The effects of charter school enrollment losses and tuition reimbursements on school districts: Lifting boats or sinking them?

We analyze a natural experiment in which policymakers in Pennsylvania first implemented, and later removed, reimbursements to districts for students exiting to brick and mortar and cyber charter schools. Generalized difference-in-difference models show that larger shares of students enrolling in charter schools predict decrements in spending, financial health, and achievement in sending districts; however, these relationships attenuate in years when districts receive reimbursements. After receiving reimbursements, districts with increased competition spent more on instruction and instructional support services, but not on facilities or non-instructional operations. Perhaps due to higher instructional expenditures, the relationship between competition and student achievement in reimbursement years is significantly less negative, and at times even positive, compared to non-reimbursement years. Cyber charter schools induce fewer instructional expenditures in districts than brick and mortar charter schools. The findings show clear policy choices can support traditional public systems experiencing competition.