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Manhattan Institute

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Should Charter Schools Pay Rent?: Implications for Staffing and Growth

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Should Charter Schools Pay Rent?: Implications for Staffing and Growth

February 6, 2014
EducationPre K-12

New York City’s charter school sector is distinguished by its size (second-largest enrollment of any district in the nation), a record of strong student performance, and the high percentage of schools “colocated” in a district public school facility. Whereas only 25 percent of charter schools nationwide are colocated, two-thirds are in New York.

Colocated charter schools in New York City are not required to pay rent for use of the district school space, but some argue that they should be required to do so. The Independent Budget Office (IBO) has recommended that the city consider charging rent to colocated charter schools as a way to raise revenue. Newly elected mayor Bill de Blasio objects to the current colocation policy on grounds of fairness, arguing that colocated schools can have a “destructive impact on the [district public] schools they’re going into.” De Blasio has called for charging rent to “well-resourced” charter schools on a sliding scale.

This paper examines the potential impact of requiring colocated charter schools to pay rent. It finds that charging rent in line with the IBO’s recommendation would have forced 71 percent of colocated charters into deficit in 2011–12, the last year for which data are readily available. The average deficit would have been $682,983, or 10.7 percent of budget. Given that personnel costs constitute, on average, 70 percent of colocated charter school budgets, teacher layoffs would likely have been required to offset the cost of rent.

Over the last decade, colocation played a key role in facilitating the expansion of New York’s charter school sector, which, rigorous studies have found, tends to outperform New York City district public schools. It is difficult to predict the impact that charging rent would have on student performance. Colocated and non-colocated charter schools seem to perform equally well. Even if charging rent did not cause strong schools to underperform, it would result in fewer high-performing schools by leading to a smaller charter school sector overall.

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