School & District Management

Study Finds Benefits to District Competition

By Debra Viadero — March 26, 1997 4 min read
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School districts spend less and do a better job in metropolitan areas where they compete with other districts for students, concludes an unorthodox study.

“When a district has a lot of competition,” said Caroline Minter Hoxby, the author of the study, “I think it makes everybody in the school district think about the kind of job they’re doing.”

Ms. Hoxby, an economist at Harvard University and the National Bureau of Economic Research, based her conclusions on an examination of “natural choice” among school districts in 320 metropolitan areas across the nation. Her study, which has not yet been published, was released earlier this year.

While much of the debate over school choice has focused on whether parents should have more options in deciding which schools--public or private--their children will attend, Ms. Hoxby pointed out that families already exercise choice when they decide where to live.

“Let’s say there are three or four things you consider when you buy a house,” Ms. Hoxby said. “You look at what the house and the neighborhood is like, the commute, and the schools.”

For some cities, such as Los Angeles or Miami, families in which the major breadwinner works downtown have only one district to choose from in the surrounding area. In Boston, on the other hand, 45 districts lie within a 30-minute commute of the city.

Ms. Hoxby attempted to measure the degree of public school choice that families have and then determine the effects on districts.

“If you lived in Connecticut, for example, what would happen if everyone in Fairfield County had to go to one school district instead of choosing among a lot of small ones?” she said.

Too Simplistic?

One finding to emerge from her analysis is that a large increase in public school choice--for example, a rise from two to 10 school districts available to the typical family--lowers per-pupil spending by about $400, or 7 percentile points. Some of that change stems from lower teacher salaries and some from higher ratios of students to teachers, according to the report.

But Bruce Fuller, an associate professor of public policy and education at the University of California, Berkeley, said that Ms. Hoxby’s spending analysis may be too simplistic.

“We do know that urban districts tend to spend more money per pupil, but part of that is they have greater student needs,” he said. A lower ratio of students to teachers, for example, might be explained by higher numbers of English-language and special education teachers in those districts.

In looking at student achievement, Ms. Hoxby used eight different measures, ranging from standardized-test scores to figures on student enrollment in two- and four-year colleges after high school. She found that a large increase in choice leads to an improvement of 7.5 percentile points in a student’s 8th grade math scores, a 4 percent increase in the probability of a student’s graduating from a four-year college, and a $903 increase in annual income at around age 32.

Where there is more public school choice, Ms. Hoxby also found, fewer parents choose private schools for their children.

All of the effects the study found were smaller in states where the state, rather than local property taxes, pays the greater share of local school costs.

Sorting Not Increased

The report also suggests that this type of natural choice among districts does not lead to more “sorting” among students--segregation by income or race. Critics of school choice proposals often contend that such policies will increase social stratification.

“This appears to be because racial and income segregation occur just through having more schools, not more districts,” Ms. Hoxby writes.

“It doesn’t make a difference whether you have one district or 100 districts, people will still sort themselves out,” Ms. Hoxby added in an interview.

Ms. Hoxby published a controversial study late last year suggesting that teacher unionization leads to overall increases in student dropout rates. (“Education’s ‘Dark Continent,’” Dec. 6, 1996.)

Her new study may generate as much debate.

Mr. Fuller, who co-edited a collection of school choice studies that was published last year, said Ms. Hoxby’s study supports other research suggesting that parents in smaller suburban districts tend to resist school choice plans, presumably because they are happy with their schools.

“Size probably matters, and smaller is probably better,” he said.

But he said Ms. Hoxby also appeared to ignore other factors that might explain differences in student achievement.

“I think it sort of adds fuel to the argument that we should break up big urban districts,” he added. “But it ignores the equity issue.” Many large districts were formed in the first place, he noted, so that schools in poorer neighborhoods would be funded at the same level as those in wealthier communities.

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