Graphic 7 below illustrates the city-level differences in per-pupil spending and standardized differences in CAP scores. Charter schools in almost all Michigan cities receive less funding per student on average, but about half of the cities have public charter schools outperforming TPS based on CAP scores. The overall average CAP scores for TPS — 99.80 — and charters — 99.60 — are virtually identical, which may lead some to believe that charters add no value. However, this comparison does not take into account relative spending efforts.

The graphic below illustrates this. Charter schools located in cities in the top left quadrant of the graph outperform TPS on student academic achievement while receiving less funding per child. Charter schools located in cities in the bottom left quadrant perform worse than TPS in the same cities; however, they also receive less public funding per student. We consider these funding differences by calculating an ROI for public charters and TPS in each city, as described above.

Graphic 7: Michigan Charter School Spending and Performance Compared to Nearby TPS

Graphic 7: Michigan Charter School Spending and Performance Compared to Nearby TPS - click to enlarge

Overall, we find that public charters outperform TPS in the same city on average on both cost effectiveness and ROI. As shown in the table in Graphic 8, the average student in a public charter school accrues 10.51 CAP points per $1,000 spent on them, whereas the average TPS student gains only 7.97 points. This difference translates to a 32 percent cost effectiveness advantage for public charter school students.

The average ROI favors public charter schools as well. For every dollar spent, charter schools deliver an average of almost $2 more, or an additional 24 percent, in lifetime earnings for students. Weighting ROI results by the total number of public charter and traditional public school students served, the difference expands to $2.63 more per dollar invested, or around a 36 percent higher ROI for public charter schools in Michigan.[*]

Graphic 8: Average Cost Effectiveness and ROI of Charter
and Traditional Public Schools in Michigan

Measure Charter TPS Difference Percent Difference
Average CAP score per $1,000 spent per pupil 10.82 8.44 2.38 28%
Weighted average CAP points per $1,000 spent per pupil 10.51 7.97 2.54 32%
Average lifetime earnings per $1 spent per student $9.82 $7.89 $1.93 24%
Weighted average lifetime earnings per $1 spent per student $10.01 $7.38 $2.63 36%

Note: All differences are statistically significant at the p < 0.001 level.

Graphic 9 indicates that 90 percent of the examined cities reveal a cost effectiveness advantage for public charter schools and 96 percent of all students included in this analysis attend school in these cities. The city of Leslie produces the largest cost effectiveness gap favoring public charters, while the city of Sault Ste. Marie demonstrates the largest cost effectiveness gap favoring TPS. Further, 68 percent of the examined cities show public charter school ROI advantages and 80 percent of students are located in these cities. The city of Flint exhibits the largest ROI gap favoring public charters and Cedar Springs displays the largest ROI gap favoring TPS.

Graphic 9: City-Level Summary Statistics of Cost Effectiveness and ROI of Charter Schools

Measure Cost Effectiveness ROI
Percent of cities with charter advantage 90% 68%
Percent of students in cities with charter advantage 96% 80%
Highest charter advantage in a city 6.36
(CAP points)
$8.32
Highest charter disadvantage in a city -3.65
(CAP points)
-$6.14

[*] We weight by the total number of public school students so that each student contributes equally to the overall results. In other words, unweighted results are straight averages that treat each city equally, regardless of size, while weighted results take into account differences in the number of public school students across cities.