The effect of charter competition on unionized district revenues and resource allocation

This study examines the impact of competition due to charter school entry on the level of revenues and the composition of expenditures within traditional public school districts (TPSDs). I leverage a policy change affecting the location and timing of charter entry to account for endogenous charter competition. TPSDs respond to competition by allocating resources away from instructional and other expenditures toward new capital construction. Using teacher contracts, I show that collectively bargained salaries are largely unresponsive to competition and that declines in instructional spending are primarily due to decreases in the number of employed teachers. Competition depresses appraised housing valuations, in turn causing TPSDs to lose property tax revenues resulting in a decline in overall spending.