures

TotalCurrentExpenditures(TCE)areexpendituresfortheday-to-day

operationofschools,includingexpendituresforstaffsalariesandbenefits,supplies,

andpurchasedservices.Expendituresassociatedwithrepayingdebtsandcapital

outlays,andexpendituresoutsidethescopeofpre-Kthrough12publiceducation,

areexcludedfromcurrentexpenditures.Eliminatingtheseexpendituresfromthe

modelscanhelpprovidebettercomparisonsinspendinglevels(Bakeretal.,2012).

Onaverage,charterschoolsinNewOrleansspend$2,394lessperpupilonTotal

CurrentExpendituresthantheirTPScounterparts.TotalCurrentspending

differencesaresimilarwhencomparisonsaremadewhilecontrollingforschooland

studentlevelcharacteristics.

Usingschool-leveldata,Model1suggeststhatnon-networkcharterschools

spend$2504lessperpupilonTCEthantheirTPScounterparts,whilenetwork

chartersspend$3016lessperpupil.Bothdifferencesaresignificant.These

differencesdisappearinModel2,however,whendataareaggregatedtotheLEA

level,withnosignificantdifferenceintheTotalCurrentExpendituresofTPSand

eithertypeofcharterschool.Inotherwords,whenspendingismodeledattheLEA

level,TotalCurrentExpendituresofthetraditionaldistrict,networkcharters,and

non-networkcharterschoolsarenotsignificantlydifferent.Nordodifferences

appearinModel3,whencentralizedschoolsarecomparedtonon-networkcharter

schools.TPSandnetworkcharterschools,ascentrallymanagedgroupsofschools,

70

donotspendsignificantlydifferentthannon-networkcharters,whichoperateasa

singleLEA.InModel4,withinthecharterschoolsectoritself,nosignificant

differencesareapparentinschool-levelTotalCurrentExpendituresbetween

networkandnon-networkcharterschools.Tosummarize,TPSappeartobe

spendingmorethanchartersschoolsonTotalCurrentExpenditures,attheschool

level.However,whenspendingisaggregatedtotheLEAlevel,thesedifferences

becomeinsignificant.

ThedisparitiesinTotalCurrentExpendituresattheschoollevelraise

questionsabouttheequitablefundinglevelsacrosspublicschoolsinNewOrleans.

Aretraditionalpublicschoolsreceivingmoreoverallfundingthancharterschools

withinthesamemarket?Ifso,inwhichexpenditurecategoriesaretheseadditional

fundsbeingspent?Thisanalysisdoesnotincludeacomparisonofperpupilrevenue

amountsforschoolsinNewOrleans,butspendingdatasuggestthatTPSareindeed

spendinglargeramountsonTotalCurrentExpenditures.Per-pupilfundinglevels

canbetiedtodifferencesinstudentdemographics,capitalneeds,andotherfactors

(Huerta&d’Entremont,2010).InNewOrleans,fundingdifferencesmayalsobetied

torevenueretainedbyOPSBforcharteroversight,andtootherservicesprovided

bythecentraldistrictaspartoftheirroleasPortfolioManager(OPSB,2016).

Anexaminationofspendingwithinspecificspendingcategoriesfollows,and

providesamoredetailedexaminationofhowcompetingschoolsandorganizations

areallocatingresourcestowardspecificareas.

71

InstructionalExpenditures

InstructionalExpenditurescoveractivitiesdealingdirectlywiththe

interactionbetweenteachersandstudents.Theseactivitiesprovidestudentswith

learningexperiencesandincludeRegularEducation,SpecialEducation,andCo-

CurricularActivities.Onaverage,charterschoolsspendnearly$1000lesson

InstructionthantheirTPScounterparts.Aftercontrollingforstudentandschool

characteristics,Model1suggeststhatschool-levelInstructionalspending

differencesremainsignificantbetweenTPSandcharterschools,withnon-network

charterschoolsspending$935lessonInstructionperpupil.Networkcharters

spend$1397lessperpupil.WhenInstructionalspendingisexaminedasa

percentageofTotalCurrentExpenditures,however,thesedifferencesbecome

insignificant,suggestingthatchartersandTPSspendingdifferencesmaybemorea

functionoftheamountoffundsavailabletoschools,ratherthanbeingbasedona

differenceinstrategicpriorities.TPSandcharterschoolsofbothtypesappearto

spendastatisticallysimilarproportionofTotalCurrentExpendituresonInstruction.

InstructionalspendingamountsinTPSandcharterschoolsalsoappeartobe

similarwhendataareaggregatedtotheLEAlevel,inModel2.Nosignificant

differenceinInstructionalspending(neitherasaper-pupilamountnorasashareof

spending)appearsbetweenInstructionalspendinginthetraditionaldistrict(OPSB),

chartermanagementorganizations,andsinglesitecharterLEA’s.Nordodifferences

emergeinModel3,whencomparisonsaremadebetweencentralizedschools(OPSB

72

andCMO’s)anddecentralized,non-networkcharterLEA’s,orinModel4,withinthe

chartersector.

TheoverallsimilarityintheshareofspendingdevotedtoInstruction,across

allregressionmodels,suggeststhatcompetitorsintheNewOrleansmarketplace,

whetherTPS,networkcharter,ornon-networkcharter,sharesimilarprioritiesonce

studentandschoolcharacteristicsaretakenintoaccount.Putdifferently,public

schoolsinNewOrleansallocatethelargestshareofspendingtowardsInstruction,

regardlessofthegovernanceandmanagementstructureoftheschool.Differences

inper-pupilamountsspentonInstructionbecomesignificantwhenexpressedasa

shareofTotalCurrentspending.Thisfindingsuggeststhatper-pupildifferencesin

Instructionalspendingarelessrelatedtoadifferenceinthestrategicprioritiesof

schools,andperhapsmorecloselyrelatedtotheamountoffundsavailable.

SupportServices

Supportservicesprovideadministrativeandtechnicalsupportactivitiesused

tostrengtheninstruction.PupilSupportServicesincludeAttendanceandSocial

Work,Guidance,HealthServices,includingspeechandoccupationaltherapy,

SupportforIndividualSpecialNeedsStudents,andactivitiestoincrease

Parent/FamilyInvolvement.InstructionalStaffSupportServicesassistthe

instructionalstaffwiththecontentandprocessofprovidinglearningexperiences

forstudents,includingSchoolImprovementPlans,CurriculumDevelopment,

ProfessionalDevelopmentservices,andMediaServices.

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Onaverage,charterschoolsinNewOrleansspend$1315perpupilon

SupportServices,around$857lessthanTPSspendonthesametypeofservices.

School-leveldatainModel1showsignificantperpupilspendingdifferenceson

SupportServicesaftercontrollingforstudentandschoolcovariates,withnon-

networkchartersspending$1077lessperpupilthantheirTPScounterpartsand

networkchartersspendingaround$751lessperpupil,bothstatisticallysignificant

differences.Onlynon-networkchartersschools,however,spendsignificantlylessas

aproportionofTotalCurrentExpenditures,withnon-networkchartersspending

6%lessonSupportServicesthanTPS.Networkcharters,ontheotherhand,donot

appeartoallocateasignificantlydifferentportionoftheirTCEonSupportServices,

despitespendingmoreperpupil.SpendingpatternsaresimilarinModel2,when

dataareaggregatedtotheLEAlevel,withnosignificantdifferencesapparentin

SupportspendingbetweenTPS,CMO’sandsinglesitecharterLEA’s.

Whengroupsofcentralized(TPSandCMO)anddecentralizedschoolsare

comparedinModel3,spendingdifferencesinSupportServicesareagainsignificant,

withdecentralized,non-networkcharterschoolsspendingaround$508lessper

pupilthancentralizedschools.ExpressedasaproportionofTotalCurrentSpending,

thesedifferencesremainsignificant,withTPSandnetworkcharterschools

collectivelyspending4.1%morethannon-networkcharterschools.Model4

reinforcesthefindingthatcentralizedschoolsspendmoreonSupportServices.

Withinthechartersector,networkchartersspendmoreperpupilandmoreasa

shareofTCEthantheirnon-networkcounterparts.

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Totheextentthatcentrallymanagedschoolsappearmorelikelytoallocate

resourcestoSupportServicesthantheirdecentralizedcounterparts,perhapsitis

becausethelargeroverallsizeoftheTPSdistrictandCMOorganizationsprovides

themwithsomeeconomiesofscale.Servicessuchasspeechandoccupational

therapy,counseling,andin-houseprofessionaldevelopmentrequirespecialized

personnelor,ifnotmanagedinternally,mustbeoutsourcedtothird-partyproviders.

Withoutacriticalmassofstudentstopayforthesepositionsorservices,itis

possiblethatnon-networkcharterschools,assmallerorganizations,aresimplyless

abletoprovidesomeservices.Asthenumberofstudentsrequiringparticular

servicesincreases,it’sreasonabletoexpectthattheperpupilcostofthoseservices

willgodown.Italsobecomesmorelikelythatschoolswillneedtoprovideawider

rangeofservicesasthecommunitygrowslargerbecausemorestudentsand

familieswillneedthosesupports.

Ofcourse,spendingdifferencesinPupilandInstructionalSupportmightalso

beduetodifferencesinstudentpopulationenrolledinparticularschools(fewer

studentswithparticularneeds)andfacultycharacteristics(noviceteachers,for

examplemayrequiremoreinstructionalsupport),orsimplyfromdifferencesinthe

levelandtypeofsupportservicesprovidedbyeachschool.SeparatingtheSupport

ServicesexpenditurecategoryintoPupilandInstructionalcomponentscould

provideclarificationforunderstandingthesedifferences.

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TransportationExpenditures

Transportationservicesareusedtoconveystudentstoandfromschool,as

providedbyStateandFederallaw.Onaverage,charterschoolsinNewOrleans

spend$331moreperpupilthantheirTPScounterparts.Usingschool-leveldata,and

aftercontrollingforstudentandschoolcharacteristics,Model1suggeststhatnon-

networkcharterschoolsdonotspendsignificantlymoreperpupilthanTPSon

transportation.TakenasapercentageofTotalCurrentExpenditures,however,

Transportationinnon-networkchartersrepresentsa2.5%increaseoverspending

inTPS,whichisstatisticallysignificant.Networkcharterschoolsspendaround$234

moreperpupilonTransportationthanTPS,representinga2.8%increaseoverTPS

spending,bothofwhicharestatisticallysignificantdifferences.

NoothermodelsshowedasignificantdifferenceinTransportationspending.

Inotherwords,Transportationspendingappearssimilaracrossthetraditional

districtandallcharterschoolsattheLEAlevel;acrosscentralized(TPSandCMO)

anddecentralized(non-networkcharter)schools;andacrossthechartersector

itself.

Thatindividualcharterschools,bothnetworkandnon-network,spenda

largerportionoftheirfundingonTransportationthantraditionalpublicschools

maybeduetothefactthattheycompeteforstudentsfromawidergeographicarea

thantraditionalpublicschools.TPShaveahistoryofservingspecificfamiliesfrom

thesurroundingneighborhoods,arelicoftheformerresidence-basedenrollment

system.Theymayalsofeellessfinancialpressuretorecruitstudentswhenunder-

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enrolled,duetotheabilityofthetraditionaldistricttoprovidecentralizedresources

thatmayotherwisenotbeavailableincasesoflowerenrollment.Charterschools,as

newerschools,andasschoolsdesignedforamarketapproachtoeducation,have

alwaysoperatedinacompetitiveenvironmentthatseeksmaximizeenrollmentby

recruitingstudentsfromwherevertheyareavailable.

SchoolAdministrationandCentralOfficeOverhead

SchoolAdministrationexpenditurespayforactivitiesconcernedwiththe

overalladministrativeresponsibilityforaschool,includingactivitiesperformedby

thePrincipalandAssistantPrincipals.CentralOfficeOverheadexpendituresinclude

GeneralAdministrationexpensesusedtofundactivitiesforoperatingtheLEA,and

theproratedshareofcentralofficeandothernon-schoolsiteservicesthatprovide

LEA-widesupport.Onaverage,charterschoolsspend$1278perpupilonSchool

Administration,comparedto$1136perpupilbyTPS.Chartersspendanaverageof

only$909perpupilonCentralOverhead,whichis$1632lessthantheaverageTPS.

Aftercontrollingforstudentandschool-levelcharacteristics,noperpupil

differenceappearstoexistbetweencharterschoolspendingonSchool

AdministrationascomparedtoTPS,regardlessoftheunitofanalysis.Whether

examinedasindividualschools,orasLEA’s,perpupilspendingonSchool

AdministrationissimilarinTPSandcharterschools.Non-networkcharterschools

doappeartospend3.5%moreonSchoolAdministrationasapercentageofTotal

CurrentExpenditureswhencomparisonsaremadeacrossindividualschoolsin

Model1,butcomparisonsofLEA-levelspending,centrallymanagedschools(TPS

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andCMO)versusdecentralizedschools,andcomparisonswithinthechartersector

allrevealnosignificantdifferencesinSchoolAdministrationspending,whether

expressedasperpupildifferencesorasashareofspending.

CentralOverheadexpenditurecomparisonsrevealstatisticallysignificant

differencesbetweenschoolsites,bothbetweenTPSandcharterschools,andwithin

thecharterschoolsector.Model1suggestsnon-networkchartersspend$1400less

perpupilthanTPSschools,representingan8.5%smallershareofTotalCurrent

Expenditures.CentralOverheadexpendituresareevenlowerinnetworkcharter

schools,whereperpupilspendingis$1776lowerperpupil,representingan11.2%

reductionintheTotalCurrentExpenditures.Model4suggestsoverhead

expendituresarealsosignificantlydifferentwithinthecharterschoolsector,with

networkchartersspending$433lessperpupilascomparedtonon-networkcharter

schools,a3.2%smallershareofTotalCurrentExpenditures.Spendingdifferences

onOverheadareinsignificant,however,whencomparisonsaremadeattheLEA

levelinModel2,andacrosscentralizedanddecentralizedschoolgroupsinModel3.

Toaccountforthepossibilitythatdifferencesinaccountingpracticesmay

allocatesomeexpensesattheschoolleveltothecentralofficeincasesofcentrally

managedschools,SchoolAdministrationandCentralOverheadareanalyzed

individually,andasacombinedmeasure.Comparisonsalongthecombinedmeasure

aresimilartothesinglemeasureofOverheadexpenditures,withsignificant

differencesappearinginschool-leveldatabetweenTPSandchartersofbothtypes,

andwithinthechartersector.Model1suggestsnon-networkcharterschoolsspend

$1146(-4.5%asashareofTCE)lessthanTPSschools,whilenon-networkcharters

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spend$1647less(-8.3%asashareofTCE).Model4suggeststhat,withinthe

chartersector,networkschoolsspend$507less(-3.7%asashareofTCE)lessthan

theirnon-networkcounterparts.Nosignificantdifferencesexistwhenthe

comparisonsofcombinedSchoolAdministrationandCentralOverheadspending

aredrawnusingLEA-leveldatainModel2,orwhenTPSandCMOschoolsare

collectivelycomparedtonon-networkcharterschoolsinModel3.

Althoughnon-networkcharterschoolsdoappeartospendaslightlylarger

shareoffundsonSchoolAdministrationascomparedtoTPS,theloweramounts

theyspendonCentralOverheadmorethanmakeupforthatdifferencewhen

consideredasacombinedmeasure.Model1suggestsschool-leveladministrative

andoverheadspendingincharterschoolsofalltypesissignificantlylowerthanin

TPS.Importantly,however,thesedifferencesbecomeinsignificantwhenexamined

attheLEAlevelinModel2.Inotherwords,nosignificantdifferencesappearin

administrativeandoverheadspendingbetweenthetraditionaldistrict,CMOs,and

single-sitecharterLEAs.Norisspendingsignificantlydifferentwhenschool-level

dataareusedinModel3tocompareTPSandCMOstonon-networkschools.

Centralizationdoesappeartoimpactadministrativeandoverheadspendingwithin

thechartersectorinModel4.Networkschoolsspend$507less(-3.7%asashareof

TCE)oncombinedadministrationandoverheadthannon-networkschools,

suggestingthatCMOsarefindingsomesavingswithinspecificschoolsundertheir

control,butnotnecessarilyattheLEAlevel.Putdifferently,thevariationsin

administrativeandoverheadspendingbetweentheTPS,networkandnon-network

chartersaresignificantonlyattheschoollevel.AttheLEAlevel,allorganizations

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appeartobespendingsimilaramountsonadministrationandoverhead.Chartersin

general,andnetworkchartersrelativetonon-networkcharters,doappeartobe

spendinglessinindividualschoolsasopposedtoothers,butthesedifferencesare

notsignificantwhenexaminedacrosslargermanagementorganizations.These

findingssuggestthatschoolsmaybeallocatingresourcesdifferentlywithinsingle

schoolsites,butnotnecessarilyacrossthelargercentralizedorganizationsthat

operatemostschools.

HumanResourceIndicators

HumanResourceindicatorscanprovideamorenuancedlookathow

organizationswithintheNewOrleansschoolsystemmaybedeployingresources

differently,asopposedtothebroadercategoriesexaminedabove.Regression

modelswereusedtomodelstaffexperienceandsalariesacrossseveralcomparison

groupswhilecontrollingforschoolandstudentlevelcovariates.

Onaverage,chartersectoremployeeshavefeweryearsofexperienceand

earnlowersalariesthantheirTPScounterparts.Thenotableexceptionisthat

chartersectoradministratorsearnhighersalaries,despitetheirlowerlevelsof

experience.ComparedtotheirTPScounterparts,theaverageteacherincharter

schoolshas9.0yearslessexperienceandearns$2012lesseachyear;theaverage

supportstaffhas11.8yearslessexperienceandearns$1095lesseachyear;andthe

averageadministratorpossesses2.9yearslessexperience,butearns$15654more

inannualsalary.

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Controllingforavarietyofstudentandschool-levelcharacteristicsprovides

amoreaccuratecomparisonofthesepersonnelindicators.Model1suggests

teachersinnon-networkcharterschoolspossess6.9feweryearsexperiencethan

theirTPSpeers,andnetworkcharterteachersare8.8yearslessexperienced,when

comparisonsaredrawnacrossindividualschools.Theselowerlevelsofteacher

experienceinchartersaresignificantaftercontrollingforcovariates,despitethe

findingthatTPSandcharterteachersearnsalariesthatarestatisticallysimilar.In

otherwords,school-leveldatasuggestthatteachersincharterschoolsarebeing

paidsimilarsalariesastheirTPSpeers,despitehavingsignificantlyfeweryearsof

classroomexperience.Supportstaffinnon-networkandnetworkcharterschools

alsopossessfeweryearsofexperience,with8.5and12.2feweryearsexperience,

respectively.SalariesforsupportstaffincharterschoolsandTPSarealsonot

statisticallydifferentfromTPSschools,despitethedifferenceinexperiencelevel.

CharterschooladministratorsinNewOrleans,whetherinnetworkornon-network

schools,appeartobringstatisticallysimilarlevelsofexperienceastheirTPS

counterparts,aftercontrollingforschoolandstudentcharacteristics.Whilenetwork

charteradministratorsearnstatisticallysimilarsalariesasTPSadministrators,non-

networkadministratorsearn$23,881moreinannualsalarythantheirTPS

counterparts,despitesimilarlevelsofexperience.Thehigheradministrativesalaries

innon-networkcharterschoolsmaybelinkedtothefactthatnon-networkcharters,

onaverage,higherfewoveralladministrators(4.2FTE)thannetworkcharters(5.8

FTE)andTPS(4.5FTE).Giventhatnon-networkcharterschoolsaretaskedwiththe

responsibilitiesofbothasinglesiteschoolandofanLEA,itisperhapstobe

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expectedthatadministratorsinthoseschoolsearnmore.Theyarechargedwith

fillingtheroleofbothsiteleaderandasthesinglepointofauthorityforallschool

relatedmatters,asopposedtonetworkandTPSadministratorswhocanrelyon

centralofficeadministratorstoprovidesomeadministrativefunctions.

School-leveldatainModel3showfewerdifferencesinhumanresources

whencentralizedTPSandCMOsitesarecomparedwithdecentralized,non-network

charters.Onlyadministrativepersonnelindicatorsappeartobesignificantly

different,withTPSandCMOadministratorspossessing5.1feweryearsexperience

andearning$12548lessinannualsalary.Centralizedmanagementalsoappearsto

influencehumanresourceallocationwithinthechartersector.Althoughnosalary

differencesareapparent,Model4suggestsnetworkcharterschooladministrators

andsupportstaffarelessexperiencedthantheirnon-networkcounterparts,with

5.7yearsand4.1yearslessoverallexperiencethantheirnon-networkcharterpeers.

Thesedifferencesareconsistentwiththeideathatnetworkcharterpersonnelmight

benefitfromthesupportprovidedbyacentraloffice,andmaythereforeneedless

overallexperiencetobesuccessful.

Despitetheseschool-leveldifferences,comparisonsofdataaggregatedtothe

LEAlevelinModel2indicateanostatisticaldifferencesbetweenpersonnelatthe

traditionaldistrict,CMOs,andnon-networkcharters.Staffexperiencelevelsand

salariesarestatisticallysimilaracrossallLEAs,regardlessofgovernanceor

managementstructure.SimilaritiesattheLEAlevelsuggestthatcompetitionfor

humanresourcesmaynotnecessarilybeoccurringatthedistrictlevel.Rather,

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organizationsarebeingstrategicaboutdeployingresourcesacrossdifferentschools

withintheircentralizednetworks.

DiscussionofTrendsinResourceAllocation

Oneintendedbenefitofschoolchoiceandcompetitionisthattheeducational

marketplacewillfreeschoolsfrombureaucracyandthepublicmonopolyby

providingamarketincentivetoimproveandtobecomemoreefficient(Chubb&

Moe,1990;Friedman,1955;Hoxby,2001).Bythisview,competitionwillimprove

schoolsbyencouragingthemtoeliminatewastefulprogramsandfocusingtheir

resourcesmoreintensivelyoninstructionandprogramsthatmoredirectlyimpact

studentoutcomes.Bakeretal.(2012)note,“[an]importantsteptoward

understandingcostis[to]determinespendingforspecificprogramsandservicesor

underspecificgovernancestructures”(Bakeretal.,2012,p.6).Bycomparing

spendingpatternsofschoolsintheNewOrleansmarketplace,thisstudycontributes

totheunderstandingofhowprivatizationanddecentralizationmightimpactthe

costofachievingparticularschooloutcomes.

TheschoolchoicemarketplaceinNewOrleanscreatescompetitionbetween

allpublicschoolsforstudentsandotherresources.Someschoolsinthechoiceset

aregovernedbythepubliclyelectedOrleansParishSchoolBoard(OPSB);someare

privatelygovernedbylocalnon-profitorganizations.Someschoolsaremanagedby

centralizedmanagementorganizations,andothersbydecentralized,site-based

managementorganizations.Bymodelingthespendingpatternsintheseschools,and

controllingforavarietyofschoolandstudentlevelcharacteristics,thisstudy

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attemptstoidentifytheimpactthatgovernanceandmanagementstructuresmight

haveonhowresourcesareallocatedwithinacompetitiveschoolmarketplace.

ThisexaminationofschoolandLEAlevelspendinguses2014-15financial

datafrompublicschoolsinNewOrleans.EachLEAprovidesexpendituredatatothe

LouisianaDepartmentofEducation(LDE)throughitsAnnualFinancialReport.

AlthoughschoolsarerequiredtoreportdatausingtheLouisianaAccounting&

UniformGovernmentalHandbook,eachorganizationisresponsibleforcodingits

ownfinancialactivity.Ifspendingdataarenotcategorizedconsistentlyacross

organizations,comparisonscanbeimprecise,particularlywithincentralized

organizationsthatmustallocateresourcesbetweenacentralofficeandschoolsite

(seeBakeretal.,2012).ThisstudyusesTotalCurrentExpenditurestomodelschool

spending,whichexcludesexpendituresrelatedtodebtandcapitaloutlay,to

examineoveralllevelsofspendinginNewOrleans’publicschools.Modelsalso

predictschoolexpendituresinthecategoriesofInstruction,PupilandInstructional

Support,Transportation,SchoolAdministration,andCentralOfficeOverhead.

Theresourceallocationpatternsthatemergeareinterpretedbelowusinga

conceptualframeworkofeducationalaccountingpractices,structuralaspectsofthe

schoolmarketplace,includingschoolgovernanceandmanagementstructures,and

throughthestrategicresponsesthatschoolsemployastheyrespondtocompetition

fromthemarketplace.

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School-levelExpenditurePatternsintheEducationalMarketplace

Charterschoolproponentssuggestthatcompetitionwillleadtomore

efficientspendingwithinschools,primarilybydevotingmoreresourcestoward

instruction,andlesstowardsadministration(Brown,1990;Finnetal.,2000;Hillet

al.,1997).However,muchoftheresearchexaminingtheseefficienciesquestionsthe

veracityofthoseclaims(Arsen&Ni,2012a,2012b;Carpenter2013;Miron&Nelson,

2002;Miron&Urschel,2010;Mironetal.,2011).Thisstudybuildsonprior

researchbyexaminingresourceallocationwithinasingle,competitivemarketplace

andusingstatisticalanalysestocontrolforavarietyoffactorsthatmightinfluence

resourceallocationinschools.School-leveldataanalysisfrompublicschoolsinNew

OrleanssuggeststhatcharterschoolsspendsignificantlylessonTotalCurrent

ExpendituresthantheirTPScounterparts.However,amorenuancedunderstanding

ofspendingdifferencesandspecificareasofefficiencycanbegainedbyexamining

spendingwithinspecificexpenditurecategories.Modelsdiscussedherealsoattempt

toidentifythespecificimpactthatprivatizationandcentralizedmanagementmight

haveonschoolresourceallocationwithinthemarketplace.

Instructionalspendinginthemarketplace.Schoolchoiceadvocates

suggestthat,aspartoftheresponsetocompetition,charterschoolswillfocusmore

resourcesoninstructionandprogramsthatwilldirectlyimpactstudentoutcomes

(Finn,Manno&Vanourek,2000;Hilletal.,1997).Regressionmodelssuggestthat,at

theschoollevel,thechartersectorinNewOrleansactuallyspendslessperpupilon

InstructionthantheirTPScounterparts.Becausetheregressionmodelscontrolfor

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studentandschool-levelcharacteristics,includingacademicperformance,these

lowerinstructionalcostsmaysuggestagreaterlevelofefficiencyinprivately

governedschoolsinthemarketplace.Theimpactofcentralizedmanagementon

school-levelinstructionalspending,however,appearstobelesssignificant.

Instructionalspendinginschoolsmanagedbycentralizedcharternetworksisnot

significantlydifferentthanindecentralized,non-networkcharterschools.This

suggeststhatcharterschools,asaprivatizedsector,maybedevelopinglowercost

instructionalsystems,relativetotheirTPScounterparts.Totheextentthatthese

innovationsdonotseefurtherefficienciesfromtheeconomiesofscaleexpectedin

centralizedorganizations,itmaybethatscalingthecomplexnatureofinstructional

workdoesnotprovideasmuchsavingsasotherspendingareas(seeDuncombe&

Yinger,2001).Eachclassroomstillrequiresateacher,andtherearepracticaland

legallimitstothenumberofstudentsinaclassroom,whichcanlimittheabilityto

scaleinstruction.

Loweradministrativeandoverheadspendinginthemarketplace.

Supportersofprivatizationsuggestthatspendinginschoolswillgodownwhen

governanceisshiftedawayfrompublicbureaucracies,whobecomeinefficientwhen

theyseektosatisfythevariedinterestsapublicconstituency(Chubb&Moe1990).

ModelssuggestthatsignificantdifferencesexistinschoolspendingonSchool

AdministrationandCentralOverhead,wheretheprivatizedchartersectorspends

less(perpupilandasashareoftotalcurrentexpenditures)thantheirTPS

counterparts.Non-networkcharterschoolsdoappeartospendalargershareof

theirexpendituresonSchoolAdministrationalone,ascomparedtoTPS,butendup

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spendingsignificantlylessoverallonthecombinedadministrativemeasure.These

findingssuggestthat,overall,administrationinprivatizedcharterschoolsmay

operatemoreefficientlythanadministrationintraditionalpublicschools.

Intheirreviewofstudiesoneconomiesofscale,Andrewsetal.(2002)found

thatoperatingandadministrativeexpendituresarealsoresponsivetothe

economiesofscalegainedthroughcentralization.SpendingpatternswithintheNew

Orleanschartersectorsupportthisfinding.Althoughtheyspendsimilaramountson

SchoolAdministration,networkcharterschoolsspendsignificantlylessthannon-

networkschoolsoncentraloverheadexpenses,bothonaperpupilbasisandasa

shareofspending.Theseresultssuggestthatnetworkcharters,inadditionto

enjoyingefficiencyfromprivatizedmanagement,benefitfromtheeconomiesof

scalethatcomewiththecentralizedmanagementstructuresprovidedbyCMOs

(Baker,2003).Inotherwords,attheschoollevel,bothprivatizedgovernanceand

centralizedmanagementappeartoreduceoveralladministrativecosts.

OPSB’shigherlevelsofspendingonadministrationandoverheadmaybe

rootedinHenig’s(1994)characterizationofdistrictsastraditionalinstitutionsthat

areresistanttochange.Alternatively,BakerandMiron(2015)suggestthatspending

comparisonsbetweenschoolsmanagedbytraditionaldistricts,charter

managementorganizationsandsinglesitecharterorganizationsmaybe

problematicwhencentralizedorganizationsspendresourcesonbehalfoftheir

individualschools.Centralizedspendingareasmayinvolvefederalfunding,

centralizedgrants,andothersupportservices,representingareasofinvestmentin

schoolsthatmaynotbeaccountedforintheirindividualfinancialstatements.To

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theextentthatOPSB,asacentralizedorganization,appearstobelessefficientwith

administrativeandoverheadspendingthanthechartersector,thosedifferences

maybeduetothefactthatOPSBhasmaintainedmanyoftheinstitutionalstructures

ofitscentraloffice,evenasitsroleasadirectproviderhascontinuedtoevolvefrom

directoperationofschools.

Indeed,OPSBcontinuestoprovideavarietyofservicesinitsroleasacharter

schoolauthorizerandportfoliomanager,providingoversightandsupporttoallarea

publicschools.Takenbyitself,schooladministrativespendingbyOPSBislargely

similartothespendinginthechartersector.Mostofthedifferenceinadministrative

costscomesfromspendingonCentralOverheadServices.Giventhesmallsizeof

OPSB,evenmodestoverheadexpendituresonbehalfofcharterschoolscouldresult

insignificantincreasesinperpupilspendingaverageswithintheOPSBschools.The

systemofschoolsinNewOrleanscontinuestochangeeachyear,andcurrent

reportingsystemsmakeitdifficulttofullyunderstandhowallresourcesare

accountedforatacity-widelevel.1

Supportservicesspendinginprivatizedandcentralizedschools.School

expendituresonSupportServicesinNewOrleansincludebothPupiland

InstructionalSupport.Thecombinationofthesetwocategoriesintoonespending

indicatorisaclearexampleofhowbroadlydefinedreportingcategoriescanleadto

impreciseanalysesbecausetheydonotprovideenoughdetailtoidentifyspecific

programspending(Bakeretal.,2012;Bakeretal.,2015).IntheNewOrleansschool

marketplace,modelssuggestTPSspendsignificantlymorethanthechartersector

1SeeOrleansParishSchoolBoard,UnificationPlan,adoptedAugust30,2016.

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onSupportServices,particularlycomparedtonon-networkcharters,whereTPS

spendmoreonbothaperpupilbasisandasashareofTotalCurrentExpenditures.

TPSschoolsspendmoreperpupilonSupportServicesthannetworkcharterschools,

butnotasashareoftotalspending,suggestingthatnetworkchartersplaceasimilar

priorityonSupportServices.Supportspendingincentralizedschools(bothTPSand

CMOsasagroup),andinnetworkchartersalone,ishigherthanindecentralized,

non-networkcharterschools,bothasaperpupilamountandasashareofspending.

Theseresultssuggestthat,asagroup,centralizedschoolorganizations

prioritizeSupportServicesmorethandecentralized,singlesiteschools.One

possiblecausefortheseresultsisthatcentralizedmanagementorganizations,

whetherTPSorcharter,maybenefitfromeconomiesofscalewithrespectto

providingSupportServices.WithoutabetterbreakdownoftheSupportServices

category,itisimpossibletodeterminewhethertheseresourcesarebeingtargeted

towardspupilsorstaff,butineithercase,itappearsthatcentralizedorganizations

investmoreinSupportServicesfortheirschools.

Intheirexaminationofhowschoolmissionmightimpactschooloperations,

Henigetal.(2005)suggestthatmarket-orientedschools(identifiedasEMOs)and

business-relatedcharters“maybemoreconcernedwithachievingeconomiesof

scale”(p.505)thantheirmission-drivencounterparts.Theseeconomiesofscale

mayhelpexplainwhycentralizedschoolsareabletoprovidemoreSupportServices

totheirorganization,particularlyifSupportServicesleadtobetteracademic

outcomes.Centralizedschools,withaneyetowardsreplication,willplaceahigh

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priorityonacademicsuccessratherthanonotheroutcomesthatmaybeaimedat

pleasingconstituencieswhovalueothergoals.

Spendingontransportationtofacilitateschoolchoice.Transportation

Servicesareanareaofspendingthatwouldalsoseemlikelytobenefitfrom

economiesofscale(seeAndrewsetal.,2002).Modelresultssuggest,however,that

centralizationdoesnothaveasignificantimpactonTransportationexpenses.No

significantspendingdifferencesappearbetweencentralizedschoolsasagroup,or

withinthechartersector.Privatizedschoolsasagroup,however,appeartobe

spendingsignificantlymorethanTPSonTransportationServices,basedonschool-

leveldata.Interestingly,networkcharterschools,whichshouldtheoreticallybenefit

fromgreatereconomiesofscalewhenpurchasingtheseservices,spendatsimilar

levelscomparedtonon-networkcharterschools.Itispossiblethatprivatized

charterschools,createdasmarket-orientedschools,arerecruitingandtransporting

studentsfromawidergeographicareathanTPS,particularlyifTPSrelyon

historicalenrollmentpatternsthatusedneighborhoodasabasisforschool

assignment.Inotherwords,charterschoolsmaybemorelikelytorecruitandenroll

studentsfromallovertheCity,ratherthanbeingfocusedonaparticular

neighborhood.

Thatcharterschoolsmightbelessfocusedonaparticularcommunityand

neighborhood,andmorefocusedonsimplyimprovingschools,regardlessof

constituency,isconsistentwithwhatHenig(1994)identifiesas“contingent

allegiance”(p18)tochoice.Inthisview,charteroperatorshavesimplegoals,

“higherachievementscores,lowerdropoutrates,basicliteracy,technicaland

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scientificskills”(p.19).Communityempowermentisnotnecessarilyagoalforthese

operators.Tothatend,schoolsseektorecruitandenrollstudentswhocansucceed

academically,regardlessofwheretheylive.

Despitethesignificantschool-levelspendingdifferencesdiscussedabove,

expenditurepatternsinNewOrleanspublicschoolsappearstobestatistically

similarwhendataareaggregatedtotheLEAlevel.Thetraditionaldistrict(OPSB),

CMOsandnon-network,singlesiteLEA’sspendinstatisticallysimilarwaysacross

allexpenditurecategories.Morediscussionofthisfindingfollowsafterabrief

discussiononhumanresourceindicators.

School-levelhumanresourcepatternsintheeducationalmarketplace.

Baker(2009)notesthatschoolscompetingwithinadefinedmarketplacemustalso

competeforhumanresources.Thelocallaborsupply,presentedwithoptions,will

likelyseekthebestcombinationofsalaryandbenefits,supports,andworking

conditionssuchasworkschedule.Onthedemandside,schoolswillseekto

employeeswhobestfittheireducationalapproach.Thehumanresourcepatterns

discussedbelowmayhelpconnectparticulargovernanceandmanagement

structureswithhowschoolsrespondtocompetitionwithinthelabormarket.

Governance,managementstructureandschoolpersonnel.Ingeneral,

privatizedcharterschoolsappeartoemployteachersandsupportstaffwithfewer

yearsofexperienceascomparedtotheirTPScounterparts.Despitethoselower

levelsofexperience,however,teacherandsupportsalariesinTPSandcharter

schoolsarestatisticallysimilar.Privatizedgovernancedoesnotappeartohave

muchimpactontheexperiencelevelofschooladministrators,withTPSandcharter

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schoolsiteleadershavingsimilarlevelsofexperienceaftercontrollingfor

covariates.Centralizedmanagement,ontheotherhand,doesappeartoimpactthe

experiencelevelofschooladministrators.TPSandCMOschoolleaders,asagroup,

arelessexperiencedthantheirnon-networkcounterparts;networkcharterschool

leadersarealsolessexperiencedwithinthechartersectoritself.Schoolleadersin

organizationswithcentralizedsupportalsoearnlowersalariesthannon-network

schooladministrators,suggestingthattheabsenceofsupportfromacentraloffice

maycompelnon-networkschoolstoemployadministratorswithmoreyearsof

experienceandtopaythoseadministratorsforthatexperience.

Datasuggestingthattheprivatizedchartersectoremploysteachersand

supportstaffwithlessexperienceisperhapsconsistentwithothereffortsto

privatizeeducation.Alternateteachercertificationprograms2,forexample,arenow

competingwithtraditionalschoolsofeducationtoprovideteachersforschools

acrossthecountry.Alternateschoolleadershipprogramsalsoexist,andinsome

casesarebeingoperatedbyorganizationsborninthechartermovement.3

LEA-levelResourceAllocationPatternsintheEducationalMarketplace

Baker(2003)suggestsexpenditure“disparitiesbetweenschoolswithin

districtscanbequitelarge,andinsomecasesbegreaterthandisparitiesbetween

districts”(p.4).Otherworkonresourcedistributioninschoolsagrees(Burke,1999;

2TeachforAmericaand,morelocally,teachNOLAaretwoexamplesofprivatecertificationprograms.3RelayGraduateSchoolofEducation,forexample,grewfromapartnershipbetweenUncommonSchools,AchievementFirst,andKIPP,threesuccessfulCMO’s.

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Herter,1996;Monk&Hussain,2000;Tayloretal.,2011).DatafromtheNew

Orleanseducationalmarketplacesupportthesefindings.

Spendingvariationswithincentralizedorganizations.Allofthe

significantresourceallocationtrendsidentifiedusingschool-levelspendingdata

disappearwhenNewOrleansdataareaggregatedtotheLEAlevel.Thetraditional

district(OPSB),charterschoolnetworks(CMOs)andnon-networkcharterLEAsall

appeartobeallocatingresources(acrossallexpenditurecategoriesandhuman

resourceindicators)instatisticallysimilarways,onceschoolandstudent

characteristicsarecontrolled.Thatfindingsuggeststhatmuchofthevariationin

schoolspendinginNewOrleansisduetovariationwithinLEAs,ratherthanacross

LEAs.

Putanotherway,itislikelythatthesignificantdifferencesinschool-level

spendingexistnotonlybetweenschoolsoperatedbydifferentLEAs,butalso

betweenschoolsthatareoperatedbythesameLEA.Indeed,acursoryexamination

ofschool-leveldatawithincentralizedorganizationssuggeststhatinsomecases,

TotalCurrentExpendituresmaydifferbyasmuchas27%acrossschoolsoperating

inthesameCMO.Differencesinspecificcategoriesareevenstarker,whereoneCMO

isspendingtwiceasmuchonSchoolAdministrationinoneschoolversusanother,

eventhoughbothschoolsoperatewithinthesamenetwork.Spendingdifferences

acrossschoolsinOPSBlooksimilar.TCEvarybynearly28%acrossschools,with

SchoolAdministrationexpendituresvaryingbyalmost300percent.Similar

spendingrangesexistwithinLEAsacrossotherexpenditurecategories,andacross

salarydata.

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Thefindingsdiscussedabovesuggestthatsignificantdifferencesexistinhow

TPSandcharterschoolsallocateresourcesattheschoollevel,despitethe

similaritiesthatexistwhendataareanalyzedattheLEAlevel.Totheextentthat

thesetrendsidentifydifferentstrategicprioritieswithinschools,andevenwithin

LEAs,thesetrendshavethepotentialtohelpunderstandhowschoolorganizations

behavedifferentlyinthecontextofacompetitivemarketplace.Thenextsection

summarizesthesefindingsandoffersrecommendationstopolicymakerswhomay

seektochangethewayresourcesareallocatedinschoolsthroughtheintroduction

ofcompetitionandchoicepolicies.

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V–CONCLUSIONS,IMPLICATIONS,ANDRECOMMENDATIONS

TheEducationalMarketplaceinNewOrleans

ThisdissertationpresentsaninvestigationofhowschoolsinNewOrleans,a

competitiveeducationalmarketplace,allocateresourcestowarddifferentpriorities.

Usingresearchonschoolchoiceandcompetition,Ihypothesizedthattwocriteria

mightinfluencehowschoolsallocateresourcesinresponsetotheeducational

marketplace:governanceandmanagementstructure.Formsofschoolgovernance

areidentifiedaseitherpublic,throughtheelectedschoolboard,orprivate,through

non-profitcharterschoolboards.Formsofschoolmanagementareidentifiedas

eithercentralized,inwhichmultipleschoolsitesareoperatedundertheguidanceof

alargerorganization,ordecentralized,whichprovidessite-basedmanagementofa

singleschoolsite.SchoolsinNewOrleanswerecategorizedalongthesetwocriteria,

andmultiplecomparisongroupswereusedtoanalyzespendingwithinschools.I

usedlinearregressionanalysistoestimatetheimpactofschooltypeschoolon

schoolresourceallocationandcontrolledforavarietyofstudentandschool-level

covariatestohelpisolatetheimpactofmyvariablesofinterest.

ThepublicschoolsysteminNewOrleansrepresentsacriticalcasefor

examininghowschoolsallocateresourceswithinacompetitivemarketplace.Onthe

supplyside,thefeasiblechoicesetofpublicschooloptionsincludestraditional

publicschools(public,centralized),networkcharterschools(privatized,

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centralized),andnon-networkcharterschools(privatized,decentralized).

Importantly,accesstotheseschoolsisvirtuallyunrestricted.1Anystudentcanapply

toanyschool.Theabsenceofaresidentialassignmentsystemforschoolsisan

importantcomponentforcreatingdemandwithinaneducationalmarketplace.

Competitivemarketforcesarestrongestwhenallfamilieshavetheabilitytochoose

amongallschooloptions.Schoolfundingstructuresalsostrengthenthedemand

sideofthemarketplace.Perpupilfundingfollowsthestudent,whichplacesdirect

pressureonschoolstocompeteforstudentenrollment.Thisuniquecombinationof

factorsmakesNewOrleansacriticalcaseforexaminingschoolresourceallocation

withinahighlycompetitiveeducationalmarketplace.

LimitationsoftheStudy

Itisimportanttonotethatthisstudyfacesseverallimitations.First,thedata

usedfortheanalysisdonotincludespendingondebtserviceandcapitaloutlays,

bothofwhichcansignificantlyimpactschoolbudgets,particularlyinpost-Katrina

NewOrleans,whererebuildingandrepairofschoolfacilitiesisstillunderway.The

spendingcategoriesusedinthelinearregressionanalysiswerealso,insomecases,

overlybroad.Futureresearchwillbenefitfromamorefine-toothedanalysistohelp

paintaclearerpictureofspendingpatternsinschools.Ialsodidnotgivefull

attentiontotheissueofspendingefficiency,animportantconceptinthemarket

metaphorforschooling.SchoolPerformanceScoreswereusedasacovariateinmy

analysis,butincludingothermeasuresofacademicsuccesscouldprovideamore1Fiveselectiveadmissionschoolsstillexistinthecity,whichrequirestudentstomeetspecificacademicorlanguageproficiencystandardstoenroll.Mostschools,however,areopenenrollment.

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thoroughunderstandingofthelinkbetweenspendingandoutcomes,andhowthey

areimpactedbymarketforces.Finally,thedecisiontouseNewOrleansasacase

studymaypresentlimitationsingeneralizingfindingstoothereducational

marketplaces.UsingtheHerfihndahlIndexprovidesawidelyacceptedconstructfor

measuringcompetitionbetweenschools,butthelevelofcompetitioninother

markets,particularlythosewheredemandforschoolsofchoicemayoutstripthe

supplyofavailableschools,maysignificantlyimpacthowschoolsuseresourcesto

respondtocompetition.

Despitetheselimitations,thisresearchmakesanimportantcontributionto

schoolchoiceliterature.Muchofthepriorresearchexaminestherelationship

betweencompetitionandresourcesbycomparingTPSandcharterschoolsusing

stateorevennationaldatasets(Arsen&Ni,2012a;Bakeretal.,2012;Miron&

Urschel,2010;Nelsonetal.,2000;Ni,2009).Whilethesestudiesaresuccessfulin

identifyingtrendswithinschooltypes,theyrelyoncomparisongroupsthatarenot

inactualcompetitionwitheachother.Byanalyzingschoolswithinaclearlydefined

marketplace,thefindingsofthisresearchprovideamorecompleteunderstanding

ofhowschoolsthatdirectlycompetewitheachotherforstudentsmightbe

influencedbycompetition.Myanalysisproducedevidenceofsignificantdifferences

inspendingbetweenschoolsgovernedbythepublicschoolboardandbyprivate

non-profitorganizations,andbetweenschoolsmanagedbycentralized

organizationsanddecentralized,site-basedorganizations.Thesedifferencesare

summarizedbelow.

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SummaryofFindings

School-levelResourceAllocationPatterns

ThefindingsinthisstudyindicatethattheTotalCurrentExpendituresspent

byprivatelygovernedcharterschoolsinNewOrleansaresignificantlylowerthan

thepubliclygovernedTPSschoolswithwhichtheycompeteforstudents.Charter

schoolsspendlessperpupilinthecategoriesofInstruction,PupilandInstructional

Support,andCentralOfficeOverhead.Chartersschoolsalsospendmoreperpupil

onTransportation,theonlycategorywhereTPSspendlessthanthechartersector.

Tobetterunderstandhowtheseperpupildifferencesreflectspending

priorities,thestudyalsoexaminedcategoricalexpendituresasapercentageofTotal

CurrentExpenditures.DespitespendinglessperpupilonInstruction,thecharter

schoolsectordedicatesasimilarshareoftheirspendingtowardthoseactivities.

Othercategoriesalsofollowtheperpupiltrends.Charterschoolsspend

proportionallylessonCentralOverheadandmoreonTransportation.Thecharter

sector’sspendingtrends,however,arenotmonolithic.Whilenetworkcharter

schoolsspendasimilarshareofspendingonSupportServicesandonSchool

AdministrationasdoTPS,non-networkchartersspendasmallershareonSupport

Services,andmoreonSchoolAdministration,ascomparedtoTPS.

Humanresourcecomparisonsindicatetheprivatizedchartersectoremploys

lessexperiencedteachersandsupportstaffthantheirTPScounterparts.Despitethe

differencesinexperiencelevel,charterschoolsalariesforthoseroleswerenot

significantlydifferentfromthoseinTPS.Onesignificantdifferencedidemergefor

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schooladministrativepersonnel,wherenon-networkcharterschoolspay

significantlyhighersalariesthanTPSschools,despitehiringadministratorswith

similarlevelsofexperience.

Findingsindicatethatmostspendingincentralizedschools,asagroup(both

TPSandnetworkcharter),isnotsignificantlydifferentfromspendingin

decentralized,non-networkcharterschools.OnlyonSupportServicesdonon-

networkchartersspendsignificantlylessthanTPSandnetworkcharterschools,

bothasaper-pupilamountandasashareofspending.Comparingcentralizedto

decentralizedschoolsalsoidentifiedlargelysimilarspendingonpersonnel,withthe

onlysignificantdifferencebeingthatnon-networkchartersemployschool

administratorswithmoreexperience,andatahighersalarylevel.

TotalCurrentExpenditureswithinthedecentralizedcharterschoolsector

arestatisticallysimilaracrossnetworkandnon-networkcharterschools.However,

recentralizationdoesappeartosignificantlyimpactspendingintwoways.Network

chartersspendmoreonSupportservices,andlessonCentralOverheadthantheir

non-networkcounterparts.Nosignificantdifferencesemergeinthesalariespaidto

staffwithinthechartersector,butnetworkcharterschoolsdoemploy

administratorsandsupportstaffwithfeweryearsofexperience.

LEA-levelResourceAllocationPatterns

Despitetheschool-levelspendingdifferencesidentifiedbetweenTPSand

privatizedcharterschools,betweencentrallymanagedandsite-basedmanaged

schools,andbetweennetworkandnon-networkcharterschools,nosignificant

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differencesappeartoexistacrossthosecomparisongroupswhenspendingdataare

aggregatedtotheLEA-level.Aftercontrollingforschoolandstudentlevel

characteristics,thetraditionalschooldistrict(OPSB),chartermanagement

organizations,andsingle-sitenon-networkcharterschools(whichserveastheir

ownLEA)shownostatisticaldifferencesinhowtheyallocateresources.

TheEducationalMarketplace:LessonsLearnedFromNewOrleansPublic

Schools

Schoolspendingpatternssuggestthatschoolgovernanceandmanagement

structuresdohaveasignificantimpactonhowresourcesareallocatedtoindividual

schoolsintheNewOrleansmarketplace.Perpupilcurrentexpendituresinprivately

governedcharterschoolsaresignificantlylowerthaninpubliclygovernedTPS.As

mightbeexpectedofmarket-orientedschools,nearlyhalfofthosesavingsstem

fromlowerspendingbychartersonSchoolAdministrationandCentralOffice

Overhead.However,chartersalsospendlessperpupilonPupilandInstructional

SupportandlessonInstruction,althoughthedifferenceinInstructionalspending

becomesinsignificantwhenexpressedasashareofcurrentexpenditures.Thefact

thatchartersdonotallocatemoreresourcestowardinstruction-relatedactivitiesis

notnecessarilyanegativetrend.Itmaysimplyindicatethatcharterschoolsare

findinglesscostlywaystoprovideinstructionalservicestotheirstudents.Lower

spendingonadministrativecostsandoverheadsuggeststhatprivatizationcanalso

resultincost-savingsinareaslongcriticizedasbloatedandwastefulspendingby

publicbureaucracies.Thesefindingshaveimportantimplicationsforpolicymakers

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astheyrelatetoprivatization.ChartersschoolsintheNewOrleansmarketplace

operateatsignificantlylowerspendinglevelsthantheirTPScounterparts.Ifpolicy

makersareseekingtoidentifywaystoreduceoverallspendingoneducation,

privatizedgovernanceofpublicschoolsappearstodeliverthoselowercosts.An

importantnextstepindeterminingtheefficiencyoftheschoolmarketplaceinNew

Orleanswillbetoevaluatethosesavingsinthecontextofstudentachievementand

otheroutcomes.

Privatizedcharterschools,despitetheirlowerlevelsofspendinginmost

categories,doallocateasignificantlylargershareofcurrentspendingon

Transportationservices,comparedtoTPS.Asmarket-orientedschools,charters

maybeseekingandenrollingstudentsfromabroadergeographicareathantheir

TPScounterparts.Interestingly,centralizationappearstohavenosignificantimpact

onTransportationspending.Networkandnon-networkcharterschoolsdonot

spendsignificantlydifferentamountsonthesepurchasedservices.Itseems

counterintuitivethatcentralizedcharternetworkswouldnotenjoysomeeconomies

ofscaleintransportationcosts,relativetotheirnon-networkcounterparts.

Transportationmaybeoneareathatsuffersfromconsolidationandgrowth.As

centralizedmanagementorganizationsexpandtheiroverallenrollment,thecostof

coveringmoreneighborhoodsmaysimplyoffsetanypotentialsavingsgainedfrom

economiesofscale.Aspolicymakersandschooloperatorsseektoidentify

additionalwaystodecreaseTransportationcosts,itmaybethateconomiesofscale

areonlypossibleforbussingonceaparticulartippingpointisreachedforstudents

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withinparticularserviceareas,ratherthanjustfromincreasingtheoverallstudent

populationoftheschool.

Fromahumanresourceperspective,administrators,teachersandsupport

staff,willfindsignificantdifferencesinhowprivatelygovernedcharterschools

allocateresourcestowardpersonnel.CharterschoolsinNewOrleansemploy

teachersandsupportstaffwithsignificantlyfeweryearsofexperiencethanthosein

TPS,yetpaysalariesthatarenotsignificantlydifferent.Thissuggeststhatteacher

andsupportstaffsalariesarehigherincharterschools,relativetotheyearsof

experienceofthoseemployees.Foremployeesinschoolswithsalarystepsand

otherpayincreasesrelatedtotenure,thosedifferencescouldresultinsignificantly

higherearningsoverthespanofacareer.Privatesectorcharteradministratorsare

notlessexperiencedthanthoseinTPS,butadministratorsinnon-networkcharters

doearnsignificantlyhighersalariesthanTPS,afindingthatisalsorelatedto

centralizedmanagementpractices.TPSandcharterschooladministrators,asa

group,arebothlessexperienced,andearnlowersalariesthannon-networkcharter

administrators.Itispossiblethatsinglesitecharterschoolsemployadministrators

withmoreexperienceduetothedemandsplacedonaschoolleaderwithoutthe

supportofacentraloffice.Ifthatisthecase,itislogicalthatnon-networkcharter

administratorsalsoearnhighersalaries,inexchangefortheincreased

administrativeskillsetrequiredtoleadaschoolwithoutthesupportthatacentral

officetypicallyprovides.Schooladministratorswhoareattractedbythehigher

earningsinnon-networkcharterschoolsshouldunderstandthattheincreased

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salarypossibleinnon-networkcharterschoolsislikelytocarrywithitsignificant

demandsbeyondtheschoolleadershiprolesthatexistincentralizedorganizations.

Inadditiontohavinganimpactonadministrativesalaries,centralized

managementofschoolsalsohasasignificantimpactonotherareasofschool

spending.Specifically,schoolsmanagedbycentralizedorganizations,whetherTPS

ornetworkCMOs,spendmoreperpupil,andmoreasashareofspending,onPupil

andInstructionalSupportServices.Totheextentthatthesesupportactivities

improvethewellbeingofstudentsandimprovetheabilityofstafftoprovide

learningexperiencesforstudents,theseinvestmentshaveimportantimplications

formembersoftheschoolcommunity.Withoutamoredetailedbreakdownof

Supportspendingintoitscomponentparts,itisnotpossibletodeterminewhether

moreinvestmentsarebeingmadeindirectstudentservices(e.g.socialwork,

guidanceandhealth)orinstaffsupport(e.g.supervision,curriculumdevelopment

andtraining),buteitherareaofspendingislikelytostrengthentheexperienceof

bothstudentsandteachers.

Centralizedmanagementalsohasasignificantimpactonreducingoverhead

spendingincharterschools,ontopofthebenefitsidentifiedasresultingfrom

privatization.NetworkcharterschoolsspendsignificantlylessonCentralOffice

Overheadonbothaperpupilandproratabasis.Forpolicymakersseekingto

minimizecentralofficespendingandtomaximizeinvestmentsinactivitiesthat

supportstudentsandinstruction,thecombinationofcentralizationand

privatizationofferedbychartermanagementorganizationsoffersthebest

combinationofgovernanceandmanagement.Itmayseemcounterintuitivethat

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charternetworkschools,whichrelyonacentralizedofficetoprovidesomeservices,

wouldspendlessonoverheadthandecentralized,non-networkcharterschoolsthat

operatewithoutacentraloffice,buttheabilityofcentralizedorganizationsto

achieveeconomiesofscalemayexplainthedifference.TotheextentthatCMOs

servemorestudents,andareabletospreadoverheadcostsacrossthatlarger

population,itmakessensethatperpupilspendingwouldbehigherinnon-network

schoolsthatmustperformalladministrativefunctionswithinasingleorganization,

especiallythoserolestraditionallyfilledbyacentraloffice.

ThelessonsfromNewOrleansdiscussedaboveprovideimportantinsights

intohowgovernanceandmanagementstructurecanimpactspendingandhuman

resourcesattheschoollevel.However,perhapsthemostimportantimplicationof

thisstudy’sfindingsisthat,whileindividualschoolswithintheNewOrleansschool

marketplacespendresourcesinsignificantlydifferentways,governanceand

managementstructurehavenosignificantimpactonresourceallocationattheLEA

level.Putdifferently,spendingdifferencesarenotsignificantwhencomparinghow

resourcesareallocatedbythetraditionalschooldistrictLEA(OPSB),charter

networkLEAs,andsinglesitecharterschoolLEAs.Onthesurface,thisfindingmay

strikemanyasapositiveexampleofhowtheeducationalmarketplaceinNew

Orleansisfunctioningequitably.Regardlessofgovernanceormanagement

structure,LEAsinthemarketplacearespendingstatisticallysimilaramountsof

moneyacrossallexpenditurecategories.However,theseLEAdatahavethe

potentialtoobscureinequitiesthatexistwithinLEAs,attheschoollevel.Thisis

particularlytrueifpolicymakersareonlyanalyzingaggregateddata.AttheLEA

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level,theeducationalmarketplaceappearstobeprovidingequitableresourcesfor

allstudents,regardlessoftheLEAinwhichtheyareenrolled.Attheschoollevel,

however,largedifferencesexistintheresourcesbeingallocated.

Iftheeducationalmarketplace,throughchoiceandcompetition,isto

improveacademicoutcomesinschoolswhilealsoprovidingequitableoptionsforall

studentsandfamilies,itisimportanttoknowmoreabouthowgovernanceand

managementstructuresarelinkedtothosegoals.Doeslowerspendingbyprivatized

schoolsmeantheyareeducatingstudentsmoreefficiently?Or,arechartersschools

simplypayinglessforthesameresults?Doescentralizedmanagementprovide

organizationswiththeopportunitytospendmoreefficiently?Or,docentraloffices

usetheirlargerorganizationstocreatetieredsystemsinwhichtheyallocate

resourcesinwaysthat,whilestrategic,leadtosomeschoolsbeingunder-resourced?

Docompetitionandchoiceimpactcertaintypesoforganizationsdifferentlythan

others?

Thesequestionsarenoteasilyanswered.Competitionisanabstractconcept,

noteasilymeasured.Schoolanddistrictaccountingpracticesdon’talwaysprovide

anaccuratepictureofthefullscopeofresourcesbroughttobearinorganizations.

Thelinkbetweeninputsandoutputsinschoolsisnotoriouslydifficulttoestablish,

andevenmoredifficulttoreplicate.Theevidencepresentedinthisdissertation

showsthatgovernanceandmanagementdohaveanimpactonhowschoolsallocate

resources.

Below,Ipresentseveralrecommendationsforeducators,policymakers,and

researcherstoconsiderastheytrytobetterunderstandhowschoolchoiceand

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competitionimpactschools.Theserecommendationsareplacedinthecontextof

theNewOrleanseducationalmarketplace,buttheyareapplicabletoanyareathatis

consideringtheuseofprivatizationanddecentralizedmanagementtoimprove

schools.

Recommendation#1:Improveschool-levelfinancialreportingto

identifyspecificresourcesallocatedtoschoolsbycentraldistrictoffices,

charterschoolnetworks,andotherorganizations.Accuratecomparisonsofthe

resourcesspentinschoolsareoftencomplicatedbythefactthataccountingsystems

donotspecificallyidentifytheresourcesthatarespentonschoolsbyoutside

organizations.Theseresourcesmaycomefromcentralizeddistrictsandcharter

managementorganizationsthatprovidefacilities,materials,personnel,training,and

otherservices.Theymaycomefromnon-profitandphilanthropicorganizationsthat

providesimilarresources,includingin-kindservicesthatarenoteasilyaccounted

forinfinancialdocuments.

Theevidencepresentedinthisdissertationsuggeststhatsignificantpublic

resourcesaredevotedtoschoolsasCentralOfficeOverhead.Asaspendingcategory,

theLouisianaDepartmentofEducationdefinesoverheadasincludingawidevariety

ofactivities,including“planning,research,development,evaluation,information,

staff,andadministrativetechnologyservices”(LDE,2010,p.75).School-level

financialdatadonotincludeabreakdownofthespecificactivitiesfundedby

spendingonoverhead,nordotheyaccuratelytrackthespecificdollaramounts

receivedbyeachschool.Rather,CentralOfficeOverheadisreportedasanLEA

average,whichimpliesthateachindividualschoolreceivesthesameamountof

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overheadsupport.Inreality,however,schoolsreceivedifferentlevelsofsupport

fromtheircentralizedmanagementorganizations.Theymayalsoreceivein-kind

servicesandresourcesthatarenoteasilyreflectedinfinancialstatements.Training,

operationalsupport,personnelandmaterialsallhavevalue.Whenschoolsreceive

thoseresourcesfromrelatedorganizationsandexternalpartners,theyareableto

spendlessoftheirownrevenueonthoseareas,whichcancreatetheappearance

thattheschoolisspendingless,whentheyareactuallyspendingmore.Ofcourse,

privateresourcesallocatedtowardschoolsmayalsogounidentified.Outside

organizationsprovideprogramming,donatematerials,andsharehumanresources

withschools.Abetteraccountingofallresourcesspentineachschoolwillhelp

provideamoreaccuratepictureofspendinglevels.

ThisisincreasinglyimportantasOPSBcontinuestotransitiontoitsroleasa

portfoliomanager,ratherthanasadirectoperatorofschools.Theplanningand

oversightactivitiesinvolvedwiththisnewroleensurethatresourcesspentbythe

districtwillcontinuetoreachschools.AstheOPSBUnificationPlanstates,“[w]e

emphasizethatthisbudgetisnotjustsupportingcentralofficepersonnel;tothe

contrary,abouthalfofthebudgetthatweenvisionisdedicatedtocitywideservices

thatdirectlyservestudentsandfamilies”(OPSB,2016,p.3).Ifthoseresources

continuetobereportedasaverages,ratherthanbeingclearlytiedtothespecific

schoolstheyserve,someschoolswillappeartobespendinglessthantheyactually

are,andsomewillappeartobespendingmore.And,thepromiseofthoseresources

maycompelschoolstobehaveinspecificwaysinordertomaximizetheamountof

discretionaryresourcesprovidedtotheschool.

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Regardlessofthesourceofaresource,publicorprivate,accurately

determiningthespendinglevelsofschoolsinthemarketplacewillrequirethese

resourcestobeidentifiedandincludedinschool-levelreporting.

Recommendation#2:Connectspendingtooutcomestodeterminethe

truecostofachievingparticulargoals.Determiningtheefficiencyofaparticular

schoolrequiresmorethansimplyknowingwhateachschoolisspending.Itrequires

knowingtheamountspentonachievingaparticularoutcome.Thereareofcoursea

widevarietyofoutcomesthatschoolsmightpursue,rangingfromamodern,well-

equippedschoolbuildingtoprovidingstudentswithsupplementalprogramslike

mentalhealthservices.Regardlessofhowschoolsprioritizeresourcestowardtheir

goals,evaluatingtheimpactofcompetitionandchoiceonefficiencyrequiresthat

evaluatorsuseavalid,consistentmeasureofthoseoutcomes.

Thisdissertationidentifiesschoolspendingpatternsacrossavarietyof

categories,butdoesnotattempttoconnectthoseresourcestooutcomes.

Researchersandpolicymakersinterestedinevaluatingtheabilityofmarket

reformstoincreaseschoolefficiencywillneedtoanalyzespendingdatainthe

contextofspecificoutcomesforstudents.Totheextentthatacademicachievement

isaprimarygoalforschools,standardizedtestscorescanbeusedtoevaluateschool

efficiency,butothergoalsmayalsobeofinteresttostakeholders.Schoolsmayseek

toimprovecollegeattendancerates,providestudentswithindustry-based

certificates,increaseparticipationinAPcourses,engagestudentsinthe

surroundingcommunity,orotherimportantgoals.Identifyingspecificmetricsfor

measuringthoseoutcomes,andusingthosemetricsinconjunctionwithschool

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spendingdata,willprovideadeeperlevelofunderstandingonhowschoolsare

usingresourcestoachievetheirgoals.

Ananalysisofschoolspendingthatincludesefficiencyhasimportant

implicationsforunderstandinghowschoolresourceallocationmightimpact

educationalequity.Notallstudentswillrequirethesameamountofresources.

Recommendation#3:Evaluatespendingpatternsbothwithin,and

acrossLEAs.Centralizedschooldistrictsandchartermanagementorganizations

existtosupporttheoperationsofindividualschoolsites.Indoingso,theybuilda

systemofcentraloperationsthatexistsindependentlyfromtheschoolstheyserve.

Thesecentralofficesprovideresourcestoschools.Yet,variationsexistinhow

resourcesareallocatedtoschoolswithincentralizedorganizations,andhowthey

areaccountedforinfinancialstatements.

Theresearchpresentedherefindsthatschoolgovernanceandmanagement

structuresignificantlyimpacthowresourcesareallocatedinschools.Totalcurrent

expendituresarelowerinprivatizedchartersschoolsthaninTPS.Privatized

managementalsoimpactsspendinginavarietyofmorespecificcategories.In

addition,centralizedmanagementimpactsspendinginspecificways.Policymakers

seekingtoevaluateschool-levelspendingpatternsinthecontextofmarketreforms

candrawspecificconclusionsbasedonthesefindings.Yet,whendataareanalyzed

attheLEAlevel,theimpactofmarketreformsseemslessstark.LEAspending

patterns,onaverage,arenotsignificantlyimpactedbygovernanceandmanagement

structures.

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Thesefindingshaveimportantimplicationsforresearchers,policymakers,

andforfamilies.First,researchersmustlookatdataatboththeschoolandLEAlevel

togainafullunderstandingoforganizationalspending.Resourceallocationtrends

atindividualschoolsdonotprovideacompletepictureofoverallorganizational

spending.Ifevaluatingefficiencyisagoal,bothschool-levelandLEA-levelspending

patternsmustbetakenintoaccount.Thismultiplelevelofanalysisisalsoimportant

forpolicymakersastheyevaluatetheimpactofmarketreforms,particularlywith

respecttoequity.AttheLEAlevel,schoolorganizationsappeartobeallocating

resourcesatsimilarlevels.School-leveldatasuggest,however,thatwidevariations

existwithinLEAs.Totheextentthatmoneyisintendedtofollowthestudentina

systemofchoice,it’simportantwhetherLEAsareallocatingdollarstoschoolsonan

equitablebasis,oriftheyarespendingbasedoninternalorganizationalpriorities

thatprovidesomestudentswithmoreresourcesthanothers.Accuratelyattributing

specificresourcestospecificprogramsandservicesisalsoimportantfor

determiningtheefficiencyofspecificschools,ratherthansimplyevaluatingthe

performanceofcentralizedorganizations,whichmaymaskimportantdifferencesin

theamountandtypeofresourcesschoolsarereceiving.

Finally,forparentsnavigatingasystemofchoice,it’simportanttorecognize

thatspendingpatternsinoneschoolwithinacentralizedschoolnetworkdonot

necessarilyimplythatotherschoolsinthenetworkwillbesimilarlyresourced.

Widevariationsexistwithincentralizedmanagementorganizations.

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Conclusion EducationalreformsinNewOrleanshavebuiltapublicschoolsystem

designedaroundthemarketprinciplesofchoiceandcompetition.Nearlyallschools

inthesystemarecharterschools,governedbyprivate,decentralizedorganizations

ratherthanthelocallyelectedpublicschoolboard.Reformadvocatescontendthat

schoolsinthiseducationalmarketplace,forcedtocompeteforstudents,willnot

onlyfindinnovativewaystoattractandkeepstudents,butthattheywillbemore

efficientwiththeirresourcesastheydoso.

Theresearchandrecommendationsincludedherearenotintendedto

advocatefororagainstthereformsinNewOrleans.Theyinsteadrepresentafirst

stepinhelpingtoevaluatetheimpactofschoolgovernanceandmanagement

structuresoneducationalspending.Schoolsandcentralizedmanagement

organizationsmustdoabetterjobofaccountingforallresourcesthatareconnected

toschools.Anincompleteassessmentofthoseresourcesdoesnotallowforgood

comparisonstobemadeacrossandwithinorganizations.Oncemorecompletedata

areavailable,resourceallocationpatternsmustbeconnectedtooutcomestohelp

determinethetruecostofreachingparticulareducationalgoals.Greaterefficiency

inschoolsshouldproducebetteroutcomesforstudents,notsimplystemfroma

reductioninspending.Finally,resourceallocationmustbeexaminedacrossall

levelsofschoolorganizations.Trendswithinsingleschools,networkschools,and

thecentralizedorganizationsthatsupportthemareallimportantcomponentsof

understandinghowthemarketplacemightimpactschoolefficiency,buttheymust

notbeexaminedinisolation.Byaddressingtheserecommendations,stakeholdersat

111

alllevelscanmovespasttheoreticaldiscussionsofhowthemarketplacemight

impactschoolbehaviorandmoveontotheimportantbusinessofevaluatingthe

realimpactofschoolchoicepoliciesonourpublicschools.

112

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121

122

TableA-2HumanResourcesinTPSandCharterSchools

OrleansParish,2014-15 Allschools Orleans

ParishSchools

Non-networkcharters

Networkcharters

Allcharters

YearsofAverageExperience-Teachers

8.0 16.4 9.1 6.2 7.4

AverageSalary–Teachers($)

48,139 50,004 48,674 47,522 47,992

YearsofAvg.Experience–Pupil/Instr.Support

9.4 20.4 11.0 6.9 8.6

AverageSalary–Pupil/Instruct.Support

49,753 50,768 49,390 49,868 49,673

YearsofAverageExperience–Admin

10.8 13.5 14.1 8.3 10.6

AverageSalary–SchoolAdministration

65,149 50,641 72,574 61,969 66,295

123

124

125

126

127

128

129

130

131

132

133

134