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Introduction

Charter schools are public schools that operate under a contract (or "charter"). The expectation is that these schools meet the terms of their charter or face closure by their authorizing bodies. As public schools, charter schools must also meet the accountability requirements of the federal Elementary and Secondary Education Act of 1965 (ESEA), as amended by the No Child Left Behind Act of 2001 (NCLB).1

Since 1991 when Minnesota passed the first state charter school law, the charter school sector of public education has grown rapidly. By the 2002-03 school year, 39 states and the District of Columbia had charter school laws in place, and more than 2,700 charter schools were operating nationally, serving hundreds of thousands of students from every socioeconomic and demographic segment of the U.S. population. 

Federal support for charter schools began in 1995 with the authorization of the Public Charter Schools Program (PCSP), administered by the U.S. Department of Education (ED).2 The PCSP funds the state grant program discussed in this report, supports charter school research and demonstration programs and underwrites national charter school conferences.

This report has a dual purpose: (1) to provide the public and education policymakers with findings from a descriptive examination of how the PCSP operates and (2) to continue documentation of the evolution of the charter school movement that began in 1995 under another federally funded study.3

Context

The charter school sector includes a diverse array of schools categorized as newly created or converted from previous status as public or private schools. Although these schools are subject to the terms of an individual state's charter school legislation, all charter school laws require that a designated body--the charter school authorizer--hold a school accountable for particular outcomes through the school's individualized contract. Further, flexibility (freedom from many policies and regulations affecting traditional public schools) and autonomy (control over decisions) are central to this educational reform. This is the basic context in which the charter school movement has evolved and in which the PCSP operates.

Highlights

Based on three years of data (collected in school years 1999-2000, 2000-01 and 2001-02), the national evaluation of the PCSP found that:

- PCSP money is the most prevalent source of start-up funding available to charter schools. Nearly two-thirds have received federal PCSP funds during their start-up phase. Charter schools primarily use PCSP funds to purchase technology and curricular and instructional materials, as well as to fund professional development activities. 
- Charter schools are more likely to serve minority and low-income students than traditional public schools but less likely to serve students in special education. 
- Charter schools, by design, have greater autonomy over their curriculums, budgets, educational philosophies, and teaching staff than do traditional public schools. Because some state charter school laws allow schools flexibility in hiring practices, charter schools as an overall group are less likely than traditional public schools to employ teachers meeting state certification standards. 
- In five case study states, charter schools are less likely to meet state performance standards than traditional public schools. It is impossible to know from this study whether that is because of the performance of the schools, the prior achievement of the students, or some other factor. The study design does not allow us to determine whether or not traditional public schools are more effective than charter schools. 
- Charter schools rarely face formal sanctions (revocation or nonrenewal). Furthermore, authorizing bodies impose sanctions on charter schools because of problems related to  compliance with regulations  and  school finances  rather than  student performance . Authorizers have difficulty closing schools that are having problems.
- During the time period examined by this study, little difference exists between the accountability requirements for charter schools and traditional public schools.

Evaluation Questions

The primary questions guiding this evaluation can be grouped into four overarching topic areas:

### The Public Charter Schools Program

- How does the PCSP work and how do this federal grant program and its state grantees encourage the development of charter schools?
- How do federally funded charter schools and school planners use their PCSP subgrants?

### Profile of the Charter School Sector

- What are the characteristics of charter schools and the students and families who are involved with them?
- What flexibility provisions are charter schools granted?

### Student Performance in Charter Schools

- To what extent are charter schools meeting state standards for student performance and how do charter schools and traditional public schools compare in meeting these standards?

### Charter School Authorizers

- What are the characteristics and roles of authorizing bodies?
- What types of accountability relationships do authorizers have with their schools?

Several data sources inform answers to these questions: survey data from state charter school coordinators, charter school authorizers, and charter school directors; data from the federal Schools and Staffing Survey (SASS); and data from state departments of education. The evaluation team also conducted multiple site visits to 12 charter schools in the following six states: Arizona, California, Massachusetts, Michigan, North Carolina, and Texas.

Key Findings

- The PCSP is a targeted federal grant program that awards grants to states with charter school legislation. States, in turn, award subgrants to charter schools and charter school planning groups. At least 95 percent of the state grants currently reach charter schools, as required by the legislation. 

In FY 2001, 90 percent of the 37 states and the District of Columbia with charter school legislation received PCSP grants. The U.S. Department of Education (ED) competitively awards these grants to states on a three-year cycle, based on projected estimates of the level of chartering activity. Within the grant cycle, ED makes annual adjustments, as necessary. States withhold up to 5 percent of these PCSP grants for administration costs, and distribute the remaining 95 percent to schools in the form of PCSP subgrants.

If a state with charter school legislation does not receive a PCSP award, individual charter schools within the state may apply directly to ED for a school grant. Charter schools in four states received grants through this provision in 2001-02.

- From FY 1995 through 2001, growth in the charter school sector kept pace with growth in federal appropriations for the PCSP program. During this period, the number of charter schools increased tenfold, as did the size of the average three-year state grant. 

State charter school coordinators and charter school directors confirmed the importance of the PCSP as a federal investment in charter school development. States may award two types of subgrants: (1) start-up subgrants to support planning and early implementation of charter schools and (2) dissemination subgrants to support charter schools in sharing their ideas and practices. Based on the 2001-02 survey of charter school directors, 61 percent reported that they had received a PCSP start-up subgrant and 19 percent had received a dissemination subgrant at some point in time.4

Federal appropriations for the PCSP grew steadily from $6 million in FY 1995 to $190 million in FY 2001 (increasing to $218.7 million in FY 2004). During the same period, the number of charter schools grew from approximately 250 to 2,700. PCSP awards to states have increased in size, from a mean state grant of $512,900 in FY 1995 to nearly $4.5 million in FY 2001 (see Exhibit ES-1). This increase in state grant awards reflects growth in the PCSP annual appropriation coupled with a leveling off of the number of states with charter legislation.

While the number of charter schools has continued to grow nationally, the growth is most substantial in a limited number of states. These states (for example, California and Florida) currently receive the largest PCSP grants.

- PCSP start-up and dissemination subgrants support professional development activities and technology-related purchases. In addition, schools used start-up subgrants to purchase curricular or instructional materials.

Each state with a PCSP grant creates its own process and selection criteria for distributing the funds as subgrants to charter schools or planning groups.5 In general, start-up subgrants are more easily obtained than dissemination subgrants. The size of subgrants to charter schools or planning groups varies by state. The average school subgrant in FY 2001-02 ranged from $20,000 in one state to $263,000 in another--with most state averages tallying between $80,000 and $150,000. Most charter schools used PCSP start-up subgrants to purchase instructional materials (87 percent), fund professional development (79 percent), and purchase technology (78 percent).

- In comparison with traditional public schools, charter schools are smaller and employ fewer certified teachers than traditional public schools because of provisions in some state laws.6 These schools are also more likely to serve more grade levels (e.g., K-12) than the typical public school.

| Student Characteristic                                                     | Percentage of Students              |
|----------------------------------------------------------------------------|-------------------------------------|
| Charter Schools(n=870)                                                     | Traditional Public Schools(n=8,432) |
| African American***                                                        | 27                                  | 17 |
| Hispanic***                                                                | 21                                  | 15 |
| White***                                                                   | 46                                  | 63 |
| Free or reduced-price lunch***                                             | 43                                  | 38 |
| Special education students with Individualized Education Programs (IEP)*** | 9                                   | 12 |

***p<.01 (Indicates significant difference between charter schools and traditional public schools in the percentage of students with various characteristics.)Source: 1999-2000 public charter school SASS survey and public school SASS survey.Exhibit reads: Of all students enrolled in charter schools in 1999-2000, 27 percent were African American, compared with 17 percent in traditional public schools. This difference is statistically significant.

Although the median enrollment in charter schools has been steadily rising (e.g., from 137 students in 1998-99 to 190 students in 2001-02), these schools remain considerably smaller than traditional public schools serving similar grade ranges. For example, according to data from the federal Schools and Staffing Survey (SASS), the median enrollment in charter high schools in 1999-2000 (the most recent year of the Schools and Staffing Survey data) was 132 compared with 675 in traditional public high schools. 

In addition, states provide flexibility to charter schools over many areas including hiring practices and the certification and licensure of their teachers. While charter schools must meet the accountability requirements of NCLB, they retain any flexibility provided to them in individual state chartering laws, especially in the area of teacher qualifications. One result of this flexibility may be that charter schools employ fewer traditionally certified teachers. According to the 1999-2000 SASS, 79 percent of teachers in charter schools held certification, compared with 92 percent of teachers in traditional public schools.

In contrast to the typical configuration of elementary, middle, and high schools, charter schools are more likely to contain either grades K-8 or grades K-12. More than one-third (35 percent) of charter schools are K-8 or K-12 schools, compared with 8 percent of other public schools. Interviews with charter school staff and parents indicated that the K-8 and K-12 configurations might be in response to the desire for students to avoid the difficult transitions between school-levels.7

- Charter schools disproportionately attract students and families who are poor and who are from African American backgrounds.

The profile of students who attend charter schools differs from traditional public schools, as illustrated in Exhibit ES-2. In 1999-2000, charter schools served fewer white students and more minority students (including African American and Hispanic) than traditional public schools. Charter schools also served more students from low-income families but fewer special education students with Individualized Education Plans (IEPs).

Furthermore, the overall proportion of minority students attending charter schools has been increasing--in 2001-02, approximately two-thirds of students in charter schools were from minority backgrounds. As Exhibit ES-3 demonstrates, virtually all of the growth in minority enrollments is the result of increases in the percentage of African American students. Over the same period, the proportion of white students decreased and the proportion of Hispanic students remained fairly constant.

Note: Racial and ethnic categories are based on current census categories and differ somewhat from RPP and SASS categories. Other Minority includes Asian, American Indian or Alaska Native and, in 2000-01 and 2001-02 only, Native Hawaiian or other Pacific Islander. Sources: 1998-99 data: Nelson et al. (2000); 1999-2000 data: Public Charter School SASS survey; 2000-01 and 2001-02 data: SRI 2000-01 and 2001-02 charter school surveys. Exhibit reads: In 1998-99, 48 percent of students in charter schools were white, compared with 46 percent in 1999-2000, 41 percent in 2000-01, and 37 percent in 2001-02.

- Case studies of Texas, Colorado, Illinois, Massachusetts, and North Carolina show that more than half of the charter schools in these states were already meeting state performance standards in 2001-02, although charter schools were somewhat less likely than traditional public schools to meet standards.8 These findings are not indicative of the impact of charter schools on student achievement. Furthermore, it is not possible to determine from this study whether or not traditional public schools are more effective than charter schools.

Although the No Child Left Behind Act of 2001 (NCLB) subjects charter schools to the same performance standards as traditional public schools, this study conducted case studies9 of five states during the period prior to NCLB and found that more than half of charter schools in each state were meeting state performance standards in 2001-02 (with as many as 90 percent meeting performance standards in Colorado). However, because many charter schools tend to target students with educational disadvantages, some studies have shown that charter school students typically do not perform as well in school as students in other public schools. Charter schools in all five case study states were less likely than traditional public schools to meet performance standards even after controlling for several school characteristics. This finding, which does not imply a lack of charter school impact on student achievement, may be linked to the prior achievement of students or some other factor. The design of this study did not allow us to determine whether charter schools are more or less effective than traditional public schools.

The purpose of this study's student performance component was to determine whether charter schools met state performance standards and to determine how charter schools compared to traditional public schools in meeting these standards. The study originally intended to use student-level data, but in 2001-02, policy interpretations of the Family Educational Rights and Privacy Act (FERPA) precluded this. As a result, the study shifted its emphasis to school-level data, conducting an analysis in the states with adequate data.

The results of these analyses suggest that charter schools may have difficulty in meeting the high-stakes performance standards recently adopted by states under NCLB. Future studies should examine the extent to which charter schools serving high proportions of educationally disadvantaged students exhibit improved performance over time.

- Charter school authorizers monitor their schools for accountability purposes and provide direct services (often on a fee-for-service basis). Authorizing bodies that charter many schools are likely to have an infrastructure for monitoring but are not likely to provide services. 

Authorizing bodies are a critical component of the charter school movement and include a variety of entities. In 2001-02, local school districts authorized 45 percent of charter schools, while state departments of education authorized 41 percent, and institutions of higher education authorized 12 percent. (See Exhibit ES-4.) (In addition, other entities, such as independent charter boards, authorized 2 percent of charter schools.) It is interesting to note that although they authorize 45 percent of all charter schools, local education agencies represent 91 percent of the population of authorizers. State education agencies on the other hand, authorize 41 percent of all charters but represent just 3 percent of all authorizers.

There is a general expectation in the charter school sector that authorizers have a responsibility to regularly oversee charter school operations and progress toward meeting the goals in the charter. The reality is that only 36 percent of authorizers had a charter school office or staff in 2001-02, suggesting limited capacity to address charter school oversight. However, this finding varies by type of authorizer. For example, 85 percent of states that are authorizers have an office or staff dedicated to charter school work. Because states are more likely to authorize a large number of schools, they may require an infrastructure to provide adequate oversight.

Some authorizers, particularly local school districts, report that they provide a number of services to charter schools, the most common being administrative oversight, assistance in meeting state or federal regulations and special education services. Increasingly, authorizers report that schools must pay for these services.

- Charter schools do not automatically have flexibility with respect to complying with state and federal regulations and often share authority over key decisions with their authorizers. Only 37 percent of charter school states automatically allow waivers of state regulations for charter schools. More commonly, charter schools must request specific waivers from the state. Few states (less than five) exempted charter schools from student assessment requirements in 2001-02.

In theory, charter schools enjoy flexibility or school-level control over key decisions not available to the typical school in exchange for accountability for specified outcomes. In reality, the autonomy of charter schools is limited by state policies, as well as by relationships with authorizers, education management organizations (EMOs) and community-based organizations (CBOs). Only 37 percent of states with charter schools granted them automatic waivers from state policies and regulations in 2001-02, but 54 percent waived regulations on selected policies or allowed charter schools to request waivers on a case-by-case basis. Nine percent did not permit any waivers to charter schools.

Furthermore, charter schools frequently share their school-level authority with one or more other entities. Schools were most likely to report sharing control with their authorizers. Some school directors reported sharing authority with EMOs or CBOs.

- Authorizers determine which schools to charter, monitor progress and performance and decide whether or not to renew the charter at the end of its term. However, more than half of all authorizers reported difficulty in closing a school that is having problems. In addition, the charter contract, with its tailored outcomes, may have diminished importance in the current high-stakes accountability environment.

The charter school accountability process involves three phases: the application process, the monitoring process and the implementation of sanctions (if needed).

During the *application* process, authorizing bodies screen applications, denying charters because of problems relating to, for example, proposed instructional strategies, governance procedures, accountability provisions, and business plans.

The *monitoring process* occurs after authorizers have awarded charters to planning groups. Authorizers and states reserve legal authority to monitor charter schools, but other entities are also involved, resulting in a complex system of account-tability. Charter schools reported being monitored by their authorizers, governing boards, states and, in some cases, EMOs or CBOs. They reported that they are most accountable to their own governing boards.

Authorizers have developed monitoring procedures and determined criteria for applying interventions or sanctions with little specific guidance from state charter school legislation. Authorizers reported monitoring nearly all of their schools on: compliance with federal or state regulations; student achievement results; enrollment numbers; financial record keeping and viability; and special education services.

Finally, authorizing bodies have the authority to implement formal or informal *sanctions* against a school that fails to meet the terms of its charter. Results from the survey of authorizers show that few authorizers had implemented formal sanctions: only four percent of authorizers had not renewed a school's charter and six percent had revoked a charter as of 2001-02. (We are unable to compare these rates with the proportion of traditional public schools that have been sanctioned through closure or reconstitution.) Informal and less severe sanctions, such as written notification of concerns, were more common. Formal and informal sanctions were usually associated with problems relating to compliance with state and federal regulations and school finances.

Authorizers report facing a wide range of challenges in sponsoring and providing support to charter schools, including inadequate financial or human resources. 

More important, more than half of authorizers report difficulty closing a school that is having problems--a key responsibility of authorizers in this educational reform.

In the early years of the charter school movement's development, charter schools--at least theoretically--were more accountable for outcomes than other schools, by virtue of the terms of a charter contract. More recently, however, states have implemented reporting systems to track school inputs in addition to outcomes for all public schools. As Exhibit ES-5 indicates, little difference now exists between state reporting requirements for charter schools and those for traditional public schools.

| Reporting Requirement                                                            | Percentage of States                    |
|----------------------------------------------------------------------------------|-----------------------------------------|
| Required for Charter Schools                                                     | Required for Traditional Public Schools |
| Reporting student achievement results on required statewide assessments (n=35)   | 100                                     | 97 |
| Reporting on other student performance indicators, e.g., attendance rates (n=34) | 97                                      | 97 |
| Reporting on enrollment numbers (n=32)                                           | 100                                     | 94 |
| Aligning of curriculum to state standards (n=31)                                 | 90                                      | 94 |
| Reporting on student demographics (n=31)                                         | 94                                      | 100 |
| Reporting on teacher qualifications (n=26)                                       | 100                                     | 96 |
| Reporting on teacher demographics (n=19)                                         | 89                                      | 100 |
| Reporting on school waiting list (n=11)                                          | 91                                      | 27 |

Note: The number of respondents varies by accountability requirement because some states reported that these requirements were "not applicable" in their states.Note: The actual survey used the term "accountability requirements" to encompass both inputs and outputs. To avoid confusion with the current narrower definition of accountability in NCLB, we have used the term "reporting requirements" in this exhibit and accompanying text.Source: SRI 2001-02 state coordinator survey. Exhibit reads: All states (n=35) required that schools report student achievement results as part of their state accountability system. Of these, all required this for charter schools and 97 percent required this for traditional public schools.

Notes

1 The data presented in this study covers a period of time (1999-2002) prior to the enactment of NCLB.

2 The name of the Public Charter Schools Program (PCSP) changed to the Charter Schools Program (CSP) when the U.S. Department of Education issued nonregulatory guidance in August 2003.

3 RPP International conducted the first federally funded charter school study. In part, the study reported in this document extended the RPP study to provide a longitudinal portrait of charter schools.

4 These statistics derive from separate survey items and are not intended to be summed. These data may underestimate the percentage of schools with start-up subgrants because of school-level confusion about the funding source--the state versus ED.

5 The federal PCSP legislation places relatively few restrictions on the use of these funds. One prohibition is the use of PCSP funds to purchase a facility.

6 By law, some states afford charter schools more flexibility with respect to teacher certification provisions.

7 Some research has found an association between grade level configuration and student academic and nonacademic performance (see Renchler, 2002, and Franklin et al., 1996).

8 While the data analyzed predate the requirements of NCLB, these five states already had set school-level standards, perhaps in response to the Improving America's Schools Act of 1994.

9 Because these state analyses are not representative of the charter school universe, this evaluation refers to them as "case studies."

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