Study: Charters Pose a Financial Threat to Already-Struggling School Districts
Traditional public schools in Philadelphia and Detroit have faced revenue shortages and credit-rating reductions as students move to charters, according to a new Moody's report.
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More than 2 million American kids attended charter schools in the 2012-13 school year—4.6 percent of the total student population, according analysts at Moody’s, the credit rating agency. And their growth has real implications outside of the classroom, too.
Municipal finance analysts at Moody’s recently took a look at the impact of charter school growth on public finances, finding “while the vast majority of traditional public districts are managing through the rise of charter schools without a negative credit impact, a small but growing number face financial stress due to the movement of students to charters.”
Moody’s found that charter schools have had particularly painful impacts on aging independent school districts in the midwest and northeast, where shrinking tax bases and population outflow make it tough to absorb the loss of government funding that occurs when enrollment shrinks due to students shifting into charter schools. Cutting costs to match declines in funding can be difficult, as decisions to close schools—even if they are half-empty—can result in fierce political fights. And decisions to cut academic programs can actually exacerbate funding