This study uses the historical example of the New York academy system to examine the effects of market-based policies of school funding. Under New York's Regents system, independently chartered academies were subsidized by per-pupil funds that followed students. Academies had to meet charter criteria to be eligible for funds. In this way, the New York system paralleled current voucher and charter school proposals. Given these parallels, what can be learned from the New York case? In this article, data from the annual reports of academies from 1825 to 1870 are analyzed. During expansion of the system, competition among schools depressed income and led to a declining level of investment in teaching at most schools. These findings are discussed in relation to debates over current school choice and charter school plans.
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