A charter school is a school that receives government funding but operates independently of the established state school system in which it is located, and in some cases is privately owned. Charter schools are an example of public asset privatization.

Charter schools in the United States offer primary or secondary education without charge to pupils who take state-mandated exams. These charter schools are subject to fewer rules, regulations, and statutes than traditional state schools, but receive less public funding than public schools, typically a fixed amount per pupil. There are both non-profit and for-profit charter schools, and only non-profit charters can receive donations from private sources.

As of 2016-2017 there were an estimated 6,900 public charter schools in 42 states and the District of Columbia (2016-17) with approximately 3.1 million students, a sixfold increase in enrollment over the past 15 years. In 2015 alone, more than 400 new charter schools opened while 270 schools closed due to low enrollment, lack of finances or low performance. Waiting lists grew from an average of 233 in 2009 to 277 in 2012, with places allocated by a lottery. They educate the majority of children in New Orleans Public Schools. Some charter schools provide a specialized curriculum (for example in arts, mathematics, or vocational training). Charter schools are attended by choice.

They may be founded by teachers, parents, or activists although state-authorized charters (schools not chartered by local school districts) are often established by non-profit groups, universities, or government entities. School districts may permit corporations to manage multiple charter schools. The first charter school law was in Minnesota in 1991.

They sometimes face opposition from local boards, state education agencies, and unions. Public-school advocates asser t that charter schools are designed to compete with public schools.

Chartering authorities

Chartering authorizers, entities that may legally issue charters, differ from state to state, as do the bodies that are legally entitled to apply for and operate under such charters. In some states, like Arkansas, the State Board of Education authorizes charters. In other states, like Maryland, only the local school district may issue charters. Some school districts may authorize charter schools as part of a larger program for systemic improvement, such as the Portfolio strategy. States including Arizona and the District of Columbia have created independent charter-authorizing bodies to which applicants may apply for a charter. The laws that permit the most charter development, as seen in Minnesota and Michigan, allow for a combination of such authorizers. As of 2012, 39% of charters were authorized by local districts, 28% by state boards of education, 12% by State Commissions, with the remainder by Universities, Cities and others.

Charter operators may includ e local school districts, institutions of higher education, non-profit corporations, and, in some states, for-profit corporations. Wisconsin, California, Michigan, and Arizona allow for-profit corporations to manage charter schools.

Caps

According to the National Alliance for Public Charter Schools, twenty-six states and the District of Columbia have some type of limit or cap on charter schools. These states restrict the number of charter schools that may be authorized or the number of students a single school can enroll.

Andrew Rotherham, co-founder of Education Sector and opponent of charter school caps, has written, “One might be willing to accept this pent-up demand if charter school caps, or the debate over them, were addressing the greater concern of charter school quality. But this is not the case. Statutory caps as they exist now are too blunt a policy instrument to sufficiently address quality. They fail to differentiate between good schools and lousy schools and between successful charter school authorizers and those with a poor track record of running charter schools. And, all the while, they limit public schooling options and choices for parents.”

Funding

Charter school funding is dictated by each state. In many states, charter schools are funded by transferring per-pupil state aid from the school district where the charter school student resides. Charters on average receive less money per-pupil than the corresponding public schools in their areas, though the average figure is controversial because some charter schools do not enroll a proportionate number of students that require special education or student support services. Additionally, some charters are not required to provide transportation and nutrition services. The Federal Elementary and Secondary Education Act, Part B, Sections 502–511 authorizes funding grants for charter schools.

In August 2005, a national report of charter school finance undertaken by the Thomas B. Fordam Institute, a pro-charter group,  found that across 16 states and the District of Columbia—which collectively enrolled 84 percent of that year’s one million charter school students—charter schools receive about 22 percent less in per-pupil public funding than the district schools that surround them, a difference of about $1,800. For a typical charter school of 250 students, that amounts to about $450,000 per year. The study asser ts that the funding gap is wider in most of twenty-seven urban school districts studied, where it amounts to $2,200 per student, and that in cities like San Diego and Atlanta, charters receive 40% less than traditional public schools. The funding gap was largest in South Carolina, California, Ohio, Georgia, Wisconsin and Missouri. The report suggests that the primary driver of the district-charter funding gap is charter schools’ lack of access to local and capital funding.

A 2010 study found that charters received 64 percent of their district counterparts, averaging $7,131 per pupil compared to the average per pupil expenditure of $11,184 in the traditional public schools in 2009/10 compared to $10,771 per pupil at conventional district public schools. Charters raise an average of some $500 per student in additional revenue from donors.

However, funding differences across districts remain considerable in most states that use local property taxes for revenue. Charters that are funded based on a statewide average may have an advantage if they are located in a low-income district, or be at a disadvantage if located in a high-income district.

Debate over funding

Nearly all charter schools face implementation obstacles, but newly created schools are most vulnerable. Some charter advocates claim that new charters tend to be plagued by resource limitations, particularly inadequate startup funds. Yet a few charter schools also attract large amounts of interest and money from private sources such as the Gates Foundation, the Walton Family Foundation, the Broad Foundation, and the NewSchools Venture Fund. Sometimes private businesses and foundations, such as the Ameritech Corporation in Michigan and the Annenberg Fund in California, provide support.

Although charter advocates recommend the schools control all per-pupil funds, charter advocates claim that their schools rarely receive as much funding as other public schools. In reality, this is not necessarily the case in the complex world of school funding. Charter schools in California were guaranteed a set amount of district funding that in some districts amounted to $800 per student per year more than traditional public schools received until a new law was passed that took effect in fall 2006. Charter advocates claim that their schools generally lack access to funding for facilities and special program funds distributed on a district basis. Congress and the President allocated $80 million to support charter-school activities in fiscal year 1998, up from $51 million in 1997. Despite the possibility of additional private and non-district funding, a government study showed that charter school may still lag behind traditional public school achievement.

Although charter schools may receive less public funding than traditional public schools, a portion of charter schools’ operating costs can come from sources outside public funding (such as private funding in the form of donations). A study funded by the American Federation of Teachers found that in DC charter schools, private funding accounted for $780 per pupil on average and, combined with a higher level of public funding in some charters (mostly due to non-district funding), resulted in considerably higher funding when compared to comparable public schools. Without federal funding, private funding, and “other income”, D.C. charter schools received slightly more on average ($8,725 versus $8,676 per pupil), but that funding was more concentrated in the better funded charter schools (as seen by the median DC charter school funding of $7,940 per pupil). With federal, private, and “other income”, charter school funding shot up to an average of $11,644 versus the district $10,384 per pupil. The median here showed an even more unequal distribution of the funds with a median of $10,333. Other research, using different funding data for DC schools and including funding for school facilities, finds conflicting results.

Charters sometimes face opposition from local boards, state education agencies, and unions. Many educators are concerned that charter schools might siphon off badly needed funds for regular schools, as well as students. In addition, public-school advocates asser t that charter schools are designed to compete with public schools in a destructive and harmful manner rather than work in harmony with them. To minimize these harmful effects, the American Federation of Teachers urges that charter schools adopt high standards, hire only certified teachers, and maintain teachers’ collective-bargaining rights.

According to a recent study published in December 2011 by the Center for Education Reform, the national percentage of charter closures were as follows: 42% of charter schools close as a direct result of financial issues, whereas only 19% of charter schools closed due to academic problems.Congress and the President allocated $80 million to support charter-school activities in fiscal year 1998, up from $51 million in 1997. Despite the possibility of additional private and non-district funding, a government study showed that charter school may still lag behind traditional public school achievement.

How can I start a charter school?

Charter schools can be started by any interested party, including parents, community members, and teachers.  It is common to see charter schools led by former teachers who wanted to take the lessons they learned in the classroom and scale to an entire school community. It is helpful to first identify a unique need in the community that the charter school would serve and connect with a local charter school authorizer. You can learn more about the charter school authorizers in your state on the National Association of Charter School Authorizers website.

WHAT IS THE CHARTER SCHOOLS PROGRAM?