Charters’ Enrollment Gain May Hurt Public School Credit Ratings
Rising charter school enrollments may hurt credit ratings at public education systems in poor U.S. cities, according to a Moody’s Investors Service report.
Cleveland, Detroit, Washington, St. Louis and Kansas City, Missouri, where more than one in five students are enrolled in charter schools, have already seen significant movement from public grade schools and high schools, according to a statement today from Moody’s. Nationwide, about one in 20 students are signed up at charter schools, the report said.
Charter schools have thrived in some older cities where shrinking tax revenues have hurt services, including education, according to the report by Moody’s analysts Michael D’Arcy and Tiphany Lee-Allen. Charter schools can pull students and revenues away from districts faster than their systems can reduce costs, the authors said.
“Districts may face institutional barriers to cutting staff levels, capital footprints and benefit costs over the short term given the intricacies of collective bargaining contracts -- leaving them with underutilized buildings and ongoing growth in personnel costs,” Lee-Allen said in the statement.
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