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7. The nonprofit sector in K-12 education Charles T. Clotfelter1 INTRODUCTION This chapter incorporates at least two of the broad topics to which Dick Netzer has devoted his attention, the nonprofit sector and the economics of local government.2 The nonprofit sector, the vast and variegated group of organizations that operate under the beneficial blanket of favorable tax treatment, includes as one of its most prominent subsectors some 27 400 private and parochial schools (1997–8; U.S. Department of Education 2000, Table 5, p.14). The nonprofit sector manifests itself in K-12 (Kindergarten through to 12th grade) education in other ways as well, ranging across extensive volunteer work in both public and private schools, parental support organizations, organizations providing after-school and other services to students and voluntary membership organizations within the schools. To be sure, private schools by any measure are the most important example of nonprofit activity in K-12 education, and for that reason they receive the bulk of attention in the current chapter. In 1999, private schools enrolled some 5.4 million students, representing 17 per cent of all kindergarten students, 11 per cent of all elementary students and 8 per cent of secondary school students. Private schools thus offer an important alternative to the nation’s public schools, one that is available in every metropolitan area and many non-metropolitan communities. Compared to some other subsectors of the nonprofit sector that can be seen as supplementary or complementary to their corresponding public services – such...