Effects of Charter School Competition on District School Budgeting Decisions: Experimental Evidence from Texas

Objective The effects of competition from public charter schools on district school budget decisions are theoretically ambiguous. Competitive pressures could increase desired budget autonomy since they give district school leaders more flexibility; however, competition could decrease desired budget autonomy if district school leaders are generally riskaverse or if they believe that central office staff are in better positions to make school‐level budget decisions. Competitive pressures could also increase or decrease changes in school‐level spending depending on school leaders’ beliefs about how to efficiently allocate resources. Methods We randomly assign surveys to district school leaders in Texas in the 2019–2020 school year to determine the effects of anticipated competition from public charter schools on reported desire for budget autonomy and expectations about future school‐level spending decisions. Results We find the first experimental evidence to suggest that anticipated charter school competition has large negative effects on school leaders’ reported spending on certain categories of support staff, and reduces, or has no effect on, the reported desire for more school‐level budget autonomy. The negative effects on spending for support staff tend to be larger for school leaders with more experience. Conclusion Although more research is needed, these results suggest that competition from public charter schools could lead to reductions in spending for certain categories in district‐run public schools if school leaders have the autonomy to make budget decisions.