Does Profit Status Make a Difference: Resource Allocation in EMO-Run and Traditional Public Schools

Research Report

Does Profit Status Make a Difference: Resource Allocation in EMO-Run and Traditional Public Schools

Abstract

One question often overlooked in the debates on for-profit education contractors (Education Management Organizations, or EMOs) is whether they allocate resources in a different manner than traditionally run schools. We undertake a case study analysis of five Edison schools, comparing their expenditure patterns with those of the host district and of the average elementary school district in the host state. Financial data for the Edison schools were drawn from their official Edison Budget Worksheets, while the public school data were drawn from three sources: the Common Core of Data, agency file (1997); the Schools and Staffing Survey--School District Questionnaire (1993-1994); and The Digest of Education Statistics--Table 79. Our findings show that the Edison schools devoted less money to instruction than their public school counterparts, both in terms of per-pupil expenditures and overall spending. However, the Edison schools had fewer students per teacher and spent more money on curriculum development as well as professional development. Surprisingly, administrative, business, and facility costs at the Edison schools were also greater. This says much about where EMOs find room for profitability, but more research is needed to determine whether the different expenditure patterns influence student learning. (Journal of Education Finance 30(1): 27-49, Summer 2004.)

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