Modernizing the Federal Charter Schools Program

Kindergarten students at a Denver, Colorado, charter school play educational computer games during class, December 2011.

Twenty-five years ago, Congress created the federal Charter Schools Program (CSP) as part of 1994’s Improving America’s Schools Act, a reauthorization of the Elementary and Secondary Education Act (ESEA) of 1965. Just a few years earlier, in 1991, the country’s first charter school law was enacted in Minnesota, with the idea quickly spreading to California in 1992. The very next year, six additional states passed laws allowing the creation of public charter schools. With bipartisan support in Congress and requested increases from each presidential administration since 1994, the program has grown from an initial $4.5 million appropriation to $440 million in fiscal year 2019.

There are now more than 7,000 charter schools educating more than 3.2 million students in 43 states and the District of Columbia—a significant jump from the fall of 1994, when there were only 64 charter schools in operation. The aim of the CSP was to open up new charters and then evaluate how schools described as “a mechanism for testing a variety of educational approaches” fared. States with charter school laws could apply for funding to make “grants to charter school developers to plan their education program around the results the school aims to achieve.” Even as the number of charter schools has grown significantly, the program’s focus on opening new schools has continued into the present day, with as much as $377 million—or 85 percent of CSP funding—in FY 2019 being dedicated to the operators of new charter schools.

However, the charter sector in 2019 is much different than it was back in 1994. Policymakers should acknowledge this change and modernize the CSP accordingly to reflect the current strengths and challenges of the charter sector. In addition to grants to open new schools and facilities financing assistance, the CSP should reflect a balanced approach to charter school policy focused on encouraging the smart growth of excellent schools, improving the quality of existing charter schools, and confronting challenges in the charter sector. Using this approach, federal policymakers can support states and local communities in reaching the goal of public schools having a good seat for every child.

Encouraging smart growth

While only 6 percent of public school students nationwide are enrolled in charter schools, the percentages tend to be much higher in the country’s largest cities. For example, in Los Angeles, more than 25 percent of public school students are enrolled in charters; in Philadelphia, nearly a third of public school students are enrolled in charters; and in Washington, D.C., slightly less than half of public school students are enrolled in charter schools. These significant market shares—coupled with stagnating growth in total K-12 school enrollment in cities such as Denver and declining overall enrollment in cities such as Chicago, Baltimore, and Detroit—raise the political and educational stakes for communities when they open new public schools. Charter schools do not operate in silos, and the decision to open new schools can have an impact on both traditional public schools and charter schools already in operation. At the same time, charter schools in urban areas have shown achievement gains when compared with traditional public schools, and for this reason, increasing the number of high-quality charters can be an important strategy for providing every student with a great school. Yet it is critical to take a smart approach to growing the charter sector.

In addition to providing grants to open new charter schools and for facilities financing assistance, the CSP should make investments to support smart growth, including the following:

  • The CSP should create communitywide analyses spanning traditional school districts and the charter sector in order to project enrollment patterns and research what kinds of educational programs parents want for their children. As deemed appropriate, these grants could be made to mayors, to districts that serve as charter authorizers along with representatives of the charter sector, and to consortia of districts as well as charter authorizers and operators. The analyses should apply an explicit equity lens based on race, income, disability, and home language in order to help districts, charter authorizers, and charter school operators understand whether there are unmet needs in particular neighborhoods and whether there is a need for specialized programs to improve equitable access to opportunities for underserved students. For example, this could highlight significant interest in dual-language offerings or programs that focus on career and technical education.
  • The CSP should provide grants to consortia of districts and charter schools in order to launch and support unified enrollment systems and therefore improve equitable access to charter schools and other public schools of choice. By using fair and efficient algorithms, conducting extensive outreach, and using carefully considered lottery rules, unified enrollment systems can simplify the enrollment process for both families and schools.
  • The CSP should invest in programs to support early-growth charter networks. Nearly two-thirds of charter schools are independently managed, but many philanthropic and federal investments in these schools are focused on the growth of successful nonprofit charter management organizations (CMOs). Helping interested independent schools strengthen their organizations to prepare for growth is not just about providing school start-up funding; federal funding should also build on initiatives such as the Emerging CMO Fund and the Charter Network Accelerator to widen access to resources and build capacity at community-created schools and charters led by Black, Latinx, and Native leaders.

Helping existing charter schools improve

Researching the impact that charter schools have on student outcomes is challenging. Study  results that look at charters using enrollment lotteries may not be generalizable to schools that are not oversubscribed and thus do not use lotteries. Moreover, studies that compare seemingly similar students could miss important differences between them. Yet a theme common to all of these studies is that there is marked variability in the success of charter schools, with some seeing tremendous success and others failing to outpace traditional public schools.

One response to this variability has been to invest in expanding the most successful schools. While such expansion is important, there are also thousands of other schools that could be serving students better. Therefore, another strategy for improving the quality of existing schools should be to target investments so that they address some of the unique challenges that charter schools face. Millions of students are already enrolled in charter schools. Many of these schools are independently run and are in communities that want an increased say in how their schools operate. These investments could include the following recommendations:

  • The CSP should provide grants to consortia—including districts, charter schools, associations, and authorizers—in order to support special education cooperation. Developing the expertise to successfully serve students with disabilities is a challenge for all schools but can be particularly acute for charters and small school districts that may not enroll many students with low-incidence disabilities, who require highly specialized services and supports. Cooperation agreements with local districts, regional service providers, or collaboratives with other charters could help charters to access expertise that would help improve outcomes for such students. In 2017, the Center for American Progress published a report with the National Center for Special Education in Charter Schools (NCSECS) that profiled examples of districts and charter schools pursuing similar efforts.
  • The CSP should provide grants to consortia of charter schools or charter school associations in order to improve economies of scale for small charter operators. In addition to the special education challenges detailed above, many charter operators are not able to access the same pricing for curricula, supplies, support services, or technology as larger districts and networks. Developing partnerships with institutions of higher education or other community partners could also prove challenging. However, by creating or expanding the capacity of collaborative organizations, charter schools could free up resources to invest elsewhere in their programs.
  • The CSP should provide grants to states in order to make curricular resources from the most successful charter operators widely available. Many small charters and schools may not be able to develop their own high-quality curricular resources. A number of charters have already shared their expertise. However, grants to states could allow them to develop and share resources as well as best practices from the most effective charter operators across a wider array of subject areas and grade spans.

Confronting challenges in the charter school sector

The founding premise of charter schools is that they have increased autonomy. By committing to meeting the academic requirements and other goals in their charters, these schools free themselves from many of the rules and regulations that exist for traditional public schools. Many have used this flexibility, for example, to lengthen the school day or year and to develop specialized programs for high-need students; however, some operators have taken advantage of this flexibility for financial gain. A 2018 CAP report on for-profit virtual charter schools highlighted academic underperformance at these schools and the exorbitant executive compensation at the largest operator in the sector. Another troubling example comes from two Indiana virtual charter schools with inflated enrollment data that were shut down this past summer. The state is possibly seeking the return of up to $40 million in funding the schools received for students who were not actually enrolled.

These gaps in policy can allow bad actors to damage the reputation of the entire sector. They need to be addressed in order to protect taxpayer resources as well as the educations of current and future students. To confront these challenges, state-level requirements could be added to the CSP State Entities competition, including the following:

  • The CSP should ban incentive compensation for student recruitment and enrollment, similar to legislation and regulations in place for institutions of higher education. Families should be able to select schools that are the right fit for their children without receiving high-pressure sales pitches from people with money on the line.
  • The CSP should establish clear conflict of interest requirements so that the leaders of charter schools and their board members cannot enrich themselves through real estate, management, or other contracts with the schools they are responsible for leading.
  • The CSP should require that management contracts for charter schools ensure that critical decision-making authority remains with the school’s board. They should also ensure that the school’s board has transparent access to financial and other data; that contracts are severable so that a change in management companies does not mean that the school has to close; and that equipment and supplies bought with public funds are owned by the school.

Conclusion

As the federal Charter Schools Program enters its second quarter-century, it is supporting a very different charter sector than when it was launched in 1994. There are now more than 7,000 charter schools—although net growth in the sector has slowed noticeably in recent years for a range of reasons, such as caps on the number of charter schools in some states and difficulties finding and affording suitable facilities. During the past 25 years, high-performing CMOs have grown to educate hundreds of thousands of students, but so have much lower-performing for-profit virtual charter schools.

Fortunately, using the recommendations outlined above, policymakers can modernize the CSP by taking a balanced approach to charter schools that focuses on encouraging smart growth, helping existing charter schools improve, and confronting the challenges in the charter sector.

Neil Campbell is the director of innovation for K-12 Education at the Center for American Progress.