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Public school leaders frequently confront the criticism that they fail to carry out their administrative duties efficiently. There is chronic and widespread concern that administration consumes too much of the education dollar. By this view, the diversion of resources from classroom instruction to bloated public school administrative structures has hampered efforts to improve student outcomes. One of the appealing prospects of charter schools, by contrast, is that as decentralized organizations compelled to compete for students, they will allocate their resources more intensively on instruction (Hill, et al. 1997, Finn, et al., 2000). The financial and performance pressures on school administrators appear unlikely to fade any time soon. As the charter school movement matures and gains wider support among state and federal policy makers, it is fitting to examine how charter schools compare to traditional public schools (TPSs) in their allocation of resources for administration, instruction, and other functions.

Researchers and policymakers have long wondered whether granting schools greater autonomy from district central administration to make resource allocation decisions would result in any real difference in spending patterns. Many observers anticipate that decentralizing budgeting authority from districts to schools will permit more efficient resource use that conforms better to schools’ particular needs. The failure of school-based management initiatives in the 1980s to produce anticipated changes is often attributed to central administrations’ reluctance to relinquish control over resources (budgets, staffing). The charter school movement by contrast has established a widely implemented new model of school organization and governance in which the influence of district administrators on resource allocation in most cases has been entirely banished. So what is different about how charter schools use their resources?

This paper analyzes resource allocation patterns for all charter schools and traditional public schools in Michigan, a state with one of the nation’s longest running charter school programs and over 265 charter schools. Unlike many states, charter schools and tradition public schools in Michigan receive approximately the same level of operational funding and the state collects uniform, audited financial data from both. We direct our attention to three main issues. First, we analyze the level and source of funding in charter schools and TPSs. Second, we analyze differences in spending patterns between charter schools and TPSs across disaggregated educational service functions. Third, we use regression analysis to control for several factors that may affect resource allocation on selected instructional and administrative functions to better isolate spending differences between charters and TPSs.

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