Can Government Regulation Improve Charter School Performance?
Harris and McKenzie (2026) examined how state regulations affect charter school growth, enrollment, and educational quality. Using national school data from 2002–2019, they analyzed charter school policies, student achievement, and school openings and closures. They found that states without enrollment caps and with multiple charter school authorizers generally had larger charter school sectors. Eliminating strict caps was associated with a 9-percentage-point higher charter school market share. Their causal analysis found that establishing statewide charter authorizers increased the percentage of public schools operating as charters by 3–5 percentage points over 10 years. These policies also increased charter enrollment among lower-income students.
Why This Article Was Selected for The Policy Scientist
Charter schools represent an important experiment in public education, combining government funding with greater operational independence. Understanding how regulations influence school expansion, educational quality, and access is particularly timely as states continue debating school choice and accountability. This study contributes to that discussion by examining whether regulatory structures produce measurable differences in educational outcomes. Published in Education Finance and Policy, a respected journal specializing in education economics and policy, the research draws on extensive national data with considerable relevance across states. Its strongest contribution is the use of difference-in-differences analysis to estimate causal effects.
Full Citation and Link to Article
Harris, D. N., & McKenzie, R. (2026). The regulation of charter schools: National patterns and causal effects. Education Finance and Policy. Advance online publication.
Central Research Question
How do state regulations influence the growth, educational quality, and accessibility of charter schools? More specifically, which regulatory policies encourage charter school expansion, and do policies that increase the number of charter schools also improve educational outcomes? Harris and McKenzie examine whether differences in state regulatory frameworks help explain variations in charter school enrollment, academic performance, school closures, and the geographic distribution of charter schools.
Charter schools are publicly funded institutions that operate with greater administrative independence than traditional public schools. However, they remain subject to state regulations governing their establishment, financing, oversight, and continued operation. These regulations differ substantially across states, creating opportunities to examine how particular policies influence the charter school sector. The central distinction is between policies that encourage expansion and those intended to maintain educational quality. A regulatory framework that facilitates the establishment of additional schools may increase educational options without necessarily improving academic performance. Conversely, regulations emphasizing accountability may influence which schools remain operational and where new schools are established.
The study also addresses a narrower causal question: Does establishing a statewide charter school authorizer increase charter school enrollment and change the socioeconomic composition of students attending these schools?
Previous Literature
The research builds on two substantial bodies of scholarship: the economic literature examining government regulation and the education literature investigating charter school performance and accountability. Traditional economic theories identify competing explanations for regulatory intervention. Pigou (1938) emphasized the potential for government regulation to correct market failures, while Posner (1974) and Shleifer (2005) examined the economic foundations and consequences of regulation. These perspectives are relevant to education because schools produce benefits extending beyond individual students, while families frequently lack complete information about institutional quality.
An alternative perspective emphasizes the possibility that regulations create barriers to market entry and protect established organizations. Shleifer and Vishny (1993) and Djankov et al. (2002) examined how institutional incentives and government intervention can undermine economic efficiency. Related empirical studies, including Ciccone and Papaioannou (2007) and Bertrand et al. (2007), investigated relationships between regulatory restrictions and business activity. These findings suggest that regulations governing the establishment of new organizations may influence competition and market development.
Within education, Betts (2005) examined market imperfections affecting school choice, while Bergman and McFarlin (2018) investigated incentives associated with student selection. Glomm, Harris, and Lo (2005) provided a foundation for understanding how charter school financing influences institutional decisions. More recent research by Bross, Harris, and Liu (2023) examined charter school accountability, while Chen and Harris (2023) addressed the importance of charter school entry into lower-performing educational markets. Together, these studies establish the theoretical basis for examining how regulatory design influences school expansion, accountability, and educational outcomes.
Data
The researchers assemble a national dataset combining information about public schools, state charter school regulations, and educational performance. Their principal institutional source is the National Longitudinal School Database, which provides an approximately comprehensive annual accounting of American public schools from 2002 through 2019. These records allow the researchers to identify charter schools, measure their share of the public education market, and examine patterns of school openings and closures.
Regulatory information comes from three organizations that evaluate state charter school laws: the National Association of Charter School Authorizers (NACSA), the National Alliance for Public Charter Schools (NAPCS), and the Center for Education Reform (CER). Their evaluations measure policies involving enrollment caps, authorization procedures, school funding, contract requirements, and institutional accountability. Because these organizations emphasize different regulatory priorities, the researchers examine both their overall assessments and individual policy components.
Educational quality is measured using the Center for Research on Education Outcomes (CREDO) national charter school studies from 2013 and 2023. Additional information from the Stanford Education Data Archive (SEDA) permits examination of academic growth and subsequent school closures. The closure analysis identifies schools operating in 2015 and determines whether they remained open in 2019. The researchers also examine whether charter schools establish operations in districts characterized by comparatively weak academic performance.
For the causal analysis, the researchers construct a state-level panel identifying changes in statewide charter authorization policies during 2002–2017. States without sufficiently established charter school laws are excluded from this analysis.
Methods
The study employs two complementary empirical approaches. First, the researchers estimate statistical relationships between state charter school regulations and several measures of market performance. These include charter school market share, academic achievement, closure of low-performing schools, and charter school entry into lower-performing districts. Regression models incorporate relevant characteristics and, where appropriate, state fixed effects to account for persistent differences between jurisdictions.
These initial estimates are explicitly interpreted as correlations rather than causal effects. States adopting particular regulations may differ systematically from other states in ways that independently influence educational outcomes. Furthermore, successful charter school expansion may itself encourage subsequent regulatory changes, creating potential reverse causation.
The second approach uses difference-in-differences analysis to estimate the causal effects of introducing statewide charter school authorizers. These organizations can approve charter schools across a state, including in districts where local authorities might otherwise oppose their establishment.
The researchers compare changes in charter school market share among states adopting statewide authorizers with changes in states that did not adopt comparable policies. They estimate conventional two-way fixed-effects models and apply the Callaway and Sant’Anna (2021) approach, which accommodates differences in the timing of policy adoption.
The credibility of this design depends on whether treated and comparison states would have followed similar trends without the policy change. The researchers examine preexisting trends, exclude states experiencing major simultaneous charter policy changes, and conduct sensitivity analyses using alternative comparison groups and outcome measures.
Findings/Size Effects
The results indicate that several regulatory policies are associated with substantial differences in charter school expansion. States without restrictive charter school caps, with multiple authorizing organizations, and with stronger contract renewal standards generally have larger charter school sectors.
One particularly substantial association concerns restrictions on charter school numbers. Moving from a strongly restrictive charter school cap to no cap is associated with an approximately 9-percentage-point increase in charter school market share. This estimate represents a difference in percentage points rather than a 9% proportional increase. Because this finding comes from the correlational analysis, it does not establish that eliminating caps would independently produce an increase of that magnitude.
The relationship between regulatory flexibility and educational quality is more complicated. States allowing greater charter school expansion sometimes exhibit weaker academic performance measures. The researchers identify evidence consistent with a possible trade-off between the quantity and quality of charter schools, although many individual estimates lack statistical precision.
Funding arrangements also appear relevant. More equitable funding relative to traditional public schools is associated with stronger charter school performance and greater charter school entry into lower-performing districts. Performance-based contracts and stronger renewal requirements are associated with greater likelihood that academically weak charter schools close. These relationships suggest that regulations governing institutional accountability may influence educational quality independently of regulations governing expansion.
The strongest causal findings concern statewide authorization. Difference-in-differences estimates indicate that introducing a statewide authorizer increases the proportion of publicly funded schools operating as charter schools by approximately 3–5 percentage points over 10 years. The increase develops gradually rather than appearing immediately after implementation.
These findings remain broadly consistent across alternative statistical specifications, comparison groups, and measures of charter school market share. Additional analyses indicate that statewide authorization also increases the representation of students eligible for free or reduced-price lunches within the charter sector. However, the researchers do not establish a reliable corresponding effect on the racial composition of charter school enrollment because the relevant models fail their pre-policy trend tests.
Conclusion
The study demonstrates that state regulatory structures are associated with meaningful differences in charter school expansion, educational quality, and access. Its principal causal finding is that establishing statewide charter school authorizers increases charter school market share over time, with estimated increases of 3–5 percentage points after approximately a decade. The evidence also indicates that these policies expand charter school participation among students from lower-income households.
The broader findings suggest that policies encouraging charter school expansion do not necessarily produce corresponding improvements in educational quality. Enrollment restrictions, funding arrangements, authorization procedures, and accountability requirements may influence different outcomes through distinct mechanisms. Consequently, evaluating charter school regulation requires consideration of both institutional growth and educational performance.
The study's principal methodological contribution is its combination of extensive national descriptive evidence with a causal analysis of a specific regulatory intervention. Nevertheless, the causal findings apply primarily to statewide authorization, while conclusions about funding, enrollment caps, and accountability remain correlational. Additional research using comparable causal identification strategies would help determine whether those regulatory policies independently influence academic achievement, school closures, and the distribution of educational opportunities.
Comments