#### Challenge and Opportunity

#### The Impact of Charter Schools on School Districts

# **A Report of the National Study of Charter Schools**

### [RPP International]{.smallcaps}

# 

# 

##### U.S. Department of Education

Office of Educational Research and Improvement

June 2001

#### Challenge and Opportunity

#### The Impact of Charter Schools on School Districts

# **A Report of the National Study of Charter Schools**

### [RPP International]{.smallcaps}

# 

# 

# **John Ericson and Debra Silverman**

## with

### Paul Berman, Beryl Nelson, and Debra Solomon

##### U.S. Department of Education

Office of Educational Research and Improvement

June 2001

**U.S. Department of Education**

Rod Paige

*Secretary*

**Office of Educational Research and Improvement**

Sue Betka

*Deputy Assistant Secretary*

June 2001

This project was supported under contract number RC95196001, as
administered by the Office of Educational Research and Improvement, U.S.
Department of Education. Any opinions, findings, or conclusions are
those of the authors and do not necessarily reflect the views of the
Department or any agency of the U.S. government.

For more information on the contents of this report, contact Gregory
Henschel, project officer, on 202--219-2082, or e-mail
<gregory.henschel@ed.gov>. The full text of this publication can be
downloaded from www.ed.gov/pubs/studies.html - Charter. 

To obtain copies of this report (limited number of copies available) or
ordering information on other U.S. Department of Education products,
call toll free 1--877--4ED--Pubs (1--877--433--7827) or write:

U.S. Department of Education

ED Pubs

P.O. Box 1398

Jessup, MD 20794--1398

TTY/TTD: 1--877--576--7734

FAX: 301--470--1244

**Preface**

This report is one in a series from the National Study of Charter
Schools (the Study). The Study, sponsored by the U.S. Department of
Education's Office of Educational Research and Improvement, is a 4-year
research effort to document and analyze the charter school movement.
Through an annual survey of all charter schools in the country,
successive site visits to 91 charter schools in 10 states, a student
achievement testing program in a sample of charter schools, and policy
work at both the district and state level, the Study has documented the
implementation of charter schools and their impact on students. Four
annual reports describe the differences in charter legislation, the
number and types of charter schools, the demographic characteristics of
students attending charter schools, the reasons why charter schools were
founded, and the factors that facilitate or hinder the development and
implementation of charter schools. In addition, a series of topical
reports, *Charter Laws and State Theories of Action; Mapping the Charter
Universe: Discovering Alternative Systems of Education; Teacher
Intention to Stay and Charter School Sustainability;* and *Are Charter
Schools Improving Student Achievement,* focus on states' charter
legislation, education systems in charter schools, teachers in charter
schools, and the impact of charter schools on student achievement.

This report, *Challenge and Opportunity: The Impact of Charter Schools
on School Districts*, explores the operational and educational changes
in districts that administrators attribute to charter schools, and the
conditions under which districts tend to make particular changes.
Through our extensive fieldwork, the Study has a unique understanding of
these particular charter schools and the district context and conditions
in which they exist. The work reported here builds on our analysis of
the states' charter laws and the policy contexts in which they were
conceptualized and implemented.

RPP International conducted the National Study of Charter Schools with
the support of the Institute for Responsive Education.

**Acknowledgments**

The authors are grateful to the many people who contributed either
directly or indirectly to this report. More than 100 district
administrators granted interviews, generously taking time from handling
their districts' operations to answer our questions and provide us with
the data that serves as the basis for this report. We also appreciate
the contributions of newspaper reporters and knowledgeable community
members we interviewed, many of whom also sent us copies of relevant
newspaper articles or reports they had written. We want to extend a
special thanks to the administrators, teachers, students, and parents of
the 91 charter schools that allowed us to visit their schools in
successive years, provided us with documents about their schools and
students, allowed us to observe classrooms, answered our questions and
helped us learn about their communities and to learn from their
experiences. They have made---and continue to make---significant
contributions to our work.

We appreciate the thoughtful and insightful ideas, contributions, and
comments of the Study's Advisory Board whose members include: Jose
Afonso, Massachusetts Department of Education; William Lowe Boyd,
Department of Education Policy Studies at Pennsylvania State University;
Rexford Brown, P.S.1 Charter School (Denver, Colorado); Joan Buckley,
American Federation of Teachers; Faith Crampton, National Education
Association; Gary Hart, Secretary for Education for the State of
California; Ted Kolderie, Center for Policy Studies; and Joe Nathan,
Center for School Change, Hubert H. Humphrey Institute of Public Affairs
at the University of Minnesota.

In addition, a group of staff members from the U.S. Department of
Education reviewed the report and provided comments and insights that
strengthened the report. We would like to thank Judith A. Holt, Office
of Special Education and Rehabilitative Services; Alex Medler, Office of
Elementary and Secondary Education, Charter Schools Office; and Meredith
Miller, Planning and Evaluation Service. We also appreciate the
thoughtful comments and advice from a group of peer reviewers, Robin
Lake, Center for Reinventing Public Education at the University of
Washington; Bruno Manno, Annie E. Casey Foundation; and Howard Nelson,
American Federation of Teachers.

The authors also would like to express our gratitude and appreciation to
Judith Anderson, Joseph Conaty, Gregory Henschel, Patricia Lines, and
Martin Orland, of the U.S. Department of Education's Office of
Educational Research and Improvement for their support and guidance in
shaping both the Study and this Report.

While appreciating the contributions of all of the reviewers, the
authors accept full responsibility for the content of the Report.

**Contents**

# Preface ....iii

# Acknowledgements iv

# Executive Summary 1

# Section I. Introduction 4

# Section II. Methodology 7

# Section III. The "Ripple" Effect of Charter Schools on Districts 10

A. District Budget 10

B. District Operations 11

C. District Education 15

D. Summary 18

# Section IV. State and Local Conditions that Influence How Charter Schools Impact Districts 19

A. State Conditions and Differences in Charter Law 19

B. Charter Granting and the Impact of Charter Schools on District

> Budget, Operations, and Education 21

C. Local Conditions and the Impact of Charter Schools on District

> Budget, Operations, and Education 27

D. Summary 31

# Section V. District Orientation and the Effect of Charter Schools on District Operations and 

# District Education 32

A. What Districts Mean by Challenge and Opportunity 32

B. Charter Authority and Enrollment Factors 33

C. District Orientation and Changes in District Operations and

> District Education 35

D. Summary 38

# Section VI. Illustrations of District Responses to Charter Schools 39

A. Charter Schools as a Challenge 39

B. Charter Schools as an Opportunity 42

C. Summary 45

# Section VII. Conclusion 46

A. Influence of Local Conditions 46

B. Charter Schools as Challenge or Opportunity 46

C. Role of State Legislation and Political Context 47

# Appendix 50

# Selected References 54

**List of Exhibits**

-   Exhibit 1 Number of Districts and Charter Schools in the Study
    States 8

-   Exhibit 2 Impact of Charter Schools on District Budget 10

-   Exhibit 3 Areas of Change in District Operations 12

-   Exhibit 4 The Impact of Charter Schools on District Operations 13

-   Exhibit 5 Single and Multiple Areas of Change in District Education
    16

-   Exhibit 6 Key Dimensions of Charter Legislation in the Study States
    20

-   Exhibit 7 The Impact of Charter Schools on Budget, District
    Operations, and District

Education by Charter Granting Entity 22

-   Exhibit 8 Summary of Funding Differences in the Study States 24

-   Exhibit 9 Enrollment Trend and the Impact of Charter Schools on
    District Budget 28

-   Exhibit 10 The Impact of Charter Schools on District Operations and
    District Education

By Enrollment 29

-   Exhibit 11 Charter Authority and Enrollment Factors Affecting
    District Orientation 33

-   Exhibit 12 Combined Effect of Charter Authority and Enrollment on
    District Orientation 34

-   Exhibit 13 District Orientation and Impact of Charter Schools on
    Budget, Facilities,

> and Staffing 35

-   Exhibit 14 District Orientation and District Change 36

# **Executive Summary**

The charter school movement is one of the fastest growing education
reform efforts in the United States. Charter schools are tuition-free
public schools freed from regulation in exchange for greater
accountability. Proponents contend that charter schools may not only
provide families and students with another educational choice but also
promote change in the public education system as a whole, thus
benefiting all students. Educational theorists suggest that charter
schools will induce systemic change by providing more educational
choices, creating competitive market forces, and serving as examples
from which other public schools can learn. This report is an exploratory
effort to gain a deeper understanding of how some charter schools have
affected the public school districts surrounding them. The Study asked
two questions:

-   *What changes have districts made in district operations and
    district education that can be attributed to charter schools?*

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-   *Under what conditions do charter schools affect change in district
    operations and district education?*

The Study focused its research on 49 districts in 5 states---Arizona,
California, Colorado, Massachusetts, and Michigan---where the Study also
conducted fieldwork in charter schools. The districts in the Study had
charter schools in their areas that reflected a broad variation among
key descriptors: grade level of students served, urbanicity, and other
factors. The five states from which these districts were drawn were
chosen to reflect the variation in state policy contexts.[^1] This Study
collected data on the impacts of charter schools through in-depth site
visits in 14 districts where Study staff members interviewed multiple
central office administrators and newspaper reporters. In the remaining
35 districts, staff conducted telephone interviews with a senior
district official, usually the superintendent, and a local newspaper
reporter or education analyst. This report focuses on changes in each
district from the perspective of district leader and staff.

The Study found that every district in our sample reported impacts from
charter schools and made changes in district operations, in the district
educational system, or in both areas. More specifically:

-   Nearly half of district leaders perceived that charter schools had
    negatively affected their budget and explained this impact by
    pointing to the reduced revenue from students who had transferred
    from districts schools to charter schools.

-   Among districts in the Study, nearly half of district leaders
    reported becoming more customer service oriented, increasing their
    marketing and public relations efforts, or increasing the frequency
    of their communication with parents. In many districts,
    administrators began paying close attention to their local charter
    schools, typically by tracking the number of students who attended
    charter schools and monitoring charter school students' test scores.

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-   Most districts implemented new educational programs, made changes in
    educational structures in district schools, and/or created new
    schools with programs that were similar to those in the local
    charter schools.

In addition to these findings on changes in district operations and
services, the Study also identified factors related to state law and
local conditions that influenced how charter schools affected districts
and how districts responded to charter schools. Two factors seemed to
best predict patterns in the data: charter granting agency and
enrollment trends.

**Charter Granting Agency Effects**

In each state, charter legislation determines which agencies can grant
charters. In some states, only the local district can grant charters. In
other states, both districts and one or more additional agencies also
can grant charters. In a third group of states, only one or more
state-level bodies can grant charters.

In the 29 districts where both districts and other agencies can grant
charters, 3 districts have granted charters while 26 others have not.
The 26 districts that were not the charter granting agency were more
likely to report greater impacts from charter schools than districts
that granted charters. Districts that did not grant charters were more
likely to report negative budget impact, increased marketing efforts,
greater emphasis on customer service, implementation of new education
programs and new specialty schools. Nearly all districts in Arizona and
Michigan chose not to grant the charters, although they had the
authority to do so.

Districts in California and Colorado have sole charter granting
authority. Because all charters in those states were granted by the
district, such districts may have been more likely to grant charters
that did not cause serious financial problems for themselves. As such,
they were more likely to report that charter schools had no impact on
their budget, and that charter schools had little or no effect on their
central office operations.

The impact on Massachusetts districts was more similar to California and
Colorado districts than it was to Michigan or Arizona districts.
Although in Massachusetts the district is not a charter granting
authority, the impact of charter schools was mitigated by legislation
that enabled districts to recover funding lost when students chose
charter schools.

####### Enrollment Effects

Local enrollment trends were also relevant to the impact on districts.
Of the 49 districts in the Study, 15 districts were either declining or
stable while 34 are increasing. The Study found that every district with
declining enrollment also reported that charter schools had a negative
impact on their budget. In these districts, administrators reported
laying-off staff, downsizing their central offices, closing schools,
increasing class sizes, placing a greater emphasis on customer service,
changing staffing arrangements, and adding new educational programs. In
the 34 districts with increasing enrollment trends, administrators were
more likely to report no fiscal impact and made few changes in district
operations or in the educational system.

####### Combination Effect

Granting agency effects and enrollment combined to exacerbate the
impact. Districts with declining enrollment that did not grant the
charter were more likely to perceive that charter schools had a negative
affect on their budget and view charter schools as competition. These
districts responded competitively, making a number of changes in
district operations and introducing programs into the educational system
designed to compete for students and parents. Yet, the threat posed by
charter schools was not the only force motivating districts to
change---some districts that viewed charter schools as an opportunity
also made changes in district operations or educational services. While
most charter granting districts with increasing enrollment viewed
charter schools as another choice and made few changes in how they
operated, a handful of districts used charter schools as a tool to
promote educational reform in their district.

The conclusions from this exploratory examination are that districts do
make changes in their educational services and district operations as a
result of charter schools, and that these changes are influenced by
enrollments, financial conditions, and the nature of the granting
agency. The rapidly increasing number of charter schools and the
tendency for districts to respond by making operational and educational
change suggests that charter schools can impact the public school
system.

However, this Study allows only early speculation on the broad-scale
impact. For one thing, the size of the Study was limited; some
inferences among schools are based on modest differences. Furthermore,
the Study included a widely varied group of school districts in five
states, but this group of districts does not statistically represent the
whole country. Larger studies could reveal more detailed and definitive
findings. Furthermore, future research on this issue should assess the
degree to which impacts observed in this Study are both long lasting and
systemic.

**Section I. Introduction**

Since 1991, 36 states and the District of Columbia have enacted charter
legislation. By the 1999--2000 school year, there were more than 1,600
charter schools in operation. Charter schools---schools that can be
created by parents, teachers and/or members of the community---are
granted the autonomy to operate outside the bureaucratic rules that
govern traditional public schools in exchange for an increased level of
accountability for student achievement. State legislation allows charter
schools to be created and each state's charter law arises from a unique
state context and political process. Therefore, the provisions of each
charter law---what institutions can grant charters; the number of
charter schools allowed; the autonomy provided the schools and the kind
of accountability required of them; and what is limited and what is
allowed---in some ways establish the role that charter schools might
play in public education.[^2] These laws, then, establish a framework
that contributes to whether charter schools will have a lasting impact
on American education. One promise of charter schools rests on their
ability to stimulate change in the public education system.[^3]

Although charter schools are a relatively recent phenomenon, a growing
body of literature suggests three ways that charter schools might affect
the public education systemnamely, that charter schools will provide
additional choices, especially for those parents and students who
traditionally have had the fewest opportunities in the public education
system; that charter schools will create a competitive market forcing
change in the entire public education system; or that the autonomy
afforded charter schools will create more innovative models of
schooling, with charter schools serving as laboratories of innovation
from which other public schools can learn.[^4]

This report explores the impact of charter schools on districts, as a
first step in assessing their impact on the public education system.[^5]
The report is based on interviews and site visits to 49 school districts
conducted between October 1998 and May 1999. This work is exploratory in
part because with the oldest law enacted in 1991, it is still too early
to track what changes, if any, might have long-term impacts on local
practices and state policy. A recent National Education Association
(NEA) report observes, "There have been some instances where the
presence of charter schools has worked to pressure districts to add
programs, but the jury is still out in terms of larger systemic change.
The studies to date show that the degree to which charters affect
systemic change is unclear."[^6] Our findings add to a growing body of
literature that aims to understand the evolution of possible systemic
changes resulting from the presence of charter schools.

The report also is exploratory because it focuses on districts in which
charter schools are located. The proportion of such districts is low
compared to all public school districts. Since the Study looks at
districts that have some experience with charter schools, the Study
cannot tell how the charter phenomenon may or may not be affecting the
vast majority of districts that have little direct experience with
charter schools. In this sense, the Study focuses on a crucial aspect of
public education---the district---but a different methodology would be
needed to place this Study's sample of districts into a larger context
of how such local change has leveraged state systems to change.

The purpose of this report, then, is to examine the effect of charter
schools on districts that have charter schools in them, whether they are
the charter granting entity or not.[^7] Kolderie (1999) suggests that
the test of charter school effectiveness is to evaluate the "ripple
effect"---whether districts do in fact change and improve their systems
in response to the appearance of charter laws and charter schools. In
addition to evaluating whether districts implement change in response to
the appearance of charter laws and charter schools, the Study also seeks
to understand the conditions that promote or impede certain types of
changes. Thus, this exploratory examination of the impact of charter
schools on districts asked two questions:

-   *What changes have districts made in district operations and
    district education that are attributable to the presence of charter
    schools?*

-   *Under what conditions do charter schools affect change in district
    operations and district education?*

The simple answer to the first question is that charter schools *have*
affected districts. In fact, based on interviews with knowledgeable
district leaders (the Study's methodology is described in section II),
the Study found that every district in our Study made changes in
district education and/or district operations that they attributed to
charter schools. The answer to the second question is more complicated.
State and local conditions affect the ways in which charter schools
impact districts and how districts respond. The Study found patterns in
the kinds of changes made by districts based on state and local
conditions and whether district leaders viewed charter schools as an
opportunity or a challenge.

These findings suggest a greater level of impact of charter schools on
districts compared to previous research.[^8] The Study's findings also
suggest that district leaders are willing to attribute changes in
district operations and district education to charter schools.[^9] The
findings reported here are from the perspective of the district leaders.
Whether all of the changes reported here represent improvements is still
unknown, but the findings show that charter schools are influencing
districts to make changes in the way they conduct their district
operations and the educational programs they provide.

The remainder of this report describes the methodology and findings.
Section II provides an overview of the methodology and the districts
that were part of the sample. Section III describes the way charter
schools have affected the districts in the areas of budget, district
operations, and educational offerings. Sections IV and V analyze how and
why local and state conditions as well as district leaders' perceptions
of challenge and opportunity influence districts to change. Finally,
section VI illustrates how districts responded to charter schools
through vignettes examining the specific conditions and responses of
several districts.

**Section II. Methodology**

This report is one product of the National Study of Charter Schools.
Data from the broader Study helped frame the research design and methods
for our analysis of the ways charter schools affect school districts.
This section provides an overview of the methodology of the broader
national study, specifically describes the methodology for this report,
and raises important methodological issues that should be considered
when interpreting the results of our research.

For 4 years, the National Study of Charter Schools conducted a yearly
telephone survey of all operational charter schools. The survey provided
broad information about charter schools, including reasons why they were
founded and general characteristics of their educational programs, and
the students, families, and teachers that choose them. The Study also
had a qualitative component in which the research team made multiple
visits to 91 charter schools in 10 states over 4 years. This fieldwork
included interviews and focus groups with teachers, administrators,
parents, students, and wherever possible governing board members,
community members, and interest group representatives. The charter
schools selected for fieldwork were chosen in a stratified random
process from all charter schools operational for at least 1 year at the
time of our first fieldwork visit.[^10] Though the fieldwork sample is
not representative of all charter schools, basic demographic
characteristics of the schools in the fieldwork sample are similar to
those of the characteristics of all charter schools.[^11]

This portion of the Study focused on the impact of charter schools on
districts in 5 of the 10 states where the National Study conducted
fieldwork---Arizona, California, Colorado, Massachusetts, and Michigan.
These states were chosen specifically to reflect the variation in state
policy contexts. Within states, districts were chosen to include schools
with a range of key characteristics: size of the school, grade levels of
the students, urbanicity, and other student characteristics. Of the 91
schools chosen for fieldwork, 64 were located in 51 districts in the 5
states. Exhibit 1 shows the number of districts in this Study in each of
the 5 states, the total number of charter schools in those districts,
and the total number of charter schools in each state.

Staff gathered information for this report in three ways: First, over
the course of the broader National Study, staff visited 64 charter
schools in the 5 states on several occasions. The last visits were
conducted between October 1998 and May 1999. These field visits provided
data from which the Study team could gain an understanding of district
context, the charter schools' staff perception of their relationship
with the district, as well as the types of issues the charter schools
faced in each of the districts. Of the 51 districts, 49 are represented
in this report---2 districts declined to participate in the Study.
Second, Study staff conducted 2-- to 3--day visits in 14 of the 49
districts. During the site visits, staff interviewed between three and
five key district administrators (including the superintendent) and
community leaders. Staff also read newspaper coverage of charter schools
in the local newspapers and interviewed the reporter on the education
desk to track the kind of coverage the local press has given charter
schools' impact on the district.[^12] Study staff used a common
interview protocol as well as probes relevant to the district context.
Third, in the remaining 35 districts, staff conducted hour-long
telephone interviews with at least one district administrator (most
often the superintendent) and a newspaper reporter or local educational
analyst. The questionnaire developed for the telephone interview was an
abbreviated version of the interview protocol used during district site
visits. As with in-person interviews, staff probed areas relevant to
district context.

Exhibit 1\
Number of Districts and Charter Schools in the Study States

  --------------- ------------------- ------------------- -------------------
  **State**       **Number of         **Number of charter **Total number of
                  districts\          schools in the      charter schools in
                  in the study**      study's             each study
                                      districts**[^13]    state**[^14]

  Arizona         12                  126                 180

  California      16                  65                  145

  Colorado        4                   20                  60

  Massachusetts   8                   17                  34

  Michigan        9                   67                  132

  **Total**       **49**              **274**             **551**
  --------------- ------------------- ------------------- -------------------

District interviewees were asked about their perception of charter
schools and the effect that charter schools were having on specific
district functions and decisions related to enrollment, finances,
facilities, personnel, relationships with parents, district services,
and educational services. Staff triangulated information from
interviewees and written sources to increase reliability. For some
effects, district leaders said charter schools were the primary or sole
reason that the district made the operational or educational change(s).
For other effects, administrators reported that charter schools worked
in conjunction with the district's educational agenda and/or state
educational policies to promote district change. In the coding and
analysis, the Study considered each of these as "effects" or "impacts"
of charter schools, but throughout the report, the differences between
charter schools as the identified stimulant for change and charter
schools as a contributing reason for change are highlighted in the
discussion.

It is important to keep in mind several methodological issues when
interpreting the results of this report. This research represents the
perspectives of district leaders at a particular point in time. The
Study does not attempt to determine if what changes made by districts
represent what is "good" or "bad" from the perspective of the larger
educational system. In this report, "district leaders" refers primarily
to district superintendents. In a few cases, superintendents were not
available to participate in our Study and the survey information comes
from another high-level district administrator, such as a deputy
superintendent.

The effects that charter schools have on districts vary over time. The
impact of charter schools and responses of districts differ depending on
whether the charter school just started or has been operating for a
number of years.[^15] Charter schools in the Study districts had been
operating for between 2 ½ years and 5 ½ years. This Study does not
explore changes over time; rather it focuses on the perceptions of
district leaders at the time of our interviews in the spring of 1999.
Therefore, our results reflect a particular cross-section of time and
will likely change as new charter schools open and relationships with
existing charter schools evolve.

This report is based on the perceptions of district leaders. An analysis
of the responses of district leaders revealed the key factors, described
in this report, that chiefly influence the nature of charter school
impacts on school districts---state conditions and laws,
charter-granting authority, and enrollment trends.

In the districts the team visited, it was possible to test the validity
of our information by drawing on multiple district and community
perspectives as well as collecting documentary evidence. In the
districts surveyed by telephone, the team members typically spoke with
the superintendent and a newspaper reporter who had covered charter
schools. While information was drawn from multiple sources for
reliability, this exploratory research is not attempting to determine
causality, rather the attempt is to examine changes that district
leaders attributed to charter schools. In some cases, district leaders
viewed changes attributable to charter schools as highly negative or
positive. For example, one superintendent felt that reducing his central
office and transferring more responsibility to his school principals was
a negative impact of charter schools. The readers of this report may
view these changes and others made by districts differently.

**Section III. The "Ripple" Effect of Charter Schools on Districts**

###### Charter schools affected districts in different ways. While leaders in approximately one-half of the districts in this Study perceived budget impact resulting from charter schools, all districts reported that they had changed the way they conducted their operations and more than half changed aspects of the education they offered in district schools. This section describes the changes in district budget, operations, and educational offerings that district leaders attributed to the presence of charter schools. 

**A. District Budget**

The Study team asked district leaders, either in an in-person or a
telephone interview, whether and how charters schools had affected their
district budget.[^16] Respondents were given the choices of positive,
negative, or no impact. Exhibit 2 shows that an almost equal percentage
of districts reported that charter schools had a negative fiscal impact
(45 percent) as those that reported no impact on the district budget (47
percent). In 8 percent of districts, district leaders perceived that
charter schools had a positive fiscal effect. In such districts, savings
on capital costs were perceived to more than offset the loss of
enrollment-based revenues.

![](media/image1.wmf)**Exhibit 2\
Impact of Charter Schools on District Budget (N=49)**

In nearly one-half of the districts, district leaders said that the
existence of charter schools in their community had not affected their
budget. In some cases, charter schools had the same financial
relationship with the district as district noncharter schools, producing
a neutral effect. In other districts reporting no impact, district
leaders felt charter schools had not affected them because only a small
number of students had left district schools to attend charter
schools.[^17]

In contrast, administrators in 45 percent of districts in this Study
reported that charter schools had a negative impact on their budget.
Some of these superintendents felt that any reduction in funding
associated with students transferring from district schools to charter
schools negatively affected their budgets. In other districts,
administrators reported that they were forced to make "tough" budget
cuts that affected their district operations. Some district leaders, for
example, attributed downsizing their central offices, laying off staff,
closing a school, and/or having facilities under capacity at least in
part to charter schools.

District leaders in 8 percent of the districts felt that charter schools
had a positive effect on their budget because the charter schools
alleviated the expense of building new schools to house their growing
student population. This report further explores reasons for particular
perceptions of charter impact on the districts' budgets in section IV.

###### B. District Operations 

Charter schools affected each of the 49 districts in this Study's sample
in at least one area of district operations[^18]---every district in
this Study changed the way it conducted its business and/or operations
in response to charter schools. In 90 percent of the districts, leaders
indicated they made changes in multiple areas of their district's
operations in response to charter schools.[^19] Exhibit 3 summarizes the
percentage of districts affected by charter schools in each of the five
broad areas the Study used to categorize impact on district
operations---central office operations, accountability and autonomy,
facilities, public relations and parent involvement, and school-level
staffing.

In exhibit 4, the categories and percentages in bold type are related to
the categories and percentages in exhibit 3. These figures indicate the
percentage of districts where interviewees reported one or more areas of
impact within each of the five broad categories of district operations.
Under each broad category, exhibit 4 also shows the percentage of
districts that reported the specific effects of charter schools, as
described below.

######## Central office operations

In nearly all districts, the presence of charter schools had an effect
on central office operations (94 percent). Most commonly, district
administrators began to track students that left for and returned from
charter schools---75 percent of districts reported tracking activities.
In most districts (65 percent), interviewees reported that central
office workload had increased due to charter--related activities (e.g.,
renewal hearings, ongoing assistance with charter school
implementation). Interviewees in roughly one-quarter of all districts
(27 percent) reported that they changed their central office services.
While few districts reported that they were slower to provide service as
a result of reduction in staff or staff hours, most indicated they
expanded their bus routes or improved the quality or speed of delivery
of services to district schools. One district, for example, improved its
media and library services for all schools after a charter conversion
school contracted with a private vendor that offered superior equipment.
Slightly more than 1 in 10 districts in the Study downsized their
central offices in response to decreasing revenues, which they
attributed at least in part to the presence of charter schools.

**Exhibit 3\
Areas of Change in District Operations (N=49)**

![](media/image2.wmf)

Exhibit 4\
The Impact of Charter Schools on District Operations (N=49)

+-----------------------------------------------+----------------------+
| Area of impact on district operations         | Percentage of        |
|                                               | districts            |
| *(number in parenthesis equals number of      |                      |
| districts reporting impact)*                  |                      |
+-----------------------------------------------+----------------------+
|                                               |                      |
+-----------------------------------------------+----------------------+
| Central office operations                     | 93.9                 |
+-----------------------------------------------+----------------------+
| Tracked students (37)                         | 75.5                 |
+-----------------------------------------------+----------------------+
| Increased central office workload (32)        | 65.3                 |
+-----------------------------------------------+----------------------+
| Changed central office services (13)          | 26.5                 |
+-----------------------------------------------+----------------------+
| Down-sized central office (5)                 | 10.2                 |
+-----------------------------------------------+----------------------+
| Accountability and autonomy                   | 77.6                 |
+-----------------------------------------------+----------------------+
| Compared student achievement with charters    | 71.4                 |
| (35)                                          |                      |
+-----------------------------------------------+----------------------+
| Increased attention to test scores in         | 34.7                 |
| district schools (17)                         |                      |
+-----------------------------------------------+----------------------+
| Increased accountability (10)                 | 20.4                 |
+-----------------------------------------------+----------------------+
| Increased autonomy: site-based management (6) | 12.2                 |
+-----------------------------------------------+----------------------+
| Facilities                                    | 61.2                 |
+-----------------------------------------------+----------------------+
| Decreased enrollment pressure (17)            | 34.7                 |
+-----------------------------------------------+----------------------+
| Operating under capacity or closed schools    | 24.5                 |
| (12)                                          |                      |
+-----------------------------------------------+----------------------+
| Increased class sizes (4)                     | 8.1                  |
+-----------------------------------------------+----------------------+
| Decreased class sizes (3)                     | 6.2                  |
+-----------------------------------------------+----------------------+
| Public relations and parent involvement       | 61.2                 |
+-----------------------------------------------+----------------------+
| Increased customer service (22)               | 44.9                 |
+-----------------------------------------------+----------------------+
| Increased marketing and public relations (20) | 40.8                 |
+-----------------------------------------------+----------------------+
| Increased communication with parents (19)     | 38.8                 |
+-----------------------------------------------+----------------------+
| Promoting parent involvement (10)             | 20.4                 |
+-----------------------------------------------+----------------------+
| School-level staffing                         | 28.6                 |
+-----------------------------------------------+----------------------+
| Staff layoffs (8)                             | 16.3                 |
+-----------------------------------------------+----------------------+
| Changed staffing patterns (8)                 | 16.3                 |
+-----------------------------------------------+----------------------+
| Changed hiring practices (3)                  | 6.1                  |
+-----------------------------------------------+----------------------+

######## Accountability and autonomy

###### Often in combination with state policies promoting accountability, charter schools affected accountability and autonomy in more than three-quarters of the districts in this Study (78 percent). In more than 7 out of 10 districts (71 percent), leaders said they tracked the results of district-- and/or state--mandated assessments for students in charter schools and compared the achievement of students in district schools with students in charter schools. Moving beyond comparing scores, district leaders in more than one-third of the total districts (35 percent) reported monitoring their district schools test scores more closely in response to charter  

###### 

###### schools.[^20] In one in five districts in the sample (20 percent), district administrators described charter schools as a lever for districts to increase accountability for student achievement in district schools. One superintendent, for example, reported that he planned to put district schools on probation if they scored lower than the state average or local charter schools on their statewide accountability assessment. Another district was piloting an accountability system originally developed by local charter schools for use in all district schools. Approximately 12 percent of districts promoted site-based decisionmaking as a result of charter school autonomy and decisionmaking practices. 

######## Facilities

Nearly two-thirds of all districts reported that charter schools had
affected their facilities (61 percent). In 35 percent of the total
districts, administrators reported that charter schools had relieved
overcrowding or the pressure to construct new facilities caused by an
increasing student population. On the other hand, administrators in 25
percent of the districts reported that since charter schools opened in
their districts, they were operating district schools under capacity or
were forced to close schools. In four districts (8 percent), budgetary
cutbacks forced the district to reduce the number of teaching positions
and, with fewer teachers, to increase class sizes. Approximately 6
percent of the districts decreased their class sizes in response to
charter schools. One superintendent, for example, lowered class sizes in
district schools to match those in a local charter school in order to
"level the playing field."

######## Public relations and parent involvement

Nearly two-thirds of the districts reported that charter schools
affected their public relations and parent involvement activities (61
percent). Leaders in these districts referred to parents as "customers,"
and not only described efforts to satisfy their current but also
potential parents as a result of charter schools in their districts.
Nearly half of the districts increased their emphasis on customer
service (45 percent)---administrators reported they were becoming more
responsive to parents, and many districts began surveying parents to
determine their level of satisfaction, or began to use existing survey
data to address parent needs and concerns. Often in conjunction with
customer service activities, nearly 40 percent of districts increased
their focus on communication with parents or changed their methods of
communication with current and prospective parents and community
members. More than one-third of the districts in the sample increased
their marketing efforts and/or hired staff to manage public relations
activities (41 percent). In most cases, marketing and public relations
involved introducing an advertising campaign or publishing new brochures
to inform parents of district programs. Districts' customer service,
communication, and marketing activities were aimed at inducing students
and families to return, join, or remain in the district schools. One in
five districts reported an increased focus on parent involvement (20
percent) and had expanded their district-wide or school-based parent
involvement programs.

######## School-level staffing

Slightly more that one-quarter of districts (29 percent) described
changes in staffing at district schools as a result of charter schools
opening. The effects on school-level staffing included both reductions
in the number of staff, as well as changes in staff roles that may have
been a result of staff layoffs. In some districts, the need to terminate
staff was minimized because of teacher attrition and/or increased demand
for teachers as a result of state-mandated class size reduction
programs. In 8 districts (16 percent), interviewees reported that the
district had to lay off teachers when charter schools opened. In 16
percent of the districts, charter schools prompted administrators to
change school-level staffing patterns. For example, some districts
implemented team teaching or added administrative duties to teachers'
roles. In 6 percent of the districts, administrators reported that
hiring practices changed to involve school-level stakeholders in the
hiring of teachers and school administrators.

###### District Education

Nearly two-thirds of the districts (61 percent) said they made changes
in their educational offerings in response to charter schools. They
formed new specialty schools, implemented new educational programs,
and/or changed organizational structures in existing schools.[^21] As
shown in exhibit 5, almost two-fifths of all districts changed one of
these areas of education (39 percent) and 22 percent made changes in
several areas.[^22] Six percent of districts created both new specialty
schools and new programs in existing schools, 12 percent of the
districts offered new programs and altered organizational structures in
district schools, and 4 percent of districts that made changes in
education described changes in all three areas. More specifically, the
following are examples of the types of educational changes that
districts made in the three broad categories.

**Exhibit 5\
Single and Multiple Areas of Change in District Education (N=49)**

![](media/image3.wmf)

######## New programs in existing schools

Nearly one-half of the districts (49 percent) implemented at least one
new educational program in existing district schools in response to
charter schools[^23]; in slightly more than half of the districts that
implemented new educational programs, this was the only area of
educational change. In the remaining half of districts, administrators
also reported creating new specialty schools, changing organizational
structures in district schools, or both.

The types of new educational programs varied widely. All-day or
extended-day kindergarten classes were the most common new educational
programs. Several districts reintroduced special classes like music and
art, developed programs for gifted students, started programs for
at-risk youth, and/or implemented after-school programs. Other districts
introduced character education or a specialized curriculum. Most of
these district changes replicated programs offered by the charter
schools.

######## New specialty schools

One in five districts in this Study responded to charter schools by
creating new specialty schools---in one-half of the districts, this was
the only educational change and in the remaining half, the district
changed one or more other aspects of their educational offerings.[^24]
Most frequently, districts that created new specialty schools did so in
response to similar programs at charter schools. For example, several
districts opened "back to basics" schools while other districts offered
new options for students on either the high or low end of the academic
spectrum---one district created a school for gifted students while
another opened a new school for dropouts. Another district created
multiple charter-like pilot schools to implement a variety of
educational philosophies.

Four superintendents reported that they---in collaboration with parents,
teachers, community, and business leaders---were involved in the
creation of a new charter school in their districts. In these cases,
rather than responding to the charter schools in their communities,
these districts took advantage of the opportunities provided by the
charter laws in their states to specifically create new, autonomous,
specialty schools. One district, for example, created a laboratory
school in order to test out innovative educational strategies for
district schools. In one district, the charter school---or new specialty
school---was the only educational change; in the remaining four
districts, the charter-as-specialty school was implemented in
combination with new programs and/or new structures.

######## New organizational structures

Administrators in 18 percent of the districts reported that they changed
school structures, generally in combination with introducing new
educational programs in district schools, in response to charter schools
in their district.[^25] Some districts instituted multiaged classrooms
to promote a more developmental approach to education; others adopted
block scheduling to allow for extended learning time in core subjects.
Several districts attempted to make their schools more student-friendly
and nurturing. One district, for example, divided a large elementary
school into smaller "families"; another district adopted a student
advisory system whereby each student was assigned to a staff member to
monitor their social and academic progress. A district with primarily
year-round schools changed to a traditional school year calendar in some
of its schools after parents reported that they particularly liked the
traditional calendar in the charter school where they were transferring
their children.

**D. Summary**

Charter schools *have* affected districts' educational systems. Leaders
in every district in the Study reported that charter schools had
affected their district's budget, operations, and/or educational
offerings. Some district leaders felt that charter schools had negative
effects. In extreme cases, these leaders reported that charter schools
negatively impacted their budgets and at least in part, prompted them to
downsize their district offices, lay off staff, and/or close a school.
Other district leaders felt that charter schools had impacted them
positively by acting as a pressure release for student overcrowding. In
response to charter schools, some districts made promising changes.
Operationally, these districts reported improving the quality or speed
of central office services, decreasing their class sizes, increasing
their focus on accountability and test scores, emphasizing customer
service and parent communication, and adding parent involvement
programs. Educationally, they created new specialty schools, programs,
and organizational structures. The following sections explore the
conditions under which districts are affected by charter schools in the
areas of budget, operations, and education.

**Section IV. State and Local Conditions that Influence\
How Charter Schools Impact Districts**

Each state's charter legislation was created and enacted for varying
reasons and under unique circumstances. To date, 37 states (including
the District of Columbia) have passed charter legislation; state laws
reflect differences in what the charter law allows and limits. The 5
states in the Study were chosen because they had a range in what the
charter law allows, and these differences have implications for the
implementation and impact of charter schools in the state.

Further, each district exists in its own context defined by its
demographic, geographic, political, economic conditions, as well as the
district's educational reform history and current efforts to reform.
This context sets a tone for how charter schools are viewed. In
analyzing the areas where charter schools had an impact on districts, it
is apparent that some patterns in the data can be traced back to and
partly explained by differences both in state charter law and in local
conditions.

A. State Conditions and Differences in Charter Law

State charter laws differ in the emphasis they place on the role of
charter schools as a means to create competitive pressures for other
public schools, to provide additional choices for at-risk students
and/or schools, and to serve as models for other public schools. State
charter laws vary in the degree to which they limit the numbers and
types of charter schools, who can grant charters, the degree of autonomy
granted charter schools, the type of accountability required of charter
schools, and other areas.[^26] States with more restrictions may have
fewer, less autonomous charter schools, whereas states with fewer
restrictions may have more charter schools. (See exhibit 6, for the key
dimensions of charter legislation in the Study's states.)

State differences in charter law play out in state differences in the
impact of charter schools on districts' budget, operations, and
education. The Study found that states with similarly constructed
charter laws perceived similar impacts. Michigan and Arizona, for
example, have charter laws that are similar on several dimensions. In
both states, charter schools can be newly created, or conversions from
public or private schools. In both states, districts as well as other
entities can grant charters,[^27] and an unlimited number of charter
schools are allowed statewide. The Study found that district leaders in
these two states reported similar impacts---often they reported that the
presence of charter schools had affected their districts negatively and
leaders felt the districts were in competition with the charter schools.

The Colorado and California charter laws are similar to each other but
different from the Michigan and Arizona laws. In both Colorado and
California, the district is the only charter granting entity allowed and
in both states, no private school conversions are allowed. While both
states allow public school conversions, the majority of charter schools
in Colorado are newly created while nearly half of charter schools in
California are public school conversions.[^28] Funding to charter
schools flows through the district, and the district and charter schools
negotiate the amount of funding that the school receives and which
services the district provides to the charter school.[^29] Most district
leaders in both Colorado and California described charter schools
positively and tended to report more positive responses to charter
schools. Most districts regarded charter schools as a choice; few
districts cited negative effects of charter schools on the district.

Exhibit 6\
Key Dimensions of Charter Legislation in the Study States (September
1999)

+-----------+-------------------+---+------+---+-------+-------+--------------+
| ### State | ### Who           | # |      |   |       |       | **Number of  |
|           | can grant charter | # |      |   |       |       | charter      |
|           |                   | # |      |   |       |       | schools      |
|           |                   | # |      |   |       |       | allowed**    |
|           |                   |   |      |   |       |       |              |
|           |                   | C |      |   |       |       |              |
|           |                   | h |      |   |       |       |              |
|           |                   | a |      |   |       |       |              |
|           |                   | r |      |   |       |       |              |
|           |                   | t |      |   |       |       |              |
|           |                   | e |      |   |       |       |              |
|           |                   | r |      |   |       |       |              |
|           |                   |   |      |   |       |       |              |
|           |                   | c |      |   |       |       |              |
|           |                   | r |      |   |       |       |              |
|           |                   | e |      |   |       |       |              |
|           |                   | a |      |   |       |       |              |
|           |                   | t |      |   |       |       |              |
|           |                   | i |      |   |       |       |              |
|           |                   | o |      |   |       |       |              |
|           |                   | n |      |   |       |       |              |
|           |                   |   |      |   |       |       |              |
|           |                   | s |      |   |       |       |              |
|           |                   | t |      |   |       |       |              |
|           |                   | a |      |   |       |       |              |
|           |                   | t |      |   |       |       |              |
|           |                   | u |      |   |       |       |              |
|           |                   | s |      |   |       |       |              |
+-----------+-------------------+---+------+---+-------+-------+--------------+
|           |                   | * |      | * |       | **Pr  |              |
|           |                   | * |      | * |       | e-exi |              |
|           |                   | N |      | P |       | sting |              |
|           |                   | e |      | r |       | priv  |              |
|           |                   | w |      | e |       | ate** |              |
|           |                   | l |      | - |       |       |              |
|           |                   | y |      | e |       |       |              |
|           |                   | c |      | x |       |       |              |
|           |                   | r |      | i |       |       |              |
|           |                   | e |      | s |       |       |              |
|           |                   | a |      | t |       |       |              |
|           |                   | t |      | i |       |       |              |
|           |                   | e |      | n |       |       |              |
|           |                   | d |      | g |       |       |              |
|           |                   | * |      | p |       |       |              |
|           |                   | * |      | u |       |       |              |
|           |                   |   |      | b |       |       |              |
|           |                   |   |      | l |       |       |              |
|           |                   |   |      | i |       |       |              |
|           |                   |   |      | c |       |       |              |
|           |                   |   |      | * |       |       |              |
|           |                   |   |      | * |       |       |              |
+-----------+-------------------+---+------+---+-------+-------+--------------+
| **        | Local boards,     | Y |      | Y |       | Yes   | No limit     |
| Arizona** | State board, and  | e |      | e |       |       |              |
|           | State charter     | s |      | s |       |       |              |
|           | board             |   |      |   |       |       |              |
+-----------+-------------------+---+------+---+-------+-------+--------------+
| **Cal     | Local boards and  | Y |      | Y |       | No    | 250 in 1998, |
| ifornia** | county boards or  | e |      | e |       |       | an           |
|           | state board if    | s |      | s |       |       | additional   |
|           | granted through   |   |      |   |       |       |              |
|           | appeal            |   |      |   |       |       | > 100        |
|           |                   |   |      |   |       |       | > annually   |
+-----------+-------------------+---+------+---+-------+-------+--------------+
| **C       | Local boards +    | Y |      | Y |       | No    | No limit     |
| olorado** | appeals[^30]      | e |      | e |       |       |              |
|           |                   | s |      | s |       |       |              |
+-----------+-------------------+---+------+---+-------+-------+--------------+
| **Massac  | Local boards for  |   | Yes  |   | Yes   | No    | 50           |
| husetts** | conversions and   |   |      |   |       |       |              |
|           | State board for   |   |      |   |       |       |              |
|           | newly             |   |      |   |       |       |              |
|           | created[^31]      |   |      |   |       |       |              |
+-----------+-------------------+---+------+---+-------+-------+--------------+
| **M       | Local boards and  |   | Yes  |   | Yes   | Yes   | No limit     |
| ichigan** | IHEs              |   |      |   |       |       |              |
+-----------+-------------------+---+------+---+-------+-------+--------------+

Massachusetts takes a more cautious approach to the creation of charter
schools than the other four states in this Study. Massachusetts charter
law limits the total number of charter schools allowed statewide.[^32]
Like Colorado and California, Massachusetts charter law allows only
newly created and public school conversions, though, unlike these two
states, the district can only grant charters for conversion schools. For
conversion schools, the district monitors the school's implementation of
their programs and is responsible for holding schools accountable for
meeting their outcomes. Applications for newly created schools are made
directly to the State Department of Education, where staff evaluate them
carefully and support their implementation and hold them accountable for
student results. Massachusetts districts in the sample were divided in
their opinion of charter schools (half of the districts viewed charter
schools positively and half viewed them negatively).

Despite these state differences, the local context in which the charter
law is interpreted and implemented can have as much to do with the
impact of charter schools as the law itself. The number of sample
districts in each state was too small to distinguish the effect of state
legislation from the effect of local interpretation and implementation.
One such example of these local differences is in the area of charter
granting.[^33] Since the district is the only charter granting entity
allowed, all of the charter schools in Colorado and California are
granted by the district. However, in Michigan and Arizona, where both
the district and other charter granting entities are allowed to grant
charters, the district granted charters in 14 percent of districts in
the two states. In Massachusetts, the legislation allows about
three-quarters of charters to be granted by the state.

B. Charter Granting and the Impact of Charter Schools on District
Budget, Operations, and Education ­

Exhibit 7 displays the impact of charter schools on district budgets,
operations, and educational services. The exhibit differentiates the
impact of charter schools on districts where the district is the only
charter granting entity from districts that have charter schools granted
by other entities. The latter group also includes districts where both
the district and other entities granted charters in the district---in 3
districts both the district and other entities granted charters in the
district, and in 26 districts, all of the charter schools were granted
by entities other than the district. In part because of state charter
legislation that defines who can grant charters, all districts in
Massachusetts, Arizona, and Michigan are in this combined category, and
all districts in Colorado and California were in the "district only"
category. While it is possible that some districts in Arizona, Michigan,
and Massachusetts could be grouped into the first category (district
only), no district in our Study in any of these three states was the
only charter granting entity.

Exhibit 7\
The Impact of Charter Schools on Budget, District Operations,\
and District Education by Charter Granting Entity (N=49)

+----------------------------------+--------------+--------------------+
| Area of impact                   | Charter      |                    |
|                                  | granting     |                    |
| *(number in parenthesis equals   | entity       |                    |
| number of districts reporting    |              |                    |
| impact)*                         |              |                    |
+----------------------------------+--------------+--------------------+
|                                  | Charters     | Charters granted   |
|                                  | granted by   | by other entities: |
|                                  |              | district did not   |
|                                  | district     | grant charter      |
|                                  | only (n=20)  | (n=26) or was not  |
|                                  |              | the only charter   |
|                                  |              | granting entity    |
|                                  |              | (n=3)              |
+----------------------------------+--------------+--------------------+
|                                  | *(percent of |                    |
|                                  | districts by |                    |
|                                  | charter      |                    |
|                                  | granting     |                    |
|                                  | entity)*     |                    |
+----------------------------------+--------------+--------------------+
| Impact on district budget        |              |                    |
+----------------------------------+--------------+--------------------+
| No effect on budget (23)         | 60.0         | 37.9               |
+----------------------------------+--------------+--------------------+
| Negative effect on budget (22)   | 35.0         | 51.7               |
+----------------------------------+--------------+--------------------+
| Positive effect on budget (4)    | 5.0          | 10.3               |
+----------------------------------+--------------+--------------------+
| Impact on facilities and staff   |              |                    |
+----------------------------------+--------------+--------------------+
| Staff layoffs (8)                | 15.0         | 17.2               |
+----------------------------------+--------------+--------------------+
| Down-sized central office (5)    | 10.0         | 10.3               |
+----------------------------------+--------------+--------------------+
| Operating under capacity or      | 20.0         | 27.6               |
| closed schools (12)              |              |                    |
+----------------------------------+--------------+--------------------+
| Increased class sizes (4)        | 5.0          | 10.3               |
+----------------------------------+--------------+--------------------+
| Decreased class sizes (3)        | 15.0         | 0.0                |
+----------------------------------+--------------+--------------------+
| Decreased enrollment pressure    | 30.0         | 37.9               |
| (17)                             |              |                    |
+----------------------------------+--------------+--------------------+
| Other effects on district        |              |                    |
| operations                       |              |                    |
+----------------------------------+--------------+--------------------+
| Increased central office         | 95.0         | 44.8               |
| workload (32)                    |              |                    |
+----------------------------------+--------------+--------------------+
| Changed central office services  | 40.0         | 17.2               |
| (13)                             |              |                    |
+----------------------------------+--------------+--------------------+
| Increased accountability (10)    | 25.0         | 17.2               |
+----------------------------------+--------------+--------------------+
| Increased attention to test      | 25.0         | 41.4               |
| scores in district schools (17)  |              |                    |
+----------------------------------+--------------+--------------------+
| Compared achievement with        | 85.0         | 62.1               |
| charters (35)                    |              |                    |
+----------------------------------+--------------+--------------------+
| Increased autonomy: site based   | 20.0         | 6.9                |
| management (6)                   |              |                    |
+----------------------------------+--------------+--------------------+
| Increased marketing and public   | 35.0         | 44.8               |
| relations (20)                   |              |                    |
+----------------------------------+--------------+--------------------+
| Increased communication with     | 35.0         | 41.4               |
| parents (19)                     |              |                    |
+----------------------------------+--------------+--------------------+
| Improved customer service (22)   | 40.0         | 48.3               |
+----------------------------------+--------------+--------------------+
| Promoted parent involvement (10) | 30.0         | 13.8               |
+----------------------------------+--------------+--------------------+
| Changed hiring practices (3)     | 5.0          | 6.9                |
+----------------------------------+--------------+--------------------+
| Changed staffing arrangements    | 15.0         | 17.2               |
| (8)                              |              |                    |
+----------------------------------+--------------+--------------------+
| Impact on district education     |              |                    |
+----------------------------------+--------------+--------------------+
| Created new educational programs | 40.0         | 55.2               |
| (24)                             |              |                    |
+----------------------------------+--------------+--------------------+
| Opened new schools (10)          | 15.0         | 24.1               |
+----------------------------------+--------------+--------------------+
| Changed organizational structure | 25.0         | 13.8               |
| (9)                              |              |                    |
+----------------------------------+--------------+--------------------+

The previous discussion distinguished between the five study states
based on the entity that granted the charters. In our analysis of other
factors that may differentiate states' charter laws, the Study found
that actual charter granting entity (as opposed to charter granting
entity allowed) was the most meaningful feature by which to analyze
differences between districts in our study states. So as not to
oversimplify the complexity of state charter laws, for the remainder of
this section and section V, the analysis and discussion will focus on
differences by charter granting entity rather than by state.

Exhibit 7 displays the percentage of districts in each charter granting
category reporting impact in each area. The second column shows the
percentage of districts that granted charters (where the district is the
only charter granting entity) that reported an impact of charter schools
on budget, facilities, staffing, and other areas of district operations,
and district education. The third column shows the percentage of the
districts in the category where other entities granted charters that
reported impact in these areas. The next pages contain a discussion of
these data in greater detail. For ease of discussion, the remainder of
the report refers to the first category as "charters granted by district
only" and the second category as "charters granted by other entities."

######## Charter granting and the financial impact of charter schools

Some districts in every state reported a negative impact on the budget
due to charter schools. Differences in the finance structure and the way
funds flow to charters affected the likelihood that districts viewed
charter schools as having a negative, neutral, or positive impact on
district budgets. (See exhibit 8 for a summary of funding differences in
the five states.) The type of impact is also related to whether or not
the district was the charter granting entity. Districts with charter
schools granted by other entities were more likely to report that
charter schools had a negative impact on the district budget than
districts that were the only charter granting entity. As shown in
exhibit 7, more than half (52 percent) of districts with charter schools
granted by other entities said that charter schools had a negative
impact on the budget. This compares to 35 percent of districts that were
the only charter granting entity. On the other hand, a majority of
districts that were the only charter granting entity (60 percent)
reported no impact of charter schools whereas less than 38 percent of
districts with charters granted by another entity reported no financial
impact.

Exhibit 8\
Summary of Funding Differences in the Study States

  ------------------- ------------------- ------------------- ------------------
  **State**           **Flow of funding   **Charters contract **State
                      from state**        services from       reimbursement
                                          district**          program to
                                                              districts**

  **Arizona**         Directly to charter Not common          None

  **California**      Through district to Negotiated; many    None
                      charter. Beginning  conversion charters 
                      in 1999, charter    have a dependent    
                      schools may receive relationship with   
                      funds directly from district and        
                      state. Districts    financial           
                      cannot charge the   arrangement is like 
                      school more than    that of district    
                      the actual cost of  schools             
                      oversight.                              

  **Colorado**        Through district to Negotiated          None
                      charter. Until                          
                      1999, minimum of 80                     
                      % of per pupil                          
                      operating revenue                       
                      (PPOR) to reach                         
                      charter school. In                      
                      1999, increased to                      
                      a minimum of 95% of                     
                      PPOR.                                   

  **Massachusetts**   Directly to charter Not common          State fully
                      school                                  reimburses
                                                              districts below
                                                              foundation level;
                                                              partially
                                                              reimburses
                                                              districts at or
                                                              above foundation
                                                              level

  **Michigan**        Directly to charter Not common          None
                      school                                  
  ------------------- ------------------- ------------------- ------------------

Districts in Michigan and Arizona were likely to report a negative
budget impact as a result of charter schools. Of the 9 districts in
Michigan in the Study, leaders in 6 districts reported a negative fiscal
impact from charter schools, and in Arizona, leaders in 6 of the 12
districts reported a negative fiscal impact resulting from charter
schools. Most districts in these states did not grant charters, so when
a student chose to attend a charter school, the per pupil funding
associated with that student left the district.[^34] District
administrators often described negative budget impact in terms of a
simple calculation: the estimated number of students who left district
schools to enroll in charter schools multiplied by the per pupil funding
equaled the revenue that was "lost" from the district budget. An
alternate calculation would be that the district's fixed costs (e.g.,
facilities costs and debt maintenance) remained constant when students
transferred to charter schools, the district's variable costs (e.g., the
cost of materials and supplies for that student and, depending on the
number of students who moved from district schools to charter schools,
the cost of one or more teachers) decreased.

Of the eight Massachusetts districts in our study, three reported
negative budget impact and five reported no impact on the budget from
charter schools. The state's reimbursement plan in Massachusetts reduces
the possibility of a negative effect when students chose charter
schools. The plan fully reimburses districts that are below the state's
foundation level[^35] and partially reimburses districts that are at or
above the state's foundation level. Most district administrators in
Massachusetts---all of those that received full reimbursement for the
per pupil funding that followed students to charter schools---reported
that charter schools did not negatively impact their budget because of
the state reimbursement plan. District leaders who reported negative
budget impact either only received partial reimbursement for students
moving to charter schools, or felt the current funding formula was
unfair and believed that they were receiving lower overall funding
levels as a result of charter schools.[^36] Several district
administrators in Massachusetts expressed concern over the fiscal impact
of charter schools in the future because of recently enacted legislation
that phases out the state's reimbursements for charter students.[^37]

On the other hand, districts in Colorado and California, as sole charter
granting entities, negotiated charter school funding and reported that
they strongly suggested (and sometimes required) that charter schools
purchase services from the district, including legal, purchasing,
payroll, accounting, or insurance.[^38] In these states, the district's
budget is not necessarily affected when a student chooses a newly
created charter school or remains in a district charter conversion
school because, to varying degrees, the district can recover some of its
fixed costs through services purchased by the charter schools. In
California, charter schools often have a dependent relationship with the
district, especially those that are converted from regular public
schools.[^39] In these cases, the districts negotiate with the charter
schools as to what services they provide and at what cost. From a
financial standpoint, the districts have a similar relationship with
charter schools as they have with district schools. More than half of
the districts that reported no impact of charter schools on district
budget were located in Colorado and California.

######## Charter granting and the impact of charter schools on district operations 

Districts that were the only charter granting entity (Colorado and
California districts)[^40] reported different types of effects on
district operations than districts with charter schools granted by other
entities (Michigan, Arizona, and Massachusetts). Specifically, districts
with charter schools granted by other entities were more likely than
districts that were the only charter granting entity to increase their
attention to test scores in district schools. They were also slightly
more likely to report operating under capacity or closing schools,
advertising and waging public relations campaigns, increasing efforts to
communicate with parents, and becoming more customer service oriented
because of charter schools.

Districts that were the only charter granting entity were much more
likely than districts with charter schools granted by other entities to
report an increase in central administrators' workload---often this
increase in workload was associated with their role as a charter
granting entity. These districts were also much more likely to change
their central office services and compare achievement of students in
charter schools with students in district schools as a result of charter
schools. Districts that granted charters were slightly more likely to
increase their focus on accountability for student performance and more
likely to promote parent involvement activities as a result of charter
schools than were districts that did not grant charter schools.

######## Charter granting and the impact of charter schools on district educational programs and structures

As shown in exhibit 7, half of the districts that were the only charter
granting entities made changes in one or more areas of education;
whereas, more than two-thirds of districts with charter schools granted
by other entities reported charter-related changes in one or more areas
of education. These areas included creating new schools, implementing
new programs, and/or altering structures in existing schools.
Specifically, districts with charter schools granted by other entities
were more likely than districts that were the only charter granting
entity to implement new educational programs in existing schools and
slightly more likely to create new specialty schools. Districts that
were the only charter granting entity were slightly more likely than
districts with charter schools granted by other entities to alter
organizational structures in existing schools. Within each area of
educational change, the types of programs, schools, and structures
differed based on charter granting category. The next section explores
these differences.

C. Local Conditions and the Impact of Charter Schools on District
Budget, Operations, and Education

Local conditions help explain the districts' responses to charter
schools. The Study found that a district's enrollment trend partially
explained patterns in charter impact on districts. [^41] These patterns
in enrollment trend and charter impact on budget, district operations,
and district education are displayed in exhibits 9 and 10. District size
(small, medium, or large) also explained perceived impact on district
budget.

######## District size and financial impact of charter schools

The Study found that reports of budget impact and district size are
significantly correlated---larger districts are more likely to report no
impact while smaller districts are more likely to report negative impact
on district budget.[^42] This finding is not surprising---even a small
number of students moving to charter schools from a small district
(those enrolling 5,000 or fewer students) might have a significant
impact on the district's budget while that same number of students
leaving a large district would have a much smaller impact on a large
district (enrolling 20,000 or more students). Sixty percent of small
districts reported that charter schools had negatively impacted their
district budget and one-third (33 percent) reported no financial impact
as a result of charter schools. Of all medium-sized districts half
reported negative budget impact while nearly 40 percent reported no
financial impact as a result of charter schools. In large districts, 70
percent of districts reported no impact from charter schools on their
district budget.[^43]

District size was not related to enrollment trend. Rather the Study
found that enrollment trend, regardless of whether the district was
small, medium, or large, explained patterns in both perceived budgetary
impact and changes in district operations and district education that
district leaders attributed to charter schools.

######## Enrollment trend and the financial impact of charter schools

Exhibit 9 displays the financial impact of charter schools in districts
with increasing, stable, and decreasing enrollment. Percentages in the
exhibit reflect the percentage of districts in each category of
enrollment trend that reported positive, negative, or neutral budget
impact as a result of charter schools. The Study found that reports of
budget impact and district enrollment trend are related. More
specifically, every district with declining enrollment reported that
charter schools had a negative impact on the district budget. Fewer
districts with stable enrollment and even fewer districts with
increasing enrollment reported negative budget impact. Two-thirds of
districts with stable enrollment (67 percent) and one-quarter of
districts with increasing enrollment (26 percent) said charter schools
had a negative impact on the district budget. Conversely, districts with
an increasing enrollment trend were the only districts that reported a
positive impact on the budget as a result of charter schools. Districts
with increasing enrollment most often reported no budget impact (62
percent). Fewer stable districts reported no budget impact (33 percent),
and all of the districts with decreasing enrollment reported some impact
on the budget from charter schools. In general, districts reported a
negative impact where the establishment of a charter school exacerbated
an already difficult financial situation.

Exhibit 9\
Enrollment Trend and the Impact of Charter Schools on District Budget
(N=49)

+--------------------+---------------+---------------+---------------+
| **Enrollment       | **Impact on   |               |               |
| trend**            | Budget**      |               |               |
|                    |               |               |               |
| *(number in        |               |               |               |
| parenthesis equals |               |               |               |
| number of          |               |               |               |
| districts in each  |               |               |               |
| category)*         |               |               |               |
+--------------------+---------------+---------------+---------------+
|                    | Neutral       | Positive      | Negative      |
+--------------------+---------------+---------------+---------------+
|                    | *(read        |               |               |
|                    | percent       |               |               |
|                    | across)*      |               |               |
+--------------------+---------------+---------------+---------------+
| > increasing       | 61.8          | 11.8          | 26.4          |
| > (n=34)           |               |               |               |
+--------------------+---------------+---------------+---------------+
| > stable (n=6)     | 33.3          | 0.0           | 66.7          |
+--------------------+---------------+---------------+---------------+
| > decreasing (n=9) | 0.0           | 0.0           | 100.0         |
+--------------------+---------------+---------------+---------------+

Exhibit 10 combines districts with stable and decreasing enrollment and
compares them to districts with increasing enrollment. For each area of
district operations or district education, the exhibit shows the
percentage of districts with stable or decreasing enrollment and the
percentage of districts with increasing enrollment where administrators
reported impact from charter schools.

Exhibit 10\
The Impact of Charter Schools on District Operations\
and District Education by Enrollment Trend (N=49)

  ------------------------------------ ---------------- ------------------
  *(number in parenthesis equals       Enrollment trend 
  number of districts reporting                         
  impact)*                                              

                                       Declining or\    Increasing (n=34)
                                       stable (n=15)    

                                       *(percent of     
                                       enrollment       
                                       category)*       

  Impact on facilities and staff                        

  Staff layoffs (8)                    46.7             2.9

  Down-sized central office (5)        26.6             2.9

  Operating under capacity or closed   46.7             14.7
  schools (12)                                          

  Increased class sizes (4)            26.7             0.0

  Decreased class sizes (3)            6.7              5.9

  Decreased enrollment pressure (17)   0.0              50.0

  Impact on other district operations                   

  Increased central office workload    73.5             46.7
  (32)                                                  

  Changed central office services (13) 40.0             20.6

  Increased accountability (10)        20.0             20.6

  Increased attention to test scores   40.0             32.4
  in district schools (17)                              

  Compared achievement with charters   66.7             73.5
  (35)                                                  

  Increased autonomy: site based       6.7              14.7
  management (6)                                        

  Marketing and public relations (20)  60.0             32.4

  Increased communication with parents 53.3             32.4
  (19)                                                  

  Increased customer service (22)      60.0             38.2

  Promoted parent involvement (10)     26.7             17.6

  Changed hiring practices (3)         6.7              5.8

  Changed staffing arrangements (8)    46.7             2.9

  Impact on district education                          

  Created new educational programs     60.0             44.1
  (24)                                                  

  Opened new schools (10)              13.3             23.5

  Changed organizational structure (9) 20.0             17.6
  ------------------------------------ ---------------- ------------------

######## Enrollment trend and the impact of charter schools on district operations

In nearly every area of district operations, districts with declining or
stable enrollment were more likely to report that charter schools had an
impact, and that these impacts were perceived as negative by district
leaders.[^44] There were several notable differences in district
leaders' reports of changes in district operations. These differences
were a product of efforts to compensate for declining enrollment trends
caused by or exacerbated by students choosing charter schools,
specifically in the areas of staffing and facilities. Districts with
declining enrollment were more likely than districts with increasing or
stable enrollment to report reductions in staffing, which district
leaders attributed to the presence of charter schools and perceived as
negative. One superintendent reported that his district terminated one
teacher's aide in each of the district schools and another district
terminated 10 teachers as a result of their decreasing enrollment trends
exacerbated by the presence of charter schools. Other districts did not
actually have to lay off staff; instead, staff reductions were
accomplished through teacher attrition and retirement.

Several district leaders reported that they would have laid off teachers
had it not been for class size reduction programs through which they
reassigned teachers. Districts with declining enrollment were more
likely to report that schools were operating under-capacity, closing
schools, and---with fewer staff---increasing class sizes, as well.

Districts with a declining or stable enrollment trend were more likely
than districts with increasing enrollment to make changes in central
office services or staffing arrangements as a result of charter schools.
These districts were more likely to report having to down-size their
central office, accomplished by laying off central office staff,
reducing administrators' hours, or placing a freeze on administrator
hiring because of charter schools in their district. One district, for
example, did not fill the retiring Associate Superintendent's position
and instead distributed those responsibilities to school principals,
which the superintendent and principals perceived as negative.

Districts with a declining or stable enrollment trend were more likely
to increase advertising of their educational programs and focus on
serving the needs of their parents and students (customer service,
parent involvement, and communication) as a result of charter schools
than were districts with increasing enrollment trends. These districts
with declining or stable enrollment were interested in retaining their
current student populations and attracting those students attending the
charter school(s) in their community.

District leaders in a third of the districts reported that the presence
of charter schools along with legislative emphasis on accountability
caused them to increase their focus on student achievement. Most
districts began to compare the achievement of students in district
schools with charter school students' achievement. A greater percentage
of districts with increasing enrollment than districts with declining or
stable enrollment began to compare the achievement of students in
charter schools with students in their district schools. Districts with
increasing enrollment were also more likely to adopt or increase
site-based decisionmaking in their district schools as a result of
charter school practices.

######## Enrollment trend and the impact of charter schools on district education

Districts with declining or stable enrollment were more likely than
districts with increasing enrollment to implement new educational
programs or new structures in existing schools. Conversely, districts
with increasing enrollment were more likely than districts with
declining or stable enrollment to create new specialty schools. As in
the case of district charter granting, the types of schools, programs,
and structures differed between districts with increasing enrollment and
districts with stable or decreasing enrollment. These differences will
be explored in the next section.

**D. Summary**

State approaches to charter laws differ. In particular, charter granting
authority is correlated with different effects. Massachusetts, Colorado,
and California have only one charter granting authority. In contrast,
Arizona and Michigan have multiple charter granting entities. Districts
in states with multiple charter granting entities were more likely to
perceive that charter schools had a negative impact on their budget and
were more likely to begin marketing, improve customer service, increase
communication with parents, and adopt new educational programs than
districts in states with only one charter granting entity. In contrast,
districts in states with only one charter granting entity were more
likely to report that charter schools had no impact on their budgets,
increased their central office workload, and prompted them to compare
their achievement scores with those of the charter schools.

Two other local factors also explain patterns in the impact of charter
schools on districts---enrollment trend and district size. The majority
of small districts, and every district with declining enrollment,
reported that charter schools had a negative impact on district budgets.
Patterns in the impact on charter school districts were even more
pronounced when charter granting entities and enrollment trends were
considered together. All districts in the Study with declining
enrollment and with charters granted by other entities reported that
charter schools had a negative impact on the budget. These districts
spoke of charter schools as a challenge to the district and often
responded competitively by increasing their marketing efforts and
implementing educational programs that would directly compete with
charter school programs. The Study also found that districts with
increasing enrollment, and where the district was the only charter
granting entity, often reported that charter schools had a neutral or
positive impact on the budget. Districts in this group described charter
schools in more positive terms, most often reporting that charter
schools created additional choice options for parents and students. In
some of these districts, leaders even spoke of charter schools as an
opportunity to support widespread district reform. The Study terms these
locally determined perceptions---challenge and opportunity---as the
district orientation toward the charter phenomenon.

Section V. District Orientation and the Effect of Charter Schools\
on District Operations and District Education

District orientation toward charter schools---whether districts viewed
charter schools as a challenge (creating competition) or as an
opportunity (offering choice or promoting innovation)---appears to be
both cause and effect. District orientation presages how some districts
respond to charter schools while also often being a product of the
effects that charter schools have on districts. Whether a district comes
to view charter schools as an opportunity or a challenge, its
orientation sets in motion decisions, policies, and changes that
ultimately affect the district in many ways. The district's orientation
and how it responds to charter schools is related to local conditions as
well as differences in state charter laws.

A. What Districts Mean by Challenge and Opportunity

Study staff listened carefully to the language interviewees used to
describe charter schools and the effect that charter schools had on
their district. District leaders also were asked to summarize how they
perceived the intent and the effect of the charter school phenomenon.
Districts were nearly evenly divided in their orientation---49 percent
viewed charter schools primarily as a challenge and 51 percent viewed
charter schools primarily as an opportunity.

*The challenge of charter schools*. Leaders in 24 of the 49 districts
(49 percent) described charter schools as a challenge to their district.
Many of the leaders reported that charter schools created competition
between the district or district schools, and charter schools.
Competition in this context suggested a rivalry, where the district and
district schools were actively seeking to regain or keep the students
for which charter schools were also vying. In other contexts, districts
said that charters were a future threat or challenge, but they were not
actively competing at present. Often, charter schools made barely
manageable or difficult district conditions worse---interviewees
attributed fiscal and operational cutbacks to the presence of charter
schools. Some districts reported that charter schools were a vehicle for
additional choice, but the overwhelming perception was that the
increased choice posed a challenge, even a threat.

*Charter schools as an opportunity*. Leaders in the remaining 25 of the
49 districts (51 percent) described charter schools in more positive
terms---as an opportunity. In some districts, district leaders reported
that charter schools created additional choice options for students and
parents, and that the leaders supported choice. In these districts,
leaders reported that the charter schools appealed to parents who wanted
a new and different way to become involved, catered to at-risk or other
special populations of students, or relieved the immediate pressure from
district growth. In other districts, charter schools represented an
impetus for change in the district. Some district leaders said they
utilized the charter schools and charter outcomes as standards of
comparison and encouraged district schools to re-evaluate their
educational programs and relationships with students and parents to
better meet their stakeholders' needs. Other districts described the
charter schools as a potential source from which to learn, or as a
"laboratory for innovation." A handful of districts embraced charter
schools as part of a district reform effort and encouraged the growth of
charter schools in their district. These districts described charter
schools as both potential laboratories for innovation and as levers for
district change. All of these were opportunities---for parents or for
the district---to better reach educational goals and meet the needs of
students.

B. Charter Authority and Enrollment Factors

Charter granting, enrollment trend, and district size are related to
district orientation. Districts in declining enrollment with charter
schools granted by other entities were more likely to view charter
schools as a challenge. Conversely, districts with increasing
enrollment, especially those that were the only charter granting entity,
were more likely to view charter schools as an opportunity---as a choice
for parents or as a catalyst for reform. Exhibit 11 shows the percentage
of districts in each enrollment trend, size, and charter granting
category that reportedly viewed charter schools as a challenge versus an
opportunity. The data show patterns that might logically explain why
some districts came to view charter schools as a threat or competition
(challenge), and other districts embraced them. Leaders in every
district with declining enrollment and leaders in two-thirds (67
percent) of small-sized districts reported that they viewed charter
schools as a challenge---charter schools posed a threat or were
competition. Similarly, leaders in nearly two-thirds of districts (62
percent) where entities other than the district granted the charter
viewed charter schools as a challenge. On the other hand, district

Exhibit 11\
Charter Authority and Enrollment Factors Affecting District Orientation
(N=49)

  ---------------------------------------- --------------- ---------------
  Factors affecting orientation\           District        
  *(number in parenthesis equals number of orientation     
  districts in each category)*                             

                                           Challenge       Opportunity

                                           *(read percent  
                                           across)*        

  Enrollment trend                                         

  Declining enrollment (9)                 100.0           0.0

  Stable enrollment (6)                    66.7            33.3

  Increasing enrollment (34)               32.4            67.6

  District size                                            

  Small, up to 4,999 students (15)         66.7            33.3

  Medium, between 5,000 and 19,999         55.6            44.4
  students (18)                                            

  Large, greater than 20,000 students (16) 25.0            75.0

  Charter granting entity[^45]                             

  District only (20)                       30.0            70.0

  Other entities (29)                      62.1            37.9
  ---------------------------------------- --------------- ---------------

administrators that viewed charter schools as an opportunity---as
another choice, as a laboratory for innovation, or as a means to promote
system-wide change---were more likely to come from large districts,
districts with increasing enrollment, or districts that granted the
charter.

These results are more compelling when enrollment and charter granting
are analyzed together. Exhibit 12 shows the percentage of districts in
each combined enrollment-charter granting category that viewed charter
schools as a challenge versus an opportunity.

Exhibit 12\
Combined Effect of Charter Authority and Enrollment on District
Orientation (N=49)

+------------+-------------------+--------+-------------+-------------+
| Combined   |                   | Number | District    |             |
| factors    |                   | of     | orientation |             |
| affecting  |                   | dis    |             |             |
| o          |                   | tricts |             |             |
| rientation |                   |        |             |             |
+------------+-------------------+--------+-------------+-------------+
| Enrollment | Charter-          |        | Challenge   | Opportunity |
| trend      |                   |        |             |             |
|            | granting entity   |        |             |             |
+------------+-------------------+--------+-------------+-------------+
|            |                   |        | *(read      |             |
|            |                   |        | percent     |             |
|            |                   |        | across)*    |             |
+------------+-------------------+--------+-------------+-------------+
| Declining  | District only     | 3      | 100.0       | 0.0         |
+------------+-------------------+--------+-------------+-------------+
|            | Other entities    | 6      | 100.0       | 0.0         |
+------------+-------------------+--------+-------------+-------------+
| Stable     | District only     | 1      | 100.0       | 0.0         |
+------------+-------------------+--------+-------------+-------------+
|            | Other entities    | 5      | 60.0        | 40.0        |
+------------+-------------------+--------+-------------+-------------+
| Increasing | District only     | 16     | 12.5        | 87.5        |
+------------+-------------------+--------+-------------+-------------+
|            | Other entities    | 18     | 50.0        | 50.0        |
+------------+-------------------+--------+-------------+-------------+

Each of the nine districts with declining enrollment viewed charter
schools as a challenge and perceived charter schools as having a
negative effect on the district budget. For these districts, declining
enrollment and negative fiscal impacts created a sense of competition
with charter schools. These districts felt that they needed to compete
with charter schools to sustain their student populations and economic
foundations. While based on a small number of schools, it appears that
declining enrollment is a more powerful predictor of districts'
orientation towards charter schools than charter granting authority.

In districts with stable enrollment, district leaders reported mixed
views of charter schools. In four of the districts with stable
enrollment, district leaders viewed charter schools as a future threat
and a challenge, and reported effects similar to those reported by
leaders in districts with declining enrollment. The one district with
stable enrollment where the district was the only charter granting
entity viewed the charter school as a challenge and three of the five
districts with stable enrollment with charter schools granted by other
entities also viewed charter schools as a challenge. Most districts with
stable enrollment also reported a negative impact on the district budget
resulting from the presence of charter schools.

In districts with increasing enrollment, charter-granting authority is
important in explaining patterns in district orientation. Of the 34
districts with an increasing enrollment trend, two-thirds viewed charter
schools as an opportunity. Further, 14 of the 16 districts that were
both the only charter granting entity and had increasing enrollment
viewed charter schools as an opportunity (88 percent). Conversely, only
half of the districts that had both charter schools granted by other
entities and had increasing enrollment viewed charter schools as an
opportunity (9 of the 18 districts were in this category). The other
nine districts viewed charter schools as a challenge, and five of the
nine districts reported charter schools had a negative impact on their
district's budget.

We found that district leaders' perception of charter effects on
district budget---and subsequent decisions related to budget---was also
related to district orientation. Exhibit 13 shows the percentage of
districts reporting that charter schools had an impact on district
budget, facilities, and staffing and viewed charter schools as a
challenge versus an opportunity. District leaders reported that charter
schools posed a threat and a challenge when students' choosing charter
schools had a negative impact on the budget and forced the district to
down-size or were otherwise negatively affected in the areas of
facilities and staffing. All but one district that was operating under
capacity or had to close schools, and every district that downsized the
central office, laid off staff, or increased class sizes as a result of
charter schools felt charter schools posed a challenge. On the other
hand, of the 17 districts that viewed charter schools as a pressure
release, all of which had increasing enrollment, nearly three-quarters
(72 percent) also viewed charter schools as an opportunity.

C. District Orientation and Changes in District Operations and District
Education

Districts are affected by charter schools, and they make changes in
district operations and district education when charter schools are
present. The types of changes in district operations and district
education differed depending on whether charter schools were viewed as a
challenge or an opportunity. Exhibit 14 shows the percentage of
districts in each orientation category where district leaders reported
that charter schools had an impact on specific areas of district
operations and district education.

Exhibit 13\
District Orientation and Impact of Charter Schools on\
Budget, Facilities, and Staffing (N=49)

+----------------------------------+-----------------+-----------------+
| Charter school impact on...      | District        |                 |
|                                  | orientation     |                 |
| *(number in parenthesis equals   |                 |                 |
| number of districts reporting    |                 |                 |
| impact)*                         |                 |                 |
+----------------------------------+-----------------+-----------------+
|                                  | Challenge       | Opportunity     |
+----------------------------------+-----------------+-----------------+
|                                  | *(read percent  |                 |
|                                  | across)*        |                 |
+----------------------------------+-----------------+-----------------+
| District budget                  |                 |                 |
+----------------------------------+-----------------+-----------------+
| Positive or no impact on budget  | 22.2            | 77.8            |
| (27)                             |                 |                 |
+----------------------------------+-----------------+-----------------+
| Negative impact on budget (22)   | 81.8            | 18.2            |
+----------------------------------+-----------------+-----------------+
| Facilities and staffing          |                 |                 |
+----------------------------------+-----------------+-----------------+
| Staff layoffs (8)                | 100.0           | 0.0             |
+----------------------------------+-----------------+-----------------+
| Down-sized central office (5)    | 100.0           | 0.0             |
+----------------------------------+-----------------+-----------------+
| Operating under capacity or      | 91.7            | 7.3             |
| closed schools (12)              |                 |                 |
+----------------------------------+-----------------+-----------------+
| Increased class sizes (4)        | 100.0           | 0.0             |
+----------------------------------+-----------------+-----------------+
| Decreased enrollment pressure    | 27.8            | 72.2            |
| (17)                             |                 |                 |
+----------------------------------+-----------------+-----------------+

*District orientation and changes in district operations*. Districts
reporting a challenge from charter schools most often increased their
public relations efforts. As shown in exhibit 14, nearly three-quarters
(71 percent) of districts that viewed charter schools as a challenge
increased their advertising, two-thirds (67 percent) increased their
focus on customer service, and more than half (54 percent) turned their
attention to improving their communication with parents. These efforts
were designed to win back students and families or entice enrolled
students not to leave. Fewer than a quarter of districts that felt
charter schools were an opportunity made changes in any aspect of their
public relations.

Exhibit 14\
District Orientation and District Change

+-----------------------------------+----------------+----------------+
| District changes in ...           | District       |                |
|                                   | orientation    |                |
| *(number in parenthesis equals    |                |                |
| number of districts reporting     |                |                |
| changes)*                         |                |                |
+-----------------------------------+----------------+----------------+
|                                   | Challenge      | Opportunity    |
|                                   | (n=24)         | (n=25)         |
+-----------------------------------+----------------+----------------+
|                                   | *(percent of   |                |
|                                   | orientation)*  |                |
+-----------------------------------+----------------+----------------+
| Central office operations         |                |                |
+-----------------------------------+----------------+----------------+
| > Increased central office        | 58.3           | 72.0           |
| > workload (32)                   |                |                |
+-----------------------------------+----------------+----------------+
| > Changed central office services | 33.3           | 20.0           |
| > (13)                            |                |                |
+-----------------------------------+----------------+----------------+
| Accountability and autonomy       |                |                |
+-----------------------------------+----------------+----------------+
| > Increased accountability (10)   | 25.0           | 16.0           |
+-----------------------------------+----------------+----------------+
| > Increased attention to test     | 45.8           | 24.0           |
| > scores (17)                     |                |                |
+-----------------------------------+----------------+----------------+
| > Compared achievement with       | 79.2           | 64.0           |
| > charters (35)                   |                |                |
+-----------------------------------+----------------+----------------+
| > Increased autonomy: site-based  | 8.4            | 16.0           |
| > management (6)                  |                |                |
+-----------------------------------+----------------+----------------+
| Public relations and parent       |                |                |
| involvement                       |                |                |
+-----------------------------------+----------------+----------------+
| Increased marketing and public    | 70.8           | 22.0           |
| relations (20)                    |                |                |
+-----------------------------------+----------------+----------------+
| > Increased communication with    | 54.2           | 24.0           |
| > parents (19)                    |                |                |
+-----------------------------------+----------------+----------------+
| > Increased customer service (22) | 66.6           | 24.0           |
+-----------------------------------+----------------+----------------+
| > Promoted parent involvement     | 25.0           | 16.0           |
| > (10)                            |                |                |
+-----------------------------------+----------------+----------------+
| School-level staffing             |                |                |
+-----------------------------------+----------------+----------------+
| > Changed hiring practices (3)    | 8.3            | 4.0            |
+-----------------------------------+----------------+----------------+
| > Changed staffing arrangements   | 29.2           | 4.0            |
| > (8)                             |                |                |
+-----------------------------------+----------------+----------------+
| District education                |                |                |
+-----------------------------------+----------------+----------------+
| > Created new educational         | 58.3           | 40.0           |
| > programs (24)                   |                |                |
+-----------------------------------+----------------+----------------+
| > Opened new schools (10)         | 25.0           | 16.0           |
+-----------------------------------+----------------+----------------+
| > Changed organizational          | 16.7           | 20.0           |
| > structure (9)                   |                |                |
+-----------------------------------+----------------+----------------+

*District orientation and changes in district education.* An almost
equal percentage of districts leaders from each group---those that
viewed charter schools as a challenge and those that viewed them as an
opportunity---altered organizational structures in existing schools. In
all districts reporting a challenge, the change was a direct result of
the presence of charter schools. In each of the districts where charter
schools were a choice or an opportunity, district leaders reported that
the new organizational structure was partly related to charter schools,
but also related to other forces at work in the district.

When district leaders viewed charter schools as a challenge rather than
an opportunity, however, the presence of charter schools was slightly
more likely to influence districts to create new specialty schools
and/or make changes in their educational services. Twenty-five percent
of districts that reported charter schools were a challenge as compared
to 16 percent of districts that reported charter schools were an
opportunity created new specialty schools. Further, nearly 60 percent of
districts where district leaders reported charter schools were a
challenge offered new educational programs, and 40 percent of districts
where leaders said charter schools were an opportunity also implemented
new educational programs.

The specific types of change and the reported reasons for making the
change in each type of educational service differed depending on whether
charter schools were viewed as a challenge or an opportunity. Districts
that were challenged by the presence of charter schools and created new
specialty schools or implemented new educational programs or structures
tended to do so in response to the actual or anticipated departure of
parents and students. For example, in one district, parents gave the
district an ultimatum, saying that they would create a new charter
school if the district did not create a gifted and talented choice
option in the district. Many challenged districts implemented programs,
structures, and new specialty schools that replicated charter school
programs. Several districts, for example, implemented an all-day
kindergarten, in order to induce parents to return, to stay in, or to
initially choose district schools. In other districts, administrators
reported that their districts were implementing programs that better met
the needs of at-risk students. Some districts implemented programs,
structures, and new schools that may or may not have been the same as
those offered in the charter school(s) but administrators reported that
charter schools were the impetus for such changes. In these districts,
administrators said that charter schools helped them to re-evaluate
their educational offerings and to look critically at why students and
parents were choosing charter schools, and to implement changes to
attract or retain students in the future. Challenged districts that
implemented changes in education also tended to increase their public
relations efforts.

Districts that viewed charter schools as an opportunity and made changes
in education tended to describe charter schools as a catalyst for
change---some were collaborating with charter school staff and others
viewed charter schools as an opportunity to learn. For example, three
districts that viewed charter schools as an opportunity were utilizing
charter school technology and the technological expertise of charter
school teachers and students to enhance use of computers in the district
schools. Another district collaborated with the charter school and was
able to offer the charter school's after school program to students in
district schools. Three other districts reported that the presence of
charter schools hastened the pace of district change already in
progress---administrators were already planning to implement multiage
classrooms, team teaching, or specialized educational programs.

Five districts that viewed charter schools as an opportunity
incorporated charter schools as part of a systemic reform effort. The
districts viewed charter schools as a tool to improve the district and
as a mechanism by which district schools could better meet student
needs. In these districts, the superintendent was instrumental in the
formation of the charter school and remained active in the
implementation of the charter. Superintendents in these districts
considered the charter schools as a lever for change in the district and
encouraged district schools to adopt charter-like practices or other
reforms, or to become charter schools in order to better meet student
needs.

D. Summary

The previous section showed that districts that had no role in charter
granting, were small in size, or had a decreasing enrollment trend were
most likely to report a negative fiscal impact from charter schools.
Most of these districts also reported changes in public relations,
district operations, and in implementation of educational programs and
structures related to attracting and retaining students. In this
section, not surprisingly, the Study found that these same districts are
most likely to report that charter schools were a threat or a challenge.
When such districts changed their operations and education---and most
did---they were actively competing with charter schools. They attempted
to entice families to stay or return by advertising district programs
and/or implementing new educational options often mirroring those found
in the charter school.

In contrast, the majority of districts with increasing enrollment and
those where the district was the only charter granting entity tended to
describe charter schools as an opportunity. Many of these districts did
not change their operations and offerings but rather viewed charter
schools as a new choice option. Other such districts used charter
schools to leverage change, to learn from, or to reinforce district
reforms.

The next section provides examples of districts that have made changes
in district operations and district education---fueled by the view of
opportunity or challenge, and the conditions and contexts that
influenced those perceptions.

**Section** **VI. Illustrations of District Responses to Charter
Schools**

This section presents vignettes of several study districts to illustrate
how charter granting status, enrollment trends, district size, and
orientation interact and mediate the way charter schools affect
districts' budgets, operations, and educational offerings. Given the
significant differences between districts that view charter schools as a
challenge versus opportunity, the Study uses orientation as a frame to
organize the vignettes.

A. Charter Schools as a Challenge

Nearly half of the districts in this Study viewed charter schools as a
challenge. These districts generally had declining or stable enrollment,
had charter schools granted by other entities, and had district leaders
who reported that charter schools had created competition in their
district. In some cases, this competition was active while in others it
loomed as a threat.

In the following example of a district with declining enrollment, the
superintendent felt that charter schools had a negative impact on the
district's budget. He described how charter schools created a
competitive atmosphere and the ways in which the district responded with
competitive operational and educational changes to entice students to
return to or remain in district schools. Like many other districts that
viewed charter schools as a challenge, and like other districts with
declining enrollment, this district was forced to make budget cuts which
resulted in what the superintendent described as negative impacts on
their central office, staffing, and facilities.

*Administrators in this multiracial, medium-sized urban district said
they "hated" and "were against" charter schools because they exacerbated
the district's declining enrollment, negatively impacted its budget,
heavily affected its operations and educational offerings, and created a
competitive challenge. This district has seen its family population age
as younger families moved out to its suburbs. For two decades, the
district experienced decreasing enrollment and anticipated that the
trend would continue. Charter schools accelerated the district's
enrollment decline by attracting a significant percentage of its
students. Four charter schools, serving approximately 1,500 students,
operated in the metropolitan area. The superintendent estimated that at
least 1,000 of these students, or more than 5 percent of the district's
total population, would otherwise have attended district schools.*

*While the superintendent acknowledged that the district no longer had
to educate the students who attended the charter schools, he reported
that the district faced a budget crisis as a result of the decrease in
revenue. The district attempted to track students who left for charter
schools and made budget projections based on those estimates. Due to
lack of reliable information, district budget projections included many
more students in district schools than actually attended. According to
the superintendent, the movement of students to charter schools created
an even greater hardship on district schools that were already operating
under capacity. As a result, the district laid off 10 teachers and
downsized the central office---increasing the workload for the remaining
staff, according to the superintendent. State class size reduction funds
and the retirement of district teachers mitigated the effect of charter
schools on the teacher layoffs.*

> *District administrators reported that the loss of students to charter
> schools and the resultant decrease in revenue to charter schools
> created a competitive education marketplace in the community. In order
> to recruit, retain, and induce students to return from charter school,
> the district increased its marketing efforts and its emphasis on
> customer service and parent satisfaction. The district developed an
> image boosting campaign and spent \$75,000 to broadcast its message in
> television, newspaper, and billboard advertisements. District leaders
> told both central office administrators and school staff that they
> needed to provide better customer service and have more contact with
> parents. The district also provided schools with more funding for
> parent and community outreach. In order to provide teachers with an
> incentive to keep students in district schools, the district developed
> a merit pay system based on student enrollment. If the district met
> its enrollment targets, teachers received a bonus; and if the district
> failed to meet its enrollment target, teachers would be penalized.*
>
> *The district also implemented educational programs to replicate the
> programs charter schools were offering. They created an all-day
> kindergarten program in direct response to a similar program in one of
> the charter schools. The superintendent said he hoped that if parents
> sent their children to district schools for kindergarten, they would
> be less likely to change schools in their elementary years. The
> district also reinstated music and arts programs in most of the
> district's elementary schools and added an honors program in its
> middle schools both in response to charter schools and to feedback
> from parent surveys.*

Not all districts that viewed charter schools as a challenge had a
declining enrollment trend. Two-thirds of districts with stable
enrollment and one-third of districts with increasing enrollment also
viewed charter schools as a challenge. In most of these districts, the
charter schools were granted by entities other than the district.
Administrators in these districts often did not have to downsize or lay
off staff, but they still viewed charter schools as a current or
potential threat. For example, one district leader stated, "We are aware
and mindful that charters are out there and our dollars are portable."
Most districts responded with competitive actions similar to the
previous example.

Two districts that viewed charter schools as a challenge had charter
schools granted by other entities as well as themselves. One district
had increasing enrollment and the other had stable enrollment. In both
districts, administrators were supportive of the charter schools they
granted but regarded those that they did not grant as a challenge. The
following vignette illustrates these dynamics and the competitive
changes that one district made.

> *This suburban, medium-sized district has stable student enrollment.
> District leaders reported being very supportive of the charter school
> they granted but were opposed to the charter school granted by another
> charter granting entity because it attracted students away from the
> district. The possibility of an additional charter school---also
> granted by another entity---opening in the district created the threat
> that the district would soon face declining student enrollment.*
>
> *Since the early 1980s, the district had an alternative school for
> students who were at-risk or who had dropped out of middle or high
> school. The district chartered the alternative school once its state
> charter law passed in order to make it easier to enroll students from
> other districts and increase the school's autonomy and educational
> flexibility. Charter status allowed the school to gain more visibility
> and increase in size. In contrast, another charter school opened in
> the district and recruited district students to attend. It enrolled
> 200 students, about one-third were from district schools and the
> remaining were from a parochial school that had closed. The
> superintendent reported that the second charter school had a negative
> financial impact. He said, "Oh yeah, that's \$1 million bucks of state
> aid we would have gotten. It's spreading an already thin budget even
> thinner." The loss of students exacerbated the degree to which some
> district schools were operating below their student capacity. The
> superintendent worried that if another charter school opened in town,
> they would have to close a district school.*
>
> *While only 79 students transferred to the charter school (or 1.3
> percent of the district's total student population), the
> superintendent reported that the primary effect of charter schools was
> competition: "Seventy-nine students could become 279 very quickly and
> as a result we're willing to fix anything that parents leave for, like
> scheduling or busing." The district took measures to entice students
> to return and to remain in district schools. The superintendent
> continued, "The charter school stole our students, we will steal them
> back." The district assigned an administrator in the central office to
> be in charge of marketing. This administrator tracked, surveyed, and
> visited the families of students moving to the charter school in order
> to understand why they were leaving the district schools. Based on
> this information, he created marketing brochures describing the
> district's virtues.*
>
> *As a direct result of charter schools, the district increased its
> emphasis on customer satisfaction. The superintendent reported, "We're
> better because of charters, I hate to say it, but we're more aware of
> the importance of what parents say and have become more
> customer-service oriented." Based on input from parents, the district
> implemented several new educational programs in their elementary
> schools. The district also encouraged team teaching and directed its
> elementary schools to divide the schools into smaller units or
> "families" as a way to increase the sense of community in the
> schools.*
>
> *The district remodeled school buildings and included parents in the
> hiring process for new principals. They began providing bus service to
> enable students to attend the school* *of their choice. In addition,
> the district improved the quality of its school lunch program. The
> district also increased schools' accountability for student
> achievement. District administrators began comparing the achievement
> of students in charter schools with students in the district schools
> from which they transferred and told school administrators that
> students in district schools were expected to outperform students in
> charter schools. District administrators created a new accountability
> system around this expectation.*

Only 6 districts (12 percent) in this Study both viewed charter schools
as a challenge and were the only charter granting entity in their
district. Four of these six districts had declining or stable
enrollment. Administrators in these four districts reported that they
were affected by and responded to charter schools in ways similar to the
district in the first example. In one case, the superintendent of a very
small district with stable enrollment said she felt "railroaded" into
granting the charter to a group of parents in the community. After the
charter school opened, the district was forced to lay off a teacher and
the superintendent had to take over as principal of the local high
school.

In contrast, the two districts with increasing enrollment that viewed
charter schools as a challenge said they were supportive of charter
schools when they granted the charters. These administrators felt that
the charter schools offered parents a valuable alternative. However,
they also expressed anxiety about the future. In these cases, charter
schools were described both as a choice for parents and a potential
challenge for the districts. The superintendent feared that charter
schools opening in neighboring districts would siphon away more of the
district's families and students. Thus, the potential threat of charter
schools caused these two districts that granted charters to view charter
schools more as a challenge than an opportunity.

B. Charter Schools as an Opportunity

Most often, district leaders who felt that charter schools were an
opportunity said that charter schools created additional school choice
options for parents who wanted to become more involved in schools or
were seeking different educational options for their students. Leaders
in some districts that viewed charters as an opportunity reported that
charter schools served to release pressure for the district's population
growth, and leaders in other districts said charter schools served as a
vehicle through which the districts could further their own reform
efforts.

More than one-half of districts that viewed charter schools as an
opportunity were the only charter granting entity, the remaining
districts had charter schools granted by other entities---nearly all of
these districts had increasing enrollment. Like many of the other
districts in this Study that saw charter schools as an opportunity, the
following example illustrates the dynamics of a district that reported
few effects of charter schools on district operations, made only limited
changes in district education, and primarily viewed charter schools as
another choice for parents.

*This growing district was supportive of charter schools, and while they
were not the charter granting entity in their district, district leaders
viewed charter schools as an opportunity to create additional choice and
relieve pressure from population growth in their community. Located in a
small city recently voted among the most livable cities in the country
by a national publication, the district operates 34 schools. Student
enrollment had grown over the previous 5 years, especially at the high
school level, and the district expected the trend to continue. Over the
previous 4 years, four charter schools had opened, serving approximately
500 students. The superintendent estimated that 400 of these students,
or 2.5 percent of the district's student population, would have
otherwise attended district schools. Despite the departure of these
students, the district's total enrollment continued to grow and the
district did not feel charter schools had a negative fiscal impact.*

> *The school board president reported that the district was initially
> "fearful" about the arrival of charter schools because they didn't
> know how many would open. This initial anxiety dissipated and the
> district became supportive of the district's charter schools when they
> relieved enrollment pressure at their over-crowded high schools and
> provided more choice to parents and students. The district was
> supportive of choice and, even before charters, offered parents
> several district choice options. The school board president said that
> the district viewed charter schools positively, as they viewed other
> non-district, private schools in the community. She added that there
> had always been a group of parents who sent their kids to non-district
> schools, "this will always be the case, and this is okay."*
>
> *District leaders did not view charter schools as a threat and the
> school board president said, "I can't say we've done anything to
> compete." A district administrator agreed that charter schools did not
> create a competitive environment, adding that this was a
> "curriculum-rich" district that had continued to grow. The only effect
> of charter schools on the district was that the district began to
> include parents into decisionmaking structures at the schools and in
> the central office. The board president and superintendent both said
> that they believed parents should be the driving force for change in
> the district. The superintendent felt that charter schools supported
> the district in their efforts to involve parents in school and
> district decisionmaking because parent involvement was also one of
> charter schools' focus areas. The board president said, "The old ways
> of communicating just don't cut it anymore" and looked to charter
> schools for new ways of involving parents.*

Five districts in this Study viewed charter schools as part of district
reform efforts. In contrast to districts that viewed charter schools as
another choice option, these districts tended to improve their central
office services and to create new schools, add new programs, and/or make
structural changes. These superintendents encouraged schools in their
district to convert to charter status if the associated increase in
autonomy made a difference in the school's ability to implement their
school's reform plans. The following vignette describes one such
district that viewed charter schools as a laboratory for innovation and
has integrated charter schools and the charter concept into its systemic
reform plans.

> *This growing, multiracial, large, suburban K-8 district viewed
> charter schools as an opportunity and incorporated them as central
> part of its systemic reform plans. Growing at the rate of three new
> schools a year, the district welcomed charter schools as a tool that
> district schools could use in their quest to improve student
> achievement, as pressure release valves for its population growth, and
> as additional educational choices for parents and students.*
>
> *The district granted all five charter schools that operated in the
> district. Four of these converted from regular district schools and
> one was newly created. The charter schools served nearly 3,000
> students, almost all of whom would have attended regular district
> schools. These students represented 13.3 percent of the district's
> population. Despite this seemingly high percentage, district
> administrators did not report that charter schools had a negative
> impact on its budget. Three of the five charter schools were
> financially "dependent" on the district and, thus, had a similar
> relationship with the district as regular district schools. The other
> two were fiscally independent, however, both were required to contract
> with the district for some of their services. The district's continued
> enrollment growth helped offset any decreases in operating revenue.*
>
> *Unsatisfied with test scores below the state's average, the
> superintendent gave district schools the autonomy to make key
> programmatic and staff decisions to best serve the needs of their
> students and increase student achievement. She supported this
> decentralization of power by adopting a service approach at the
> district's central office, she encouraging central office staff to
> adopt more of a coaching role with schools rather than a traditional
> administrative role. The superintendent inspired district schools to
> be innovative and promoted charter status as a tool that schools could
> use if they needed more autonomy to implement organizational or
> programmatic changes. One school for example, converted to charter
> status in order to move to a 4-5-6 multiaged classroom, a change that
> school personnel believed could not have been implemented without the
> charter.*
>
> *The district also viewed charter schools as catalysts for change in
> the district office. Several charter schools, for example, exercised
> their autonomy to purchase the some services from private vendors.
> This prompted the district to reassess its service delivery and
> improve the quality of its library/media and maintenance services.
> Through yearly reviews with the school board and weekly principals
> meetings (that include charter school directors), district schools and
> charter schools share information. As a result of charter schools'
> experimentation, the district implemented diversity training for its
> staff and piloted the use of electronic report cards and new hiring
> practices.*

The district had always been a supporter of parents' ability to choose
the public school where they wanted to send their children. Overcrowding
in the district, however, limited the reality of school choice. Charter
schools in the district helped relieve this strain of overcrowding
which, once again, enabled choice options in both district and charter
schools. One district school partnered with Edison (a private
corporation that operates charter schools in several states) and became
a charter school. Immediately, it expanded to serve more students. A
newly created charter school with an academically rigorous educational
program also opened in the district with space for several hundred
students offering parents an additional choice.

C. Summary

These vignettes highlight the major differences in charter school impact
on districts when charter granting, enrollment trend, size, and district
orientation interact. The Study found evidence that charter schools
serve as a choice option for families, create competitive education
marketplaces, and prompt the creation of laboratory schools. As
illustrated in the vignettes, the types of impacts that district leaders
attributed to charter schools varied depending on whether district
leaders viewed them as a challenge, or as an opportunity for choice,
reform, or laboratories for innovation.

**Section VII. Conclusion**

This Report began with the two questions that drove the Study's work:

-   *What changes have districts made in district operations and
    district education that they attribute to the presence of charter
    schools?*

-   *Under what conditions do charter schools affect change in district
    operations and district education?*

The answer to the first question is straightforward---every district in
our sample reported that charter schools affected their district in some
way. For some districts, charter schools served as a wake-up call,
clearly communicating to district staff that other educational options
exist and that the district must do a better job of meeting the needs of
students and parents. For other districts, charter schools were one of
several forces at work as part of a district vision to improve the
public education system. For yet another group of districts, charter
schools represented additional choices for parents and students. The
answer to the second question is more complex---the remainder of this
section addresses the conditions under which charter schools impact
district operations and education.

A. Influence of Local Conditions

While the research reported here is exploratory, the Study found
patterns that suggest that local conditions influence how districts
leader perceive charter schools. Whether or not the district is the
charter granting entity, district enrollment trends, and district size
influence the district's orientation toward charter schools, and in
turn, influence whether districts come to view charter schools as a
challenge or an opportunity. Districts in which charter schools were
granted by entities other than the district most often felt challenged
by charter schools operating within their boundaries. Every district in
our study with declining enrollment viewed charter schools as a
challenge and most of these districts felt they had to make budget cuts
as a result of charter schools---some downsized district offices and
others laid off teachers. The districts that had declining enrollment
*and did not grant charters* also introduced educational programs, began
marketing campaigns, and expanded customer service---changes that were
specifically designed to compete with charter schools for students.

B. Charter Schools as Challenge or Opportunity

The threat posed by charter schools was not the only force motivating
district change. Some districts that viewed charter schools as an
opportunity---most often districts that were the only charter granting
entity and had increasing enrollment---also made changes in district
operations and in educational services. While most such districts simply
viewed charter schools as an opportunity to offer an added choice option
for at-risk or dissatisfied students and made few changes, a handful of
districts in our study saw charter schools as a vehicle for advancing
reform. In these districts, administrators used charter schools in
conjunction with other forces to re-evaluate and change both the way the
district operated and the educational options it provided. Some
districts used charter schools as educational laboratories or used the
charter concept as a lever to promote systemic district reform.

It is not clear whether or to what degree each of these changes is an
improvement in education, as measured by increased student achievement
in the district, but it is clear that change is happening to varying
degrees in every district in the Study. Further research might
investigate whether changes associated with district orientation toward
charter schools leads to differential changes in student achievement.
When districts view charter schools as a challenge and respond
competitively with changes in district operations and district
educational services, do students benefit academically? Or do students
show greater improvement when districts view charter schools as an
opportunity and incorporate charter schools in their reform plans?
Further research might also explore whether the types of impacts that
districts report and districts' view of charter schools will change over
time as charter schools become more established.

C. Role of State Legislation and Political Context

Yet, the patterns of district response are very suggestive. Although
this report focused on the local level, each state's approach to charter
schools set the stage for district responses. Charter laws create an
opportunity for local people to pursue charter schools. Districts
respond both to the specifics of the charter schools and the broader
state context that establishes the rules under which charter schools can
be formed. In Arizona and Michigan, charter advocates have argued that
competition represents the ideal vehicle for reforming public education
and to implement that view, their laws establish multiple charter
granting bodies and allow for the operation of many charter schools.
Most Arizona and Michigan districts in our sample housed charter schools
that were granted by other entities---only 3 districts of the 21 Arizona
and Michigan districts in our sample chose to grant charter schools.
Based on the previous discussion, one would expect such non-charter
granting districts to respond competitively, and they did. Most
districts in Arizona and Michigan that were not the charter granting
entity viewed charter schools as a challenge and made educational and
operational changes as a result of the competitive pressure of charter
schools.

In contrast, most districts in California and Colorado, where charter
advocates promoted charters as a means of increasing educational choice
as well as to introduce some "healthy competition," charter laws limit
charter granting to districts. As one would predict of charter granting
districts, in both states, most districts reported that charter schools
were an opportunity---albeit to different degrees. Districts that viewed
charter schools as a choice for parents or as part of a larger reform
effort often said that charter schools were places from which the
district and district schools could learn, and most of those districts
made changes in their educational options and in areas of district
operations. Other districts supported charter schools as a choice
option, but leaders also said that charter schools promoted "healthy
competition" in district schools---a strategy they applauded. In their
view, charters represented a mechanism that would encourage district
schools to continuously re-evaluate their educational options and
relationships with parents in order to meet students' and parents'
needs.

Massachusetts offers a less straightforward pattern. In this state,
charter advocates argued that charter schools would promote the transfer
of innovation. While the law does not allow districts to grant charters
to newly created charter schools, it minimizes the negative fiscal
effects by limiting the number of charter schools to a small number (50
statewide) and initially reimburses districts for loss of revenue due to
student movement to charter schools. In Massachusetts, half of the
districts viewed charter schools as challenge and the other viewed
charter schools as an opportunity. Challenge here was a matter of
degree---no challenged Massachusetts district characterized any impacts
of charter schools on facilities or staffing as negative, and the
negative impact on budgets were more of a projection into the future
than a current issue.

While these patterns arise from experience with a limited number of
districts, they indicate the state's charter laws and political context
affect how charter schools impact district change. State laws seem to
influence district perceptions and set a tone for the way the charter
concept might be received. This finding alone has great implications for
policymakers who craft charter laws with the intent to affect the public
education system. The Study has shown ways that charter granting
entities might create charter schools as a competitive force, or create
an opportunity for added choice or district reform. As in Massachusetts,
charter laws that build in fiscal relief for districts can also
influence how districts come to view charter schools. In the end, local
conditions (such as district size and enrollment trends) reinforce
charter schools as a threat or competitive pressure, or make it easier
for districts to view charter schools as a choice for parents or to
embrace charter schools as part of their own reform plans. State
contextual differences influence the type of impact policymakers intend
to result from charter schools. These findings suggest that different
legislative provisions influence the impact of charter schools on
education in the district. If, for example, policymakers want to
encourage districts to learn from charter schools, to embrace charter
schools as a tool for reform, they might consider adopting policies that
provide relief for small districts and districts in declining enrollment
situations when charter schools are created. If, on the other hand,
policymakers want to apply competitive pressure to districts, they might
consider allowing multiple entities to grant charters.

Our research focused on a single aspect of state charter law as it
translates into local practice---charter-granting entity. Other research
might choose other aspects of state law and study the impact on local
practices. For example, the type of charter school(s) in the district,
the level of charter school autonomy, and staffing requirements are a
few areas where state laws affect district orientation and district
changes. A larger sample of states, and a larger sample of districts,
might reflect different state patterns resulting from other aspects of
state law.

In the end, whether viewed a challenge or an opportunity, regardless of
state, the Study found that districts are changing as a result of
charter schools. Indeed, this report provides some evidence to
substantiate the claims of charter advocates that charter schools may be
producing ripple effects beyond the schoolhouse doors. However, the
rapidly increasing number of charter schools and the propensity of
districts to respond by making operational and educational change
suggests that the ripple effect of charter schools will continue to
increase---perhaps eventually inducing broader, long lasting systemic
change.

**[Appendix]{.smallcaps}**

**Selected Survey Responses**

**[District Impact Study\
]{.smallcaps}Coded District Leader Interview Protocol**

1.  In what type of area is the district located?

> a\. Urban (15) 30.6
>
> b\. Suburban (16) 32.7
>
> c\. Small City ( 9) 18.4
>
> d\. Rural ( 9) 18.4

2.  What is the district's current student enrollment (98/99)?

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a.  Small (1-4999 students) (15) 30.6

b.  Medium (5,000-19,999 students) (18) 36.7

c.  Large (20,000-more students) (16) 32.7

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3.  How do the district's average test scores compare to the state's
    average (most recent year available [199)]{.underline}?

> a\. Above (18) 36.7
>
> b\. Within 5% (12) 24.5
>
> c\. Below (19) 38.8

5\. How many charter schools are in the district? (Total in all
districts)

########  Newly created 223 {#newly-created-223 .unnumbered}

########  Conversion public or private 51 {#conversion-public-or-private-51 .unnumbered}

########  Total charter schools in all districts 274 {#total-charter-schools-in-all-districts-274 .unnumbered}

# **Impacts of Charter Schools: Students and Enrollment**

6.  Has the *eligible* school age population in the district's
    attendance area increased, decreased or remained stable over the
    past 5 years (regardless of whether the students attend district
    schools or not)?

> a\. decreased ( 7) 14.3
>
> b\. No change ( 4) 8.2
>
> c\. increased (38) 77.6

Has the district's enrollment in non-charter district schools increased,
decreased, or remained stable over the past 5 years?

a.  a\. decreased ( 9) 18.4

> b\. no change ( 6) 12.2

b.  c\. increased (34) 69.4

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7.  Does the district track the number of students who choose charter
    schools from district schools? (34) 69.4

8.  Does the district conduct exit interviews or surveys of students who
    choose to attend charter schools? (15) 30.6

9.  Does the district track the numbers of students who return to
    district schools from charter schools? (26) 53.1

10. Is the impact on the district budget from students attending charter
    schools rather than district schools positive, negative or is there
    no budgetary impact?

> a\. positive ( 4) 8.2
>
> b\. negative (22) 44.9
>
> c\. no impact (23) 46.9

(For questions #11 - 40, percentages reflect district leaders who
answered "yes" and attributed that impact to charter schools)

# **Impact on Central Office Personnel and Services**

11. Have administrators from the central office left for charters? (5)
    10.2

12. Has there been an increase in central administrators' workload
    because of charter schools? (32) 65.3

13. Have you hired additional personnel at central office to deal with
    charter schools?

\(4\) 8.2

14. Does the district contract services to charter schools? (27) 55.1

15. Have you downsized the central office? (5) 10.2

16. Have there been changes in delivery of central office services to
    other schools in the district?

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(13) 26.5

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```
17. Has the district started busing service to schools that did not have
    that service before?

\(3\) 6.1

# **Impact on School Staff** 

18. Have teachers or principals left the district schools for
    charters? (27) 55.1

### 19. Have there been changes in staffing patterns within or across schools (e.g., teachers

###  taking on different roles, teaching configuration changes)? (8) 16.3

### Have teachers lost their jobs? (8) 16.3

19. Have there been changes in the hiring practices (e.g., certification
    requirements, involvement in hiring decisions, timeline for hiring,
    where/how staff are recruited, etc.... specify)?

> \(3\) 6.1

# **Impact on Facilities** 

20. Has the district closed any schools? (2) 4.2

21. Are schools operating under capacity? (10) 20.8

22. Has the district decreased class sizes? (3) 6.1

23. Has the district increased class sizes? (4) 8.1

24. Are charter schools helping to relieve district population
    growth? (17) 34.7

# **Impact on School Accountability and Autonomy** 

25. Has the district implemented a new or different system of
    accountability for its schools in the past few years? (6) 12.2

26. Does the district hold its schools more accountable for student
    performance now than it did several years ago? (7) 14.2

27. Has the district increased its attention to student achievement
    results in the past few years?

> \(17\) 34.7

28. Does the district analyze and compare district and charter school
    outcomes? (35) 71.4

29. Has the district implemented or increased school based
    decisionmaking? (6) 12.2

# **Impact on Public Relations and Parent Involvement**

30. Has the district created a position or hired additional staff whose
    responsibility is public relations? (10) 20.4

31. Has the district increased advertising of educational programs? (20)
    40.8

32. Has the district become more customer service oriented? (22) 44.9

33. Has the district or have district schools changed methods or
    frequency of communication with parents? (19) 38.8

34. Has the district or have district schools begun or increased
    surveying of parents about their satisfaction? (8) 16.4

35. Has the district or have district schools implemented programs to
    increase parental involvement in schools? (10) 20.4

# **Impact on Educational Programs and Structures and School Choice** 

36. Has the district added any district choice options in the past few
    years? (e.g., new specialty schools)? (10) 20.4

37. Has the district added any programs within existing schools in the
    past few years (e.g., gifted and talented, arts focus, early
    childhood program, full-day kindergarten etc.)? (24) 49.0

38. Has the district changed or implemented a particular school
    structure or organization in any of its schools in the past few
    years (multiaged classes, house structure, etc.)? (9) 18.4

# **Selected References**

Berman, P. (1998). *Charter schools: A partial and imperfect market
system of public education.* A paper prepared for "Education between
State and Civil Society."

Bierlen, L. & Mulholland, L. (1994). The promise of charter schools.
*Educational Leadership,* *52*(1), 34-40.

Chubb, J. and Moe, T. (1990). *Politics, markets, and America's
schools.* Washington, DC: The Brookings Institute.

Clune, W. and Witte, J., eds. (1990). *Choice and control in American
education. The practice of choice, decentralization, and school
restructuring,* vol. 1. Bristol, PA: The Falmer Press.

Fuhrman, S. (1994). Politics and systemic education reform, *CPRE Policy
Briefs*. Philadelphia: University of Pennsylvania, Consortium for Policy
Research in Education, 1-8.

Garn, G. (1998). The thinking behind Arizona's charter movement.
*Educational Leadership.* 56(2), 48-50.

Hill, P. (1996). The educational consequences of choice, *Phi Delta
Kappan*, *77*(10), 671-675

Hord, S. H. (April, 1996). Why systemic reform? *SEDLetter, 9*(2).

Kolderie, T. (1999). *What does it mean to ask: "Is 'charter schools'
working?"* Charter Friends National Network, 6 pp.

Kolderie, T. (1994). Charters: An invitation to change. *Educational
Leadership*, *52*(1), 36.

Lane, B. (1998). *Choice matters: Policy alternatives and implications
for charter schools.* Northwest Regional Educational Laboratory, 27
pages.

Manno, B., Finn, C., Bierlein, L., & Vanourek, G. (1998). How Charter
Schools Are Different: Lessons and Implications from a National Study.
*Phi Delta Kappan, 79*(7), 488.

Nathan, J. & Power, J. (1996). *Policy-makers' views on the charter
school movement*. Minneapolis: University of Minnesota, Hubert H.
Humphrey Institute of Public Affairs, Center for School Change.

NCREL (1997). *Charter schools: The challenge to public education*. New
Leaders for Tomorrow's Schools, online journal at
[www.ncrel.org/cscd](http://www.ncrel.org/cscd).

Rofes, E. (1998). *How are school districts responding to charter laws
and charter schools*? Berkeley, CA: University of California, Policy
Analysis for California Education.

Rosenblum and Brigham Associates (1998). *Innovation and Massachusetts
charter schools.* Boston: Massachusetts Department of Education.

RPP International (2001). *Charter laws and state theories of action: A
report of the National Study of Charter Schools*. Washington, DC: U.S.
Department of Education, Office of Educational Research and Improvement.

RPP International (2000). *The state of charter schools 2000.*
Washington, DC: U.S. Department of Education, Office of Educational
Research and Improvement.

RPP International (1999). *The state of charter schools 1999.*
Washington, DC: U.S. Department of Education, Office of Educational
Research and Improvement.

Traub, J. (1999). In theory: A school of your own. *New York Times*,
April 4, 1999 (www.nytimes.com/library/national/).

[^1]: Section II of this report contains a full discussion of how the
    districts were chosen.

[^2]: Another of the reports from the National Study of Charter Schools,
    *Charter laws and state theories of action*, includes a more
    detailed discussion of the provisions of charter legislation in each
    state.

[^3]: Bierlein and Mulholland (1994) conclude that "Perhaps more than
    most reforms, charter schools force educators to question the wisdom
    of conventional practices and may create the dynamics that will
    foster change within the entire school system."

[^4]: Hill, 1996; Kolderie, 1994; Manno, et al., 1998; Nathan & Power,
    1996.

[^5]: Throughout this report, as appropriate for verb or noun reference,
    the terms "impact," "affect," and "effect" are used synonymously.

[^6]: NCREL, 1997, *Charter schools: The challenge to public education*,
    New Leaders for Tomorrow's Schools. NCREL's fall 1997 journal is
    devoted to discussing charter schools through a variety of lenses,
    both charter advocates and critics, and a research-based synthesis
    of the assumptions and facts, and strengths and weaknesses of
    charter law and implementation. The quote from NEA is drawn from
    this source.

[^7]: As the Report will discuss in section III, some states' charter
    legislation imparts the role of charter granting solely to the
    district. In other states, an agency other than the district (such
    as the State Board of Education) is the only authority that can
    grant charters. In other states, both the district and other charter
    granting agencies can grant charters.

[^8]: Rofes (1998) studied districts' responses to charter laws and
    charter schools in 1997 and 1998. Through interviews with district
    administrators and charter school advocates, he explored the effects
    of charter schools on 25 districts in 8 states. He examined the
    types of impacts that charter schools had on districts, the
    intensity of these impacts, and districts' responses. In the 25
    districts he studied, Rofes found that 36 percent had not been
    affected in any way by charter schools. Although this Report also
    examines the way charter schools impacted districts, it differs from
    Rolfes' work in that it makes no attempt to intensity of the
    district response.

[^9]: As described in the Methodology, district leaders' perceptions
    were triangulated to insure reliability. In-depth research in 14 of
    the 49 cases allowed staff to validate district leader's claims.

[^10]: The selection process included random selection of schools within
    categories of state, grade level, school size, and creation status
    (i.e., newly created, public school conversion, or private school
    conversion). The Study staff first visited some of these schools in
    1996 and first visited others in 1997.

[^11]: See *The State of Charter Schools, 2000*, RPP International, U.S.
    Department of Education, Office of Educational Research and
    Improvement, for results from the most recent National Study of
    Charter Schools' annual survey.

[^12]: Newspaper reporters often provided a perspective broader than
    that of district staff. They were able to fill in information as
    well as provide historical insights. Although the report is written
    from the perspective of district leaders, reporters were able to
    provide insights on how charter schools and districts response to
    them had been characterized in the media.

[^13]: The National Study of Charter Schools compiled a database of all
    operational charter schools in the United States over a 4--year
    period. These figures were drawn from that database of operational
    charter schools as of the 1998--1999 school year and were confirmed
    by district leaders.

[^14]: These figures were drawn from *The State of Charter Schools,
    1999*, RPP International, U.S. Department of Education, Office of
    Educational Research and Improvement. They reflect the number of
    charter schools as of September 1998.

[^15]: Rofes, 1998.

[^16]: Given the complex nature and differences in state and district
    finance systems for charter schools, it was beyond the scope of this
    research to conduct an in-depth financial analysis for each
    district. Our data represent the perceptions of district leaders.

[^17]: In most districts, interviewees described budget impact in terms
    of the relative number of students in charter schools and the
    revenue associated with each student from a district school who
    chooses a charter school.

[^18]: The Study asked district leaders questions about change in
    district operations in the past 5 years. These broad areas of change
    included: *central office*: downsizing, tracking students who choose
    to attend or return from charters, increasing workload, and changing
    delivery of services to district schools; *accountability and
    autonomy*: changing the accountability system, increasing focus on
    test scores, comparing charter and district schools' test scores,
    and increasing site-based decisionmaking in district schools;
    *facilities*: operating schools under-capacity, closing schools, and
    increasing or decreasing class sizes; *public relations and parent
    involvement*: hiring public relations personnel, increasing
    advertising, making changes in communication with parents, and
    focusing on parent involvement and customer service; *school-level
    staffing*: laying-off teaching staff and changing staffing patterns
    or hiring practices.

[^19]: In five districts (or 10 percent of the total number of districts
    in this study), charter schools affected districts in only one broad
    area of district operations. Four districts reported that charter
    schools had impacted them only in their central office operations.
    Three of these districts began tracking students transferring to and
    returning from charter schools and the fourth reported both tracking
    and an increased workload. Another district only reported charter
    impact in the area of facilities where its schools were operating
    under capacity.

[^20]: In all but 2 districts (15 of the 17) that reported increasing
    their attention to test scores in district schools as a result of
    charter schools, districts also reported that they began comparing
    the achievement of students in district schools with students in
    charter schools. An additional 20 districts reported that they
    compare achievement but reported that they did not increase their
    focus on achievement in district schools as a result of charter
    schools---many district administrators explained this by saying they
    were already focused on achievement.

[^21]: The term "new specialty schools" describes new schools that have
    a specific academic focus and were attributed to the charter school
    in the community or to the opportunity that the charter law
    provided. Districts that identified new programs and/or new
    structures described academic or structural changes within existing
    schools. Two districts may have implemented a similar program, such
    as gifted and talented, but the Study differentiated in coding
    between schools where the program was the focus of a new school
    ("new school") versus schools where the program was adopted into an
    existing school ("new program").

[^22]: For some of the following discussion, percentages reported in the
    text combine percentages in categories reported in exhibit 4.

[^23]: The total percent of sample districts that implemented new
    programs (49 percent) is calculated by adding all of the categories
    from the pie chart in exhibit 5 that include "new programs." These
    include the 27 percent that added only new programs, the 12 percent
    that added new programs and implemented new school structures, and
    the 6 percent that added new programs and created new specialty
    schools.

[^24]: The total percent of districts that implemented new specialty
    schools (20 percent) is calculated by summing the pieces of the pie
    chart in exhibit 5 that include "new specialty schools." These
    include the10 percent of districts that implemented only new
    specialty schools, the 6 percent of districts that implemented new
    schools and new programs, and the 4 percent of districts that
    implemented new schools, new programs, and new structures.

[^25]: As in the previous two categories of educational change, the
    total percentage of districts that implemented new structures (18
    percent) is the sum of all the pieces of the pie (exhibit 5) that
    include "new structures."

[^26]: See *Charter laws and state theories of action,* forthcoming, RPP
    International, U.S. Department of Education, Office of Educational
    Research and Improvement. This report identifies and analyzes 16
    dimensions for distinguishing state charter law.

[^27]: While Michigan and Arizona charter law allows both the district
    and other charter granting entities, only three districts had one or
    more charter schools that were granted by the district, and one or
    more charter schools that were granted by another entity.

[^28]: See *The State of Charter Schools: 2000*, RPP International, U.S.
    Department of Education, Office of Educational Research and
    Improvement. As of the 1998--99 school year, only 10 percent of
    charter schools in Colorado were public school conversions whereas
    43 percent of charter schools in California were public school
    conversions.

[^29]: Recent changes in both the California and Colorado charter have
    established limits on the percentage of per pupil funding that is
    subject to negotiation. In California, the maximum amount that a
    district can withhold is 3 percent while the Colorado maximum is 5
    percent.

[^30]: Unlike California where a county or state board may grant the
    charter upon appeal, in Colorado appeals, the State Board of
    Education may order the district to grant the charter.

[^31]: The State Board of Education grants charters to Horace Mann
    Charter Schools in Massachusetts. While the state grants the
    charters, the district signs off on the charters. Most Horace Mann
    schools are newly created schools.

[^32]: Massachusetts's charter schools are limited to a total of 50,
    with 37 of those Commonwealth charters and 13 district-based Horace
    Mann charter schools.

[^33]: Another area that charter law defines is the type of charter
    schools allowed. In a given district, there may be newly created,
    public school conversion, private school conversion, or a
    combination of these types of charter schools. In our sample, 94
    percent of districts had one or more newly created charter schools
    (as the only type of charter school or in combination with
    conversions) while 6 percent of districts had only public or private
    conversions. Because our sample of districts weighed heavily on
    districts with only newly created schools (78 percent) or districts
    with newly created schools in combination with conversion public or
    private schools (16 percent), the Study team could not study the
    actual effect of creation status on changes in district operations
    or education.

[^34]: The five states in this Study vary markedly in the way they
    finance district and charter schools. All states in the Study fund
    districts on a per pupil basis. This is called average daily
    attendance (ADA) in California, per pupil operating revenue (PPOR)
    in Colorado, and membership or average daily membership (ADM) in the
    other states.

[^35]: The school funding formula in Massachusetts is fairly
    complex---the state has determined a minimum level of per pupil
    revenue for districts across the state (the foundation level).
    Districts have the authority to raise revenue for schools through
    taxation but some districts generate less than the foundation amount
    while others generate more. The two types of districts are treated
    differently in state equalization formulae and for charter school
    funding.

[^36]: The funding formula provides charter schools with funding for
    high cost (special education) students whether or not they actually
    enroll them.

[^37]: In 1997, Massachusetts amended their charter law to subsidize all
    districts for the enrollment of additional students in charter
    schools on a diminishing basis. Starting in fiscal 1999 districts
    would be funded for 100 percent of the per pupil funds attributable
    to students attending charter schools their first year. This amount
    would decrease to 60 percent, 40 percent, and zero in the second,
    third, and fourth years following their transfer to charter schools.

[^38]: See *The State of Charter Schools: 2000,* RPP International, U.S.
    Department of Education, Office of Educational Research and
    Improvement for a summary of services and service providers. As
    reported there, less than 7 percent of all charter schools in
    Arizona, less than 5 percent of all charter schools in Michigan, and
    less than 6 percent of districts in Massachusetts contract central
    office services from the district (purchasing, insurance,
    accounting, payroll, or legal). Between 53 percent and 75 percent of
    all charter schools in California and between 37 percent and 67
    percent of all charter schools in Colorado contract these central
    office services from their districts.

[^39]: In California, 43 percent of all charter schools are conversions
    from public schools. Of the 16 districts in California in our study,
    5 districts have primarily conversion schools (4 of the 5 also have
    newly created charter) and 11 districts have only newly created
    charters.

[^40]: In Colorado and California, the district is the only charter
    granting entity allowed. While it is possible that districts in
    Michigan and Arizona could be the only charter granting entity in
    their district, no districts in this study were the only charter
    granting entity. Most did not grant charter schools.

[^41]: Based on actual district enrollment figures over the past 5
    years, the Study calculated whether the district's enrollment trend
    excluding charter school students was increasing, decreasing, or had
    remained stable. District interviewees confirmed these estimates.

[^42]: The Study categorized 15 districts as small in size (enrolling up
    to 4,999 students); 18 districts as medium-sized (enrolling between
    5,000 and 19,999 students); and 16 districts as large (enrolling
    20,000 or more students.)

[^43]: District size is related to geographic location---urban districts
    tend to be larger than suburban districts, which in turn tend to be
    larger than rural districts. The number of charter schools in a
    district ranged from 1 to 40. While the number of charter schools in
    the district was correlated significantly with district size, there
    was no relationship between number of charter schools and perceived
    impact on budget, district operations, or district education. For
    average district student achievement, the Study categorized
    districts in comparison to state average: above, below, within 5
    percent of state average for student achievement. Neither district
    size nor average student achievement explained patterns in charter
    schools impact on district operations or district education.

[^44]: The declining enrollment that some districts were experiencing
    may have been part of a decline in the larger system, as surrounding
    districts with no charter schools were, in some cases, also
    experiencing a similar rate of enrollment decline. In some
    districts, it is possible that the negatively perceived affects of
    charter schools could also be attributed to the dynamics of the
    larger system and district leaders are "blaming" charter schools.
    This report does not attempt to differentiate between effects of the
    larger system and effects of charter schools, but only reports
    district leaders' attribution.

[^45]: In exhibits 10 and 11, "district only" denotes districts that are
    the only charter granting entity in the district. "Others entities"
    includes both districts that only have charter schools granted by
    other entities and districts where one or more charter schools are
    granted by the district and one or more charter schools are granted
    by another entity. The text describes these as "districts with
    charters granted by other entities."