The appointment of Betsy DeVos as education secretary of the United States has led to much debate across the nation about public charter schools. Opponents of charter schools typically argue that these schools fail if their average standardized test scores do not exceed those of traditional, district-run schools. These types of comparisons, however, often do not take taxpayer inputs into account. Taking these inputs into consideration, public charter schools ought to be deemed successful if they are able to produce similar outcomes at a lower cost to taxpayers.

In this study, we examine charter school funding inequities in 92 cities across Secretary DeVos’s home state of Michigan. In addition, we calculate the cost effectiveness and return on investment of public charter schools in 71 Michigan cities. Similar to the findings of the existing literature on the topic, we find that public charter schools receive substantially less funding per pupil than traditional public schools.

We reveal that charters in Michigan are more cost effective and produce a larger return on investment for taxpayers. These results persist even after controlling for student demographic factors that research suggests impacts both a school’s funding levels and its average student test scores. These factors include the portion of students receiving special education services or who are English language learners, the average socioeconomic background of students in a school as well as the race and gender composition of a school’s students.

Three key findings are:

  • On average, Michigan charter schools receive about $2,782, or 20 percent, less per pupil than traditional public schools.

  • Based in part on this funding disparity, the average public charter school studied is 32 percent more cost effective than the average traditional public school located in the same city.

  • As measured by expected lifetime earnings of each student, the average charter school generates about $2.63 more return on investment for each dollar it spends — 36 percent higher than the average traditional public school.