Choice theory has shaped much of public-school policy throughout the world as countries have adopted free market principles to establish educational alternatives to state and traditional public schools with the goal of improving chronically failing schools.   While public dollars are being used globally to support private school enterprises, public dollars are also being used to finance public school alternatives to the state and traditional public-school offerings.  On both sides of the Atlantic Ocean during the 1990s, school choice theory promoted public school alternatives to state or traditional public schools with the emergence of academies in England and the rise of Charter Schools in the United States.  Beginning with the Education Reform Act of 1988, schools having the choice to convert to academy status and the rapid expansion in the proportion of academy schools have been a key element of new policies that aimed to develop what the government has called a ‘self-improving, school-led system’ (DfE 2010).  As of June 2020, there is a total of 9,180 academies compared to 803 in 2010-2011 (DfE 2020).  Concurrently since the first charter school in Minnesota in 1992, the number of charter schools in the United States have climbed to 7,038, and 44 states now have charter school laws.  Both school growth trends in choice schools have had the unflinching endorsement of respective national governments.

Theoretical Framework:  Choice Theory is the study’s theoretical framework.   Choice theory is the antithesis of the governmental centralization of public schools, as conceived by German fiscal influence in the United States educational policy during the early twentieth century.  Choice Theory seeks equitable and efficient resource distribution through parental selection and market-fueled competition. Choice Theory application advocates a variety of resource distribution schemes in contemporary school finance policy, featuring tuition tax credits, vouchers, funding portability, and charter schools.  Given this framework, my study will evaluate how the theoretical framework has effectively or ineffectively been implemented in school finance policy within British academies and US charter schools through an equity and efficiency analysis.  Due to the researcher’s limitations to aggregate data on all academies and charter schools in both respective countries, an explanatory quantitative study will be conducted among choice schools in these countries’ largest municipalities:  London (or Inner London - its schools within fourteen local education authorities) and New York City (NYC’s Department of Education).  Given this theoretical backdrop, the paper’s main research questions include:

1.   To what extent do the distribution of per pupil expenditures of London academies and New York City (NYC) charter schools vary when compared to the distribution of these per pupil expenditures in state schools and the traditional public schools in each of these municipalities?

2.   To what extent does the per pupil funding formula allocate to the magnitude of student need in both London academies and NYC charter schools when compared to this needs-based allocation in the traditional public and state schools in each of these municipalities?

3.  Given the school spending data from the Income and Expenditure Reports in England for state and choice schools and the School Based Expenditure Reports in the NYC public schools, to what extent can one track the usage of resources to determine what percentage of resources are being allocated for total uses on instruction – minus capital outlays, security, transportation, building up-keep, and other non-instructional needs?

4.  Are academies and charter schools respectively in London and NYC getting more bang for the “pound” or “buck” when analyzing the relationship between student gain scores and per pupil expenditures in these schools, especially when compared to analyzing the same data of state and traditional schools in these two municipalities?

Question 1 will use descriptive statistics and school-finance equity measures to analyze the spending variability in different parts of the distribution for each set of schools. Question 2 will use an ordinary least square regression to determine if the unstandardized beta coefficients, partial correlations and effect-sizes of this statistical model reinforce or refute real allocation of need based equalization policies in both sets of schools within both municipalities. Question 3 will use a functional analysis model, which will track spending at various decentralized levels of schooling in each set of schools within the respective municipalities to analyze the extent the spending is being allocation to instruction. Question 4 will derive effective size from hypothesis testing and correlations to evaluate the efficiency of the funding policy as function of student gain scores. The study’s unit of analysis is at the school level, and subsequently embraces the new school-finance perspective, which calls for more meaningful input-output analysis at the school level (Grubb & Huerta). School finance data will be aggregated at the pupil level for the years 2011-2012 to 2016-2017. The British spending data will be collected from the British Department of Education’s (DfE’s) Local Authority and School Expenditure reports. This specific British per pupil school finance data source contains revenue and expenditure data on the primary and secondary state schools of Inner London’s fourteen local education authorities. From this same agency, per pupil school finance data on multi-academy trusts will be aggregated from the Income and Expenditure Reports in England for only years 2011-2012 to 2016-2017, focusing only on financial data of multi-academy trusts in the 14 Inner London local education authorities. The NYC school finance data will be aggregated from its Education Department’s School Based Expenditure Reports, which contains rich per pupil finance data on all NYC public schools, including charter schools, by school and function respectively. All data will be reported in Excel spreadsheets, and then transported to SPSS for statistical analysis. British school level student performance data will originate from its accountability program (i.e. A-level exams of secondary schools), and NYC school-level student performance will be aggregated from the publicly available state accountability data system.

Anticipated findings: It is hypothesized that expenditures patterns will vary between choice schools and state/traditional schools in respective Inner London and NYC municipalities using horizontal and vertical equity measures. Horizontal equity measures will include the coefficient of variation (measuring spending variability within the middle 68 percent of the distribution), McLoone Index (measuring spending variability under the median), Verstegen Index (measuring spending variability above the median) as well as other measures. Secondly, vertical equity measures will generate findings featuring an interpretation of the beta coefficients of an ordinary least squared regression to evaluate whether the actual funding levels of the need equalization formula are being allocated according to the formula’s design. Thirdly, it is anticipated that some measure of decentralized resource allocation will be found when using the functional analysis model to track funding at specific levels of schooling. Additionally, analyses between spending and student performance will either validate evidence toward trends of an economies of scale and efficiency or show evidence for a dis-economies of scale and inefficiency.

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