Study sheds light on economics of public school transfer program

September 22, 2009

A comprehensive study of public school transfers in Wisconsin provides intriguing evidence that parents send their children to study in school districts that spend more on students.

The study by University of Wisconsin-Whitewater researchers found that parents who live in communities with high property values but comparatively low tax rates often send their children to districts that spend more on students and, presumable, tax more as well.

"To our knowledge, this is the first study of school choice in a public school setting that evaluates transfer decisions controlling for district characteristics from which the students are transferring," said David Welsch, the UW-Whitewater economist who will publish the paper in the Economics of Education Review, one of the top education policy journals in economics.

"The main result of our research indicates that parents of transfer students reside in districts with high property values but low taxes, and they choose to send their children to higher-spending school districts," Welsch said. "Other key findings are that parents send their children to districts with lower percentages of minorities and are more likely to transfer from districts with fewer extracurricular opportunities."

Welsch and colleagues Bambi Statz, a professor of school business management at UW-Whitewater, and Mark Skidmore, an economist at Michigan State University and former chair of the Economics Department at UW-Whitewater, studied data from all Wisconsin school districts from 2003 to 2007 to determine the characteristics of the Wisconsin Open Enrollment program.

During the 2006-07 school year, 23,406 Wisconsin students transferred from one school district to another.  Wisconsin allows pupils to attend any public school district outside the one they live in provided certain procedures are followed.

Welsch says his findings lead to some intriguing possibilities.

"Prior to this, we economists thought people would be likely to locate their families in areas that provided the best educational possibilities," he said. "But it is possible to move to a community with low taxes if there is a community next door that spends more per pupil, and receive the benefits of that for your children."

The UW-Whitewater study, however, was based only on statistics and not on parent interviews, so, Welsch said, he cannot state with any certainty why parents decide to transfer their children.

"There is evidence in the data that parents are avoiding schools with heavy concentrations of minorities but there is also evidence that they are willing to transfer their children to racially diverse districts," Welsch said.

Not surprisingly, Welsch's data also suggests that parents are likely to transfer their children from school districts with few extra-curricular activities to districts with more such opportunities.

"Of these factors, it appears that the expenditure per member of the receiving district is the most important factor in determining transfers to a district," he said. "It is both statistically significant and large in magnitude."

Welsch said the impact of "school choice" and voucher programs that allow students to leave public schools for private schools has been widely studied in Wisconsin, but that the impact of the open enrollment program for public school students has not been previously studied in depth.

The Economics of Education Review is the top journal for economics of education policy makers, Welsch said.  "If you are an economist and you write a paper, this is where you want to be."