Charter Schools: To Enhance Education's Monitoring and Research, More Charter School-Level Data Are Needed
Published: 2005-01-12T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Charter schools are public schools that are granted increased autonomy by states in exchange for meeting specified academic goals. State law determines who approves the formation of a charter school, often the board of education. As public schools, charter schools are subject to the performance requirements of the No Child Left Behind Act (NCLBA) as well. In this environment, states' systems for allowing charter schools flexibility and ensuring school performance and financial integrity assume greater importance. GAO examined (1) how states allow charter schools flexibility, (2) how states promote accountability for school performance and financial integrity for charter schools, (3) the implications of NCLBA for charter schools, and (4) the role the Department of Education (Education) plays in charter school accountability. GAO surveyed the 39 states and jurisdictions with operating charter schools in 2002-03 and interviewed charter school experts and Education officials.
section_title: What GAO Found
paragraphs: In school year 2002-03, some states reported that they provided charter schools flexibility by allowing them to choose their authorizer. Authorizers--state education agencies, local education agencies, universities, and other nonprofit organizations--oversee the formation and operation of charter schools. Also, nearly all states provided flexibility by releasing charter schools from some traditional public school requirements, such as teacher hiring and termination practices, schedules, and collective bargaining agreements. To promote charter school performance and financial integrity, states reported that they took action to oversee charter schools and to oversee and provide assistance to authorizers. About half of the 39 states reported having primary responsibility for enforcing school improvement actions in charter schools not achieving annual school performance goals under NCLBA. Most states reported that they intervened when authorizers were not performing their responsibilities and conducted or required audits of authorizers' finances. About half of the states assisted authorizers with funding for their charter school oversight responsibilities or gave them fee collection authority. NCLBA requires charter schools to meet the same requirements as other public schools, but the law permits certain flexibilities where allowed by state law. Charter schools must be included in the statewide assessment system, and charter schools that receive NCLBA Title I funds must take school improvement actions if they do not meet state performance goals. However, NCLBA allows state law to determine the entity responsible for charter school oversight. In addition, while NCLBA requires certification for all other teachers to meet the highly qualified teacher requirement, the law exempts charter school teachers from this requirement where state law permits. As it does for all public schools, Education administers grant programs that provide funds to charter schools, monitors grant performance, and sponsors research on accountability for academic performance and financial integrity. Under NCLBA, the department and states must ensure that new and expanding charter schools receive timely payment of federal grant funds for which they are eligible and meet the act's academic achievement goals. However, in its monitoring and data collection, Education gathers little information on the timeliness of charter school grant payments or how well the schools perform. Moreover, Education's Office of the Inspector General (OIG) reported delays in states' Title I payments to charter schools. Education is in the process of developing new systems that are expected to provide both academic performance and financial reports for the department's major grant programs, but the ability of the new systems to provide financial reports for charter schools is uncertain.

section_title: Letter
paragraphs: In the 2003-04 school year, nearly 3,000 charter schools, representing  about 3 percent of all public schools, were in operation in the United  States. Charter schools are public schools established through agreements  between people or organizations granted permission to establish  schools—charter holders—and the entities that approve and oversee them  —authorizers. The agreement, or charter, specifies certain academic goals  and financial requirements that the charter holders agree to meet in return  for increased autonomy in school management, usually including release  from traditional public school requirements in areas such as teacher  termination practices and student discipline. Since 1994, the federal  government has provided over $1 billion of federal funding to encourage  new and expanding charter schools under the Education’s Public Charter  Schools and Credit Enhancement for Charter School Facilities programs.
Forty states, the District of Columbia, and Puerto Rico have enacted  charter school laws in an effort to increase school choice and improve  student outcomes, although not all states have operational schools.  Specifics of the laws vary from state to state; for instance, there are  variations in how many charter schools are allowed and what entity or  entities can authorize them. However, in every state, charter schools are  included in the statewide system for assessing school performance and are  expected to achieve the state annual school performance goal  requirements that apply to all public schools under the No Child Left  Behind Act of 2001 (NCLBA).
Proponents of charter schools believe that the increased autonomy given  charter schools and the expanded opportunities for parents to select their  child’s school can result in improved student achievement. However, there  are many challenges associated with successfully establishing and  operating a charter school. Because of these challenges, state systems for  allowing charter schools flexibility and ensuring accountability for school  performance and financial integrity assume greater importance. Moreover,  NCLBA requirements for assessing the status of annual school  performance goals and the actions schools must take if they do not meet  academic performance goals have the potential to expand or restrict the  flexibilities and performance agreements established in schools’ charters.  This report examines (1) how states allow charter schools flexibility in  design and operation; (2) how states promote accountability for school  performance and financial integrity in their charter school systems; (3) the  implications of NCLBA for charter schools, and (4) the role the  Department of Education (Education) plays in charter school  accountability for school performance and financial integrity.
To determine how states allow flexibility and promote accountability for  charter school performance, we focused on actions taken by state-level  officials. We surveyed designated charter school points of contact in 37  states, the District of Columbia, and Puerto Rico, with operating charter  schools in school year 2002-03. We collected data for school year 2002-03,  rather than 2003-04, to increase the likelihood that final, accurate data  would be available from state test administrations under NCLBA. We  assessed the reliability and validity of questions in our survey by  interviewing knowledgeable agency officials, and pretesting draft versions  of the survey. For selected questions, we confirmed the data with follow- up telephone interviews of respondents and compared data provided with  information available from other sources. We analyzed these data to  identify the flexibility states grant charter schools and the actions states  take directly, and through authorizers, to help hold charter schools  responsible for both their academic results and their fiscal practices. To  examine the effect of NCLBA, we synthesized information obtained from  Education’s charter school guidance on NCLBA, interviews with state and  federal officials and charter school experts, and our survey of states with  operating charter schools. We determined Education’s role by interviewing  officials responsible for federal grant and research programs applicable to  charter schools and by reviewing relevant laws and guidance. Appendix I  provides additional details about our scope and methodology. We  conducted our work between September 2003 and December 2004 in  accordance with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: States began adopting charter school laws in the early 1990s, beginning  with Minnesota in 1991. Charter schools are permitted more flexibility in  school operation for agreeing to accomplish specific academic goals  contained in their charters. The specifics of these arrangements vary, as  each state adopting a charter school law sets up its own charter school  structure and guidelines, and states have continued to revise their charter  school laws over time. However, not all states with a charter school law  have operational charter schools, as shown in figure 2. The District of  Columbia and Puerto Rico also have charter school laws. During the 2003- 04 school year, nearly 3,000 charter schools were operating nationwide,  with nearly 700,000 students enrolled.
Oversight authority for charter schools is established by the state’s charter  school law and may rest with several entities, including state boards of  education, which set educational policy, and state departments of  education, which implement those policies. Some states have also created  independent charter school boards that can authorize charter schools in  the state. In addition, some states have created charter school offices,  housed in the state department of education, that support and advocate  for charter schools. State law also specifies which entities within the state  can authorize the establishment of a charter school, such as state  departments of education, state boards of education, local education  agencies, institutions of higher education, and municipal governments.
Depending on the state, a wide range of individuals or groups, including  parents, educators, nonprofit organizations, and universities, may apply  for permission to operate a charter school. The agreement that is reached  between the applicants and the authorizer defines specific academic goals  and outlines school finances and other operational considerations. In  some states, including Texas and Arizona, a single charter may cover the  establishment of multiple schools. Once charter schools are in operation,  the authorizer is responsible for monitoring school performance and has  authority to close the school or take other actions if academic goals or  state financial requirements are not met. The schools are governed by a  board of trustees, which is responsible for overseeing school operations.  Requirements for charter school board membership vary across states, but  the responsibilities are similar. Specifically, charter school boards oversee  legal compliance, contracts with external parties, financial management  and policies, and facilities and equipment acquisition and maintenance.
NCLBA, signed into law in early 2002, increased federal funding for  elementary and secondary education and created new requirements for all  public schools, including charter schools. NCLBA requires states to test  all children against reading and mathematics standards annually in grades  3-8 and once in grades 10-12 by the 2005-06 school year. States also had to  develop performance goals for schools that identify what percentage of  students must be proficient in reading and math each year for the school  to achieve proficiency for all children by 2013-14. Standards for science  proficiency are to be developed by the 2005-06 school year, with testing in  science to begin in 2007-08. Schools are required to measure the  performance of all students in meeting proficiency goals, as well as the  performance of designated groups. These groups are students who   (1) are economically disadvantaged, (2) represent major racial and ethnic  groups, (3) have disabilities, and (4) are limited in English proficiency.
NCLBA also requires that schools include at least 95 percent of students in  each of these groups in statewide tests and meet at least one other  academic indicator. States must use the graduation rate as the additional  indicator for high schools. NCLBA also generally requires that teachers be  highly qualified by the end of the 2005-06 school year, meaning that  teachers must demonstrate subject matter expertise, have a bachelor’s  degree and have full state certification as a teacher.
NCLBA also specifies the actions that must be taken if schools receiving  funds for children from low-income families under Title I of the act do not  meet performance goals. Title I provides funds to states for local school  districts to improve the education of low-income students in high-poverty  schools. About half of all public schools nationwide receive a share of the  federal funds—over $12 billion dollars in 2004—this program provides.  NCLBA’s performance requirements specify that if a school receiving Title  I funds does not meet its performance target for 2 consecutive years, it  must provide professional development for the school’s staff and students  must be offered the choice of attending another public school. If the  school misses its performance goal for the third year, it must offer low- income students supplemental educational services, such as tutoring. If  the school continues to miss its performance goal, additional actions are  required, such as replacing the curriculum, hiring a new principal, turning  the school into a charter school, letting a private company operate the  school, or taking other action designed to improve student academic  results.
As with other public schools, funding for charter schools comes largely  from state and local funds, augmented by federal aid. Eligible charter  schools may receive funds under federal formula and discretionary grant  programs. Formula grant programs, which provide funding to states on a  noncompetitive basis, include    Title I Grants to LEAs. This program is the largest federal program  supporting elementary and secondary education. Title I provides funding  for schools with disadvantaged children and accounts for about 2.5  percent of total education expenditures nationally.
Impact Aid. This program provides funds to help educate children whose  parents or residences are connected to the federal government through  employment, the military, or federal housing programs.
Special Education Grants to States. This program funds districts to assist  them to provide special education and related services to children with  disabilities.
NCLBA continues to require Education and states to ensure that charter  schools receive payment from 18 federal grant programs for which they  are eligible, including Title I and Special Education Grants. New charter  schools and charter schools with expanding enrollments are to receive  these funds within 5 months of opening or expanding enrollment. This  NCLBA requirement for timely payment of federal grant funds originated  with the Charter School Expansion Act of 1998.
Education has two data systems to support the department’s grant  administration functions. One system, the Grant Administration and  Payment System (GAPS), tracks the payment of federal grant funds to the  grant recipient, frequently the state education agency (SEA) or LEA.  Education is developing the second system, the PBDMI—a data  management initiative for federal grant programs—to streamline the  collection of performance and financial data across Education’s formula  grant programs, including Title I. When fully implemented, this initiative  would replace, in whole or in part, other data collections on the  implementation of NCLBA’s academic performance requirements,  including elements of the Consolidated State Performance Report.
Education also administers two grant programs targeted to charter  schools, the Charter School Program and the Credit Enhancement for  Charter School Facilities Program. These programs provide funding to  states, charter schools, and other entities on a competitive basis. The  Charter School Program supports the planning, development, and initial  implementation of charter schools. The Congress has appropriated over   $1 billion to the Charter School Program since 1995. The Credit  Enhancement for Charter School Facilities Program helps charter schools  obtain school facilities, one of the greatest challenges faced by new  charter schools. In total, the Congress has appropriated nearly $90 million  for Credit Enhancement for Charter School Facilities since 2001.
While Education relies on states for the most part to oversee the  implementation of federal grant programs at the individual school level,  Education does sponsor research on schools in areas that support the  department’s strategic goals, such as improving student achievement. A  considerable body of research related to charter school oversight by  authorizers has been conducted since 1991 by a number of policy research  organizations, as well as Education. In addition, to address the  department’s interest in charter schools as an educational reform  initiative, Education has sponsored three studies, focusing on the  evolution of the charter school movement, the characteristics of charter  schools and charter school students, and charter schools’ relationships  with authorizers and their communities. The first evaluation, The State of  Charter Schools, provides descriptive information about charter schools  that were operating in the 1998-99 school year. This study addressed how  charter schools have been implemented, under what conditions they have  improved student achievement, and their impact on public education. The  second evaluation, A Study of Charter School Accountability, by  researchers at the University of Washington, examined charter schools’  relationships with authorizers and with their communities. The study  included the perspectives of both charter schools and authorizers. The  third study, A Decade of Public Charter Schools, evaluated the Public  Charter School Program and documented the evolution of the charter  school movement. None of these studies looked at the states’ role in  ensuring that charter schools are held accountable for meeting their goals.
section_title: Some States Provided Flexibility by Allowing Charter Schools to Choose among Authorizers, and Most States Released Charter Schools from Traditional Public School Requirements
paragraphs: In school year 2002-03, states reported that they provided flexibility  through the authorizers they established and through releasing charter  schools from traditional public school requirements. Some states provided  charter schools flexibility in developing and operating their programs by  allowing a degree of choice in selecting the authorizer that oversees  operations. Twenty-six of 39 states in our survey reported that they  allowed an appeal of an authorizer’s decision to deny an application to  start a charter school. Nearly all states released charter schools from  traditional public school requirements of some type.
subsections: section_title: About Half of the States Had Established More Than One Type of Authorizer, but Fewer States Allowed Authorizer Choice
paragraphs: About half of the 39 states with operating charter schools in school year  2002-03 had established more than one type of authorizer to approve  charters and oversee operations. In about a quarter of states, only a state  agency—either the state education agency or the state board—could  authorize; in another quarter, only LEAs could authorize. Figure 3, which  is based on responses of charter school state agency officials to our  survey, shows the types of authorizers states with a mix of authorizers  have established as well as those in states that allow only one type of  authorizer.
A state with a mix of authorizers potentially provides charter school  founders more opportunity to find support for a wider range of  instructional approaches or educational philosophies than might be  possible with a single authorizer, such as the local school district. In  addition, providing more than one type of authorizer may expedite charter  school authorization and insulate the decision to approve a charter school  from the local political environment. The range of authorizers in states  that offered a mix of authorizers included LEAs that are local school  districts, other types of LEAs, state departments or boards of education,  public or private colleges or universities, and nonprofit organizations.  Two states—Ohio and Minnesota—had established more types of  authorizers than other charter school states. In school year 2002-03, Ohio  allowed the board of education, local school districts, an educational  service center, and a private university to authorize. That same year in  Minnesota, the department of education, local school districts and other  types of LEAs, public and private universities, and nonprofit organizations  served as authorizers. Examples of another type of authorizer can be  found in Arizona and the District of Columbia: both created a charter  school board independent of local school districts to authorize.
In 11 of the 20 states with a mix of authorizers in school year 2002-03,  more than one authorizer was available in at least some geographic areas  that charter school developers could choose. (See fig. 3.) For example, in  the District of Columbia, a charter school developer might petition either  of the two established authorizers. Most of the 11 states offering choice  emphasized that allowing choice was intended to provide charter school  developers with options, and these states allowed choice among all of the  state’s authorizers. In a few of the 11 states, charter school developers had  choice in some areas of the state but not in other areas. For example, in  Milwaukee, Wisconsin, charter school developers could choose an  authorizer from several options: the LEA, the City of Milwaukee, the  University of Wisconsin or a local technical college. In Racine, charter  school developers could choose between the LEA and the University of  Wisconsin, but the university was limited to overseeing just one charter  school in Racine. However, outside of Milwaukee and Racine, charter  school developers did not have a choice of authorizers.
In 7 of the 20 states with a mix of authorizers, choice of authorizer was not  available. Although LEAs and the state board of education served as  authorizers in 6 of these 7 states, LEAs could authorize only within their  jurisdiction and the board of education authorized only when a charter  school developer appealed an LEA’s denial of an application. Table 7 in  appendix II identifies the type and number of authorizers offered by each  state with a mix of authorizers and those states that offer charter school  developers a choice of authorizers.
In 9 states—Alaska, Colorado, Nevada, New Mexico, Oklahoma,  Pennsylvania, South Carolina, Virginia, and Wyoming—only LEAs served  as authorizers. The number of LEAs that had operating charter schools in  these states ranged from 1 in Wyoming and 2 in Oklahoma to 91 in  Colorado and Pennsylvania. In 8 of these 9 states, the LEAs authorized  only within their jurisdiction, and charter school developers were not  allowed to choose an authorizer from a jurisdiction other than the one  where they decided to locate their school. Ten states—Arkansas,  Connecticut, Hawaii, Kansas, Massachusetts, Mississippi, North Carolina,  New Jersey, Rhode Island, and Puerto Rico—allowed only a state agency  to act as authorizer.
Of the 39 charter school state agencies surveyed, 26 reported that they  allowed appeals when authorizers denied applications. States reported  taking different approaches to conducting the appeal process. In 17 states,  the appeal is made to the state board of education, and in 3 states, the  state department of education hears the appeal. In the other states, a  charter school review panel or state board, the county office of education  or city council, a state or district court, or an independent party hears the  appeal. In 1 state, the reviewing body hears the appeal and, if the case has  merit, asks the school developers to resubmit the application to the same  authorizer.
section_title: Most States Released Charter Schools from Some Traditional School Requirements
paragraphs: Nearly all of the 39 states in our survey reported that they released charter  schools from some traditional public school requirements. All but 2 states  offered release in one or more of 30 areas that states identified, from  reporting requirements to staffing practices to student discipline. The  greatest number of states released charter schools from teacher  termination procedures and length of school day (21 states), teacher  compensation and benefits (22 states), collective bargaining procedures  (22 states), and requirements established for local school boards (23  states). Officials in 6 states reported that the state released charter schools  from almost all traditional public school requirements, while a few  requirements, such as the minimum number of teachers required, the use  of district-approved text books, and graduation requirements, were  released in only a few states.
Michigan and Puerto Rico reported that they don’t release charter schools  from traditional public school requirements but that their charter schools  had some features that distinguished them from traditional public schools.  Michigan’s state charter school agency representative explained that its  charter schools operate as private, nonprofit corporations and that their  contracts are individualized and set forth terms that are unique to each  charter school. In addition, unlike public schools, Michigan’s charter  school boards are appointed, not elected. Puerto Rico’s representative said  that the state permits charter schools to introduce additional elements to  the curriculum, as long as they meet state curriculum requirements and  that the charter school computer equipment policy is different from the  policy for traditional public schools.
section_title: States Promoted Accountability for Charter School Performance and Financial Integrity through State Actions and through Authorizers
paragraphs: To promote charter school performance and financial integrity, states took  various actions to oversee charter schools and provided oversight of and  assistance to authorizers. Twenty-eight of 39 states reported that they  collected information on the extent to which charter schools achieved the  academic goals in their charters, goals that may not be related to NCLBA.  A third of the 39 surveyed states reported having primary responsibility for  monitoring the financial condition of charter schools. In overseeing  authorizers, most states also reported having taken actions to determine  whether authorizers were performing their oversight responsibilities or to  address authorizer oversight problems. In addition, most of the states  supported authorizers by providing them with assistance to help them  oversee charter schools. Over half of the states either provided funding to  authorizers or allowed authorizers to collect a fee from the charter schools  they authorize.
subsections: section_title: States Took Various Actions to Monitor the Academic Performance and Financial Integrity of Charter Schools
paragraphs: All but 5 states reported monitoring the enforcement of NCLBA school  improvement requirements for charter schools. Title I schools are  designated as in need of improvement if they miss state performance  targets for 2 or more years in a row and certain school improvement  actions are required. According to our survey, only 6 states reported being  responsible for developing school improvement strategies. (See table 1.)  Over half of the 39 states in our survey reported having responsibility for  enforcing school improvement actions. Table 8 in Appendix II presents the  detailed responses to these questions, organized by states’ authorizer  structures.
Twenty-eight of the 39 surveyed states reported that they also collected  information on the extent to which charter schools achieved the academic  goals in their charters, not including those goals related to NCLBA. Eight  states reported that the state agency had primary responsibility for  ensuring the charter goals are achieved, but most of these were states  where the state agency is the only authorizer in the state. Table 9 in  appendix II shows states’ detailed responses to these questions.
States also reported varying roles in promoting financial integrity of  charter schools. Thirteen states reported that a state agency was primarily  responsible for monitoring the financial condition of charter schools. As  shown in table 2, many of the 39 states reported multiple entities with  varying degrees of responsibility for financial monitoring. Only 4 states— Arizona, Indiana, Wisconsin, and Puerto Rico—reported that a single  entity had financial oversight responsibility. Table 10 and table 11 in  appendix II show the complete range of answers given for each state  reporting.
Most of the 39 states relied on financial audits as one mechanism of  financial oversight. Thirty states reported that the state required charter  schools to obtain an audit of their financial statements on a regular cycle,  usually each year, and most of these states said that state law required this  audit. Generally, states reported that independent auditing firms  conducted these audits; in 6 states, they were conducted by the state audit  organization.
Although 30 states reported that audits were required, many of these states  did not provide information we requested about audit results for the 2002- 03 school year. Twenty-seven states reported that charter schools received  audits in 2002-03, but only 14 states provided audit data. States gave  several reasons for the incomplete information. Some state officials said  that they collected the annual audit reports but did not compile the audit  data for our survey or that their office did not receive copies of the audit  reports. Other states reported that charter schools are included in school  district audits, but results are not broken out for charter schools.
In the 14 states that reported audit data, 360 of the 428 charter schools—84  percent—received an unqualified, or “clean,” opinion. An unqualified  opinion means that financial statements present fairly the financial  position, results of operations, and cash flows of the entity, in this case the  charter school, in conformity with generally accepted accounting  principles. Almost 70 charter schools in these states received something  other than a clean opinion; most of these schools—59—received a  qualified opinion as the result of a problem. For example, one state had  several charter schools receive qualified opinions because of insufficient  detail in their financial statements. Three schools received a disclaimer of  opinion, indicating that the auditor did not express an opinion on the  financial statements, and 6 schools received a going concern opinion,  indicating that the school could not meet current operating costs without  incurring debt or liquidating assets.
Over one-third of the 39 surveyed states reported that in school year 2002- 03, at least one charter school was closed involuntarily, for reasons other  than the charter holder’s request. One state—Connecticut—reported an  involuntary charter school closure for academic reasons in 2002-03, and 7  states—Arizona, Colorado, Florida, Louisiana, New Jersey, Oregon, and  Wisconsin—reported involuntary charter school closures for financial  reasons. Other reasons given for involuntary closures included leadership  and governance problems. Fourteen states, many of which were the same  states reporting involuntary closures, also reported that at least one  charter school closed voluntarily in 2002-03. Table 12 in appendix II  provides more detailed information about charter school closures.
section_title: States Also Provided Oversight of and Assistance to Authorizers of Charter Schools
paragraphs: Twenty-nine states reported that entities other than a state agency could  authorize charter schools. These states reported that they had established  a variety of statewide policies and procedures that authorizers and schools  must use. Nearly all of the 29 states established procedures for  administering standardized tests. Eight states established policies that  required or allowed accreditation of charter schools. Over half of the 29  states reported that they prescribed accounting standards for authorizers,  and 12 reported that they permitted authorizers to withhold state funds  from charter schools.
Most of the 29 states also reported having taken actions to determine  whether authorizers were performing their oversight responsibilities or to  address authorizer oversight problems. As table 3 shows, these actions  sometimes involved audits or investigations of authorizers. Not shown in  table 3, most of the 29 states provided notification of potential charter  school noncompliance with educational or financial requirements. Table  13 in appendix II provides more detailed information about states’ actions  to address authorizers not performing their oversight responsibilities.
In addition to overseeing authorizers, states supported authorizers by  providing them with assistance to help them oversee charter schools. As  shown in table 4, nearly all of the 29 states provided assistance in at least  one of four forms: state funding, fees for service, training, and technical  assistance. Over half of the 29 states either provided funding to authorizers  or allowed authorizers to collect a fee from the charter schools they  authorize.
Most of the 29 states also collected information from authorizers about the  charter schools the authorizer oversaw. As shown in table 5, the majority  required authorizers to submit schools’ charters and student attendance  data to the state. Fewer than half required authorizers to submit  performance reports about the schools they authorized, contracts  approved by charter schools, and information about policy decisions made  by charter holders.
section_title: NCLBA’s Provisions Apply to Charter Schools but Provide Some Flexibilities
paragraphs: Under NCLBA, charter schools are required to meet the same performance  requirements as other public schools, but the law permits certain  flexibilities where allowed by state law. Charter schools, like other public  schools, are subject to the law’s requirements for the assessment of school  performance and the implementation of actions required when schools do  not meet state performance goals. NCLBA requires that oversight  responsibility be performed in accordance with state law. In addition,  while NCLBA requires certification for all other teachers to meet the  highly qualified teacher requirement, the law exempts charter school  teachers from this requirement where state law contains such an  exemption.
subsections: section_title: NCLBA Requires Charter Schools to Comply with Its Provisions, but Oversight Responsibility Is Determined by State Law
paragraphs: Charter schools, like other public schools, are subject to the single  statewide system for assessing school performance required by NCLBA  and to the law’s parental notification requirements regarding the school’s  performance on these assessments. If charter schools receiving Title I  funds do not meet annual performance goals, they must also implement  the school improvement actions NCLBA requires. Education’s guidance  for charter schools specifies that NCLBA requirements are to be overseen  in accordance with state law and that it is state law that determines the  entity with responsibility for the performance of charter schools.  According to the guidance, this generally means the authorizer.
Our survey of states indicated that charter schools were included in  statewide assessment systems. All 39 states indicated that charter schools  administered the test used for states’ annual performance goals under  NCLBA in 2002-03. Thirty-three states provided information on their  charter schools’ performance in achieving the state performance goals in  2002-03. Of these 33 states, 21 reported that at least half of charter schools  in the state achieved annual state performance goals in 2002-03, while 12  states indicated that fewer than half of their charter schools achieved  annual performance goals. (See fig. 4.) For example, the percentage of  charter schools achieving state performance goals ranged from 100  percent in Utah to 8 percent in Missouri. Table 14 in appendix II includes  information for each state on charter schools’ achievement of state goals.
In addition, the law requires schools receiving funds under Title I of  NCLBA, including charter schools, to take certain improvement actions if  they repeatedly do not achieve their states’ annual performance goals. As  figure 5 shows, 31 states reported that some or all charter schools in their  states received Title I funds in 2002-03; therefore, these Title I schools  would potentially be subject to NCLBA school improvement actions. In 21  of those states, a majority of charter schools received Title I funds. Table  14 in appendix II provides detailed responses on the percentage of Title I  charter schools by state.
As mentioned previously in this report, our survey asked state officials  which entity in their state had primary responsibility for NCLBA  requirements, and consistent with Education’s guidance, states reported a  variety of entities assuming these responsibilities. As shown in figure 6,  officials most commonly reported that development of school  improvement strategies is primarily the responsibility of the charter  holder—the entity granted permission to establish the charter school. The  enforcement role was most often seen as the responsibility of the state  education agency, either the state department or board of education and,  less frequently, authorizers. However, in 9 of the 19 states that identified a  state agency as being primarily responsible, the state agency was the only  authorizer in the state. In addition, while 7 states reported that  enforcement is primarily an LEA responsibility, LEAs are the only  authorizers in 4 of these states.
Among the first of the improvement actions specified for Title I schools  are the school choice transfer option and supplemental services. If a Title I  school does not meet the state’s annual school performance goals for 2  consecutive years, it must be designated as in need of improvement.  Students attending these schools must be given the option to transfer to  another school in the district, and the transfer school offered must not be  designated in need of improvement under NCLBA. If a school does not  meet the target for a third year, students must be offered supplementary  educational services, such as tutoring. Officials in 18 of the 31 states with  Title I charter schools reported that at least one charter school in their  state had been designated in need of improvement in school year 2002- 03—a total of 148 charter schools across the 18 states. Three of the 18  states reported a total of 15 charter schools implementing the school  choice transfer option. An additional 5 of the 18 states reported  implementing supplemental services rather than choice. Ten states  reported that neither choice nor supplemental services was implemented  or that they did not know if any school improvement action had been  taken. Table 14 in appendix II provides this information for each state.
One of the possible reasons that states reported relatively few charter  schools implementing choice may be that many charter schools are single- school LEAs. In these cases, Education guidance says that to the extent  practicable, arrangements should be made with a neighboring LEA to  accept transferring students. If such arrangements cannot be made,  supplemental services may be offered as an alternative. Officials in 8 of the  39 states we surveyed reported that charter schools were considered  LEAs, and in 15 other states, some charter schools were LEAs. (See fig. 7.)  However, when charter schools are parts of LEAs under state law, as  reported by 16 states, and there are other eligible schools in the LEA to  which students could transfer, LEAs are required to offer transfers.  Charter school students who accept transfers under these conditions must  be provided transportation to the offered school, even if a state’s charter  law does not require that transportation funds be made available for  charter schools.
Those schools, including charter schools, that meet state performance  goals may serve as schools of choice for students transferring under  NCLBA or may provide supplemental services to students attending  schools that did not meet state goals. Officials in 4 states reported on our  survey that at least one charter school in their state received students  transferring under the NCLBA school choice provision, and officials in 3  states reported charter schools serving as providers of supplemental  services.
A few states reported other reasons that school improvement actions,  including school choice transfer, were not implemented in charter schools.  In 1 state, timing was reported as a possible reason—that is, school  improvement actions may have been planned but not yet taken by the end  of school year 2002-03. In 2 states, officials said that charter schools are  schools of choice and students may transfer at any time. In another state,  officials said they believed that in most charter schools needing  improvement, parents might have declined to transfer their children—or  might not have been offered the transfer option because of a  misunderstanding of the law. However, some states did not know what  actions were taken in charter schools needing improvement. For example,  officials in 3 states, with a total of 78 charter schools needing  improvement in 2002-03, were unable to provide information about any  school improvement actions that may have been taken in those schools.
section_title: NCLBA Allows Certain Flexibilities for Charter Schools
paragraphs: While most accountability provisions of NCLBA are applied in the same  way to charter and traditional schools, the law makes a distinction in  several areas. For one thing, NCLBA requirements for highly qualified  teachers make an exception in the certification requirement for charter  school teachers. In general, to be highly qualified under NCLBA, teachers  in core academic subjects must have obtained state teacher certification,  hold a bachelor’s degree, and have demonstrated subject matter  knowledge. However, the law provides that teachers of core academic  subjects in charter schools meet the certification requirement if they meet  the requirements set forth in their state’s charter school law regarding  certification or licensure. Officials in 13 of the 39 states in our survey  reported that their state law exempted charter school teachers from  certification requirements.
In addition, Education’s NCLBA guidance for charter schools modifies the  instructions regarding lotteries to give preference to students seeking to  transfer to the charter school under the choice provision of NCLBA.  Charter schools receiving funds under Education’s Charter School  Program must use a lottery if they have more applicants than can be  served by the school. The NCLBA guidance permits such charter schools  to weight the lottery to increase the chances of admitting students seeking  to change schools under the law’s choice provisions.
Other areas where charter schools have had flexibility do not appear to be  affected by NCLBA, such as having additional, unique academic goals and  using additional assessments to measure progress for those goals. Officials  in 30 of the 39 charter school states we surveyed reported that all charter  schools included unique academic goals, not related to the state’s annual  school performance goals, in their charters. Officials in 4 other states  reported that at least some of the charter schools in their states included  their own academic goals in their charters. Twenty-three states reported  that charter schools in their states use a test, in addition to the  standardized test required by the state, for their own assessment  purposes.
section_title: Education Provides Support to Charter Schools Directly and Indirectly through Several Federal Programs and Conducts Research on Charter Schools
paragraphs: As it does for all public schools, Education plays a role in accountability  for charter schools through the resources it provides: it administers grant  programs that provide funds to charter schools, including a program  designed specifically to encourage the development of charter schools,  and sponsors research on charter school accountability. In addition,  NCLBA reiterated Education’s additional responsibility for charter  schools’ funds. The department must ensure that new and expanding  charter schools receive timely payment of federal grant funds for which  they are eligible. Education’s OIG has reported problems with the  timeliness of receipt of Title I funds by charter schools and recommended  that Education more closely monitor this situation. Although Education  monitors states’ oversight systems and visits some school districts and  schools, the data collected during these site visits can only be used to  determine the timeliness of funds disbursed at the locations visited.  Therefore, Education has little information to use in ensuring that charter  schools receive their federal funds promptly or to know how well the  schools perform. Education is in the process of developing new systems  that are expected to provide both performance and financial reports for  the department’s major grant programs, but the ability of the new systems  to provide financial data for charter schools is questionable. Education  also sponsors research that provides a better understanding of charter  schools.
subsections: section_title: Education Administers Grant Programs That Provided Funds to Charter Schools but Could Seldom Distinguish Charter Schools from Others in Data Collected
paragraphs: Although charter schools receive funds from a variety of federal programs,  Education’s monitoring of these programs provides little information that  can help the department fulfill its responsibility under NCLBA to ensure  timely payment to charter schools. Table 6 shows selected grant programs  from which charter schools commonly receive federal funds. In the case of  the larger grant programs, Title I and the Individuals with Disabilities  Education Act (IDEA), Education makes grants to the states, which then  distribute the money to local education agencies. In such cases, Education  monitors state programs, including state systems for monitoring local  programs, by reviewing annual performance reports and conducting site  visits. As part of its monitoring process, Education visits a selected  number of school districts and schools. However, the data collected  during these site visits could be used to determine the timeliness only of  funds disbursed to the districts and schools visited. These data cannot be  used to check timeliness of funds dispersed to all of a state’s charter  schools.
NCLBA charges both Education and states with ensuring that new and  expanding charter schools receive all federal formula grant funds for  which they are eligible within 5 months of opening or expanding.  However, Education’s OIG reported problems with the timeliness of Title I  grant payments to charter schools. In 2003 and 2004, the OIG examined the  timeliness of states’ Title I payments to charter schools in Arizona,  California, and New York and found delays as long as 13 months in New  York and 6 months in Arizona. In reporting these findings, the OIG  included suggestions for improving Education’s monitoring of payment  timeliness for charter schools. Education has generally accepted the  OIG’s recommendations and proposes to take certain steps to improve its  monitoring of these payments.
Responses to our survey suggested that states varied in their ability to  track federal funds flowing to charter schools in their states. For instance,  according to our survey, although officials in 36 states reported that they  monitored the federal funding that individual charter schools received,  just 13 states were able to report the proportion. However, according to  officials in at least two of these 13 states—Ohio and Texas—their states  have developed the capability to track the flow of state and federal funds  to charter schools through their automated financial information systems.  The information on funding flows and the timeliness of payments these  systems provide can assist state education agencies in Ohio and Texas in  ensuring that charter schools receive federal grant funds.
For most grant programs, Education’s financial data system does not  identify individual schools, nor does it distinguish between charter schools  and other schools. Instead, for most programs, funding is provided to, and  data are collected on, the grant recipient, which is usually an SEA or LEA.  The management information system that Education’s grant managers use  to track funds and oversee their programs, GAPS, follows the payment and  timing of grants according to the fiscal agent, frequently an SEA or LEA.
Only when schools are single-school LEAs can they serve as fiscal agents  in some programs. Even then, however, single-school charter school LEAs  are not separately identified as charter schools in GAPS. For the programs  shown in table 6, GAPS cannot be used to obtain complete information on  grant receipt at the charter school level. Furthermore, although there are  plans to develop a new management information system to improve grant  monitoring, it is unlikely that the new system will have the capability to  track Education’s grant funds to the school level. Without the capability in  its financial information system to track federal funds to charter schools,  Education must rely on states for information to perform its responsibility  under NCLBA to ensure prompt payment of federal funds to individual  charter schools. According to Education’s OIG, Education’s current  monitoring of states does not systematically obtain information about  timeliness. While monitoring team members sometimes asked about  timely payment on their own initiative, Education’s monitoring procedures  for Title I funds did not instruct team members to inquire about timely  payment of funds to charter schools.
At present, a similar lack of charter school-level information exists for  school performance data. Education did not collect information on  NCLBA-related annual school performance goal status for any public  schools in school year 2002-03, and the performance data Education  collected about school improvement status did not allow the department  to distinguish charter schools from other public schools without additional  analysis and reporting. Education required states to submit a Consolidated  State Performance Report by December 2003 on specific aspects of  NCLBA implementation for the 2002-03 school year. Of the Consolidated  State Performance Report’s three main sections—student performance,  schools needing improvement, and school choice and supplemental  educational services—none requested separate data on charter schools.
Education also administers the Charter School Program, a grant program  designed specifically to encourage the development and expansion of  charter schools. The Charter School Program obligated about $199 million  in grants in fiscal year 2003. Typically, grants are awarded to state  agencies, although other entities, including schools, can apply directly if  their state does not have an approved application on file. The grant is  competitive; that is, applications are ranked and awards are made on the  basis of the applicant’s ability to meet program goals. To monitor this  program, Education has collected information on how well the program is  meeting its goal of developing and expanding charter schools, using the  standard performance report used by most Education programs. This  report does not require that states receiving Charter School Program  grants provide this information in a standardized, uniform way. States  provided information about how they are meeting the goal in formats of  their own choosing, resulting in data that are not readily aggregated and  making determination of overall program success difficult. For example, at  least one state reported the number of grant applications received and  awarded but did not report on the number of schools actually opened and  operated that were funded by those grants, a piece of information critical  to assessing the program’s goal of developing and expanding charter  schools.
In 2003, federal program officials developed a supplementary form that  requested more specific indicators of performance; for instance, the form  asks specifically for the number of charter schools opened each year.  According to an Education official, the information provided on this form  has been useful in monitoring the grant, but completing it is voluntary on  the part of the states, and not all states choose to provide the information.  Having the data from all states on the number of new charter schools  started with Charter School Program funds would allow program officials  to monitor the program’s goal of encouraging the development of charter  schools more precisely than the standard performance report permits.
section_title: Data System Holds Promise for Tracking School-Level Performance Data; Financial Data Are More Problematic
paragraphs: To support Education’s grant management functions and to streamline  collection of performance reports across grant programs, Education is in  the process of developing the PBDMI. The PBDMI is designed to be a  comprehensive system that will integrate information from numerous data  sources. The design calls for the system to include both financial and  academic performance information. For the academic performance  information component, the PBDMI is expected to provide school-level  academic performance information for the department’s major grant  programs, including information on NCLBA implementation. Education  officials also hope to use PBDMI’s financial information to examine the  link between federal grant program resources and program results.
Moreover, the system is designed to produce reports that break out  charter schools, but this capability is contingent upon receiving data from  states that identify charter schools. Education officials expect to  implement the academic performance information component in spring  2005, and the PBDMI’s financial information component is in an early  stage of implementation.
For academic performance information, the system’s school-level data  categories will include whether schools have achieved annual state school  performance goals under NCLBA, whether or not students from the school  have transferred to other schools under school choice, and the number of  students receiving supplemental services. Reports covering these  categories would allow Education to monitor and analyze charter schools’  NCLBA results. In fact, once the PBDMI is fully implemented, according to  an Education official, elements of the Consolidated State Performance  Report will be replaced, since the new system will allow Education to  monitor implementation of NCLBA in all public schools.
Although the academic performance information component is fully  developed, the extent to which the PBDMI will provide school-level  financial information, including information that could be used to track  the timeliness of payments, still is unclear. The PBDMI is expected to draw  on the new grant tracking and monitoring system that will replace GAPS,  but that system is unlikely to have the capability to track Education’s grant  funds to the school level, according to Education officials. Consequently,  on the basis of our discussions with Education officials, it appears  questionable that the PBDMI will be able to track federal funds to schools,  either traditional public schools or charter schools, unless other school- level data sources are available, such as information states may be able to  provide. However, according to Education officials, states and school  districts in some cases may not maintain complete school-level records on  federal grant fund disbursements. For instance, Education officials  explained that because for some grant programs, federal funds bypass the  states and go directly to school districts, states may not record the  disbursements. States’ records also are incomplete in some cases because  states may redistribute the funds for federal grant programs, such as Title  I, and record those disbursements, but have no records of the  disbursements made by school districts or schools. Thus, Education’s plan  for collecting school-level financial information for the PBDMI is not yet  complete.
Through a separate process, the PBDMI also will make possible the  collection of specialized data, which could provide useful information in  understanding the performance of charter schools. Surveys will be used to  obtain information on schools or subpopulations of schools that is not  reported annually by state agencies. For charter schools, the specialized  information could include data such as authorizer type. Researchers then  would be able to use the PBDMI’s information on characteristics of  charter school and the type of authorizer that oversees each charter  school in the design of charter school studies, such as Education’s charter  school impact evaluation of the effectiveness of charter schools.  Collecting information on the entire charter school population, storing it in  the PBDMI, and updating it periodically would avoid the need for  researchers to collect basic descriptive information each time a charter  school study is conducted. The first survey—which is not currently  focused on charter schools—is planned for spring 2005. No surveys of  charter schools are planned yet, according to an Education official,  although they could be considered in the future.
section_title: Education Has Sponsored Research on Charter Schools
paragraphs: To contribute to understanding of the charter school movement and  address the department’s interest in charter schools as an educational  reform, Education has sponsored a range of research projects on charter  schools. Some findings of these studies provide useful information related  to accountability for school performance and financial integrity. Appendix  III shows selected charter school research projects sponsored by  Education. For example, the department has conducted a series of studies  based on national surveys, published as The State of Charter Schools and  A Decade of Public Charter Schools. These studies provided useful  information on the methods authorizers use to hold charter schools  responsible for academic performance and financial integrity, but they did  not examine states’ oversight actions. These studies also have produced  valuable information on the flexibilities available to and preferred by  charter schools. Although they provided descriptive information on  authorizers’ oversight methods, these studies were not designed to focus  on states’ oversight actions and charter school performance. Thus, the  studies did not attempt to associate states’ approaches to flexibility or  oversight actions with charter school results.
At present, Education is undertaking a major study of charter school  performance, the charter school impact study shown in appendix III. This  study, Education’s first evaluation designed to determine whether charter  schools can make a difference in the academic achievement of their  students, will track about 3,000 students in 50 schools in 10 states. It will  compare the achievement on standardized tests over 3 years for a cohort  of students accepted into the 50 charter schools and students who applied  to those schools but were not accepted. This approach should result in a  methodologically rigorous study design because acceptance into an  oversubscribed charter school is supposed to be based on a lottery.   Assignment by a lottery would yield a study group and a comparison group  that are created from randomly selected students. In order to identify the  conditions under which charter schools are most effective in improving  student achievement, the study is likely to include a measure of the  flexibility states offer charter schools, according to an Education official.  As originally designed, the study did not include plans to examine states’  approaches to oversight or to associate these approaches with school  performance. According to department officials, subsequent revisions  were made to the study design to allow Education to examine how various  aspects of state and authorizer policy may contribute to student  achievement. However, the amended evaluation design does not make  clear the extent to which states’ accountability practices will be taken into  account.
section_title: Conclusions
paragraphs: In recent years, charter schools have enjoyed widespread support as  vehicles with potential to provide parental choice in education and  promote innovation and creativity in the nation’s educational system.  Flexibility and increased autonomy are thought to be important tools for  successful charter schools. However, the many challenges of starting and  operating a successful charter school are widely recognized, and these  challenges could put charter schools at risk for academic and financial  difficulties.
Like the department’s role in administering other federal public school  programs, Education’s oversight responsibility for charter schools seldom  extends to individual schools. However, charter schools, as a group, are of  particular interest to policy makers because they hold promise as an  education reform. Education’s inability to disaggregate charter schools in  its routine monitoring and analysis activities has limited its ability to  provide policy makers information on the academic performance of  charter schools, although the department’s planned comprehensive data  system, PBDMI, is expected to improve this situation soon. However, the  department’s plans for the financial component of PBDMI are much less  developed. Although it appears that the system has the potential to assist  the department in its responsibility to ensure timely grant payments to  charter schools, critical questions remain about the capability of states to  provide complete information on the timing and disbursements of federal  funds. Some states, including Ohio and Texas, have developed financial  information systems that include records of school-level disbursements of  federal funds. Such improvements enable these states to track the  timeliness of federal grant payments to charter schools.
In an area where Education has a more direct monitoring role—oversight  of the Charter School Program—program officials have recently taken  steps to collect data that give better insight into program performance. For  instance, program officials have begun to ask for standardized data on  program progress, such as the number of charter schools opened.  However, reporting the information is voluntary, and not all states choose  to provide it. Without assurance that states will provide the requested  information, Education is limited in its ability to gauge the Charter School  Program’s accomplishments.
Finally, as it does for other public schools, Education plays an important  role in advancing knowledge about charter schools through research  efforts it sponsors, and its planned evaluation of achievement in charter  schools will further contribute to this knowledge base. The size of this  study—about 3000 students in 50 charter schools—could afford an  opportunity for researchers to further examine the relationship between  states’ approaches to oversight of charter schools and their academic  success.
section_title: Recommendations for Executive Action
paragraphs: To help the department in carrying out its responsibilities related to  monitoring federal funds for charter schools and to provide further  information on charter schools as an educational reform, we recommend  that the Secretary of Education  1.  Support implementation of the PBDMI’s financial performance  information component by assisting states in developing automated  financial information systems to measure and track the disbursement  of funds to the charter school level.  2.  Require Charter School Program grantees to include in their annual  performance reports standard indicators of program accomplishments,  in particular, the number of schools started through use of grant funds.  3.  Require that the planned charter school impact evaluation design  include an analysis of the effects of accountability practices on charter  schools’ performance.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Department of Education for  review and comment.  Education’s comments appear in appendix IV.   Recommended technical changes have been incorporated in the report as  appropriate.
Education said that the report provides useful information about the  application of NCLBA to charter schools, charter school authorizers, and  states’ oversight of charter schools. Education strongly agreed with our  recommendation about reporting requirements for the Charter School  Program and indicated its intention to implement that recommendation.   In the case of our recommendation that the department support the  implementation of PBDMI’s financial component by assisting states in  making improvements to their financial information systems, Education  said that it would look more closely at the systems developed in Ohio and  Texas and, if merited, will share this information with other states.  Education also will use the review of Ohio and Texas’ information systems  to assess the degree of burden states might incur in measuring and  tracking financial information to the school level. Regarding our  recommendation about examining the effects of accountability practices  on school performance, Education agreed to examine expanding the  impact evaluation to include a review of authorizers’ oversight and  accountability practices.
We have withdrawn our recommendation that Education collect  information on authorizer type through a PBDMI survey. We think that  Education’s plan to examine the strength of the relationship between  authorizers and charter schools’ academic performance in the charter  school impact evaluation is a good first step. We think using information  from a small sample of schools to determine whether authorizer type  should be collected for the entire charter school population through a  PBDMI survey is a prudent use of resources.
We will send copies of this report to the relevant congressional  committees and other interested parties. We also will make copies  available to others upon request. In addition, the report will be made  available at no charge on GAO’s Web site at http://www.gao.gov. Please  contact me at (202) 512-7215 if you or your staff have any questions about  this report. Other contacts and major contributors are listed in appendix V.
section_title: Appendix I: Scope and Methodology
paragraphs: This appendix discusses in more detail our methodology for examining  states’ oversight of their charter school systems and the role the  Department of Education (Education) plays in charter school  accountability. The study was framed around four questions: (1) how  states allow charter schools flexibility in design and operation, (2) how  states promote accountability for school performance and financial  integrity in their charter school systems, (3) the implications of the No  Child Left Behind Act (NCLBA) for charter schools, and (4) the role  Education plays in charter school accountability for school performance  and financial integrity.
subsections: section_title: Scope
paragraphs: While individual charter schools often are locally initiated, the state  legislature determines the basic structure of a state’s charter school  system in legislation. Prior research on charter school accountability has  focused on the relationship between charter school authorizers and their  schools, but few studies examined the flexibility that state laws and  agencies grant authorizers and schools or the accountability  responsibilities the state exercises. To examine how states allow flexibility  and promote accountability, we focused on the approaches all states and  other political units with operating charter schools in school year 2002-03  took to managing the accountability relationship with charter school  authorizers and schools. We also examined states’ NCLBA implementation  practices and the role Education played in supporting charter school  accountability through federal funds and research.
section_title: Methodology
subsections: section_title: Survey Data Collection and Analysis
paragraphs: The population for this survey included the state charter school agencies  in the 37 states, the District of Columbia, and Puerto Rico, all of which had  operating charter schools in school year 2002-03. We obtained usable data  from all 39. We asked that the person most knowledgeable about the  state’s charter schools coordinate completion of the data collection  instrument and confer with representatives of other offices in the state  department of education or other charter school agencies for questions  that required more in-depth knowledge of particular areas.
To develop survey questions, we conducted interviews with charter school  researchers and reviewed existing studies on the relationship between  authorizers and their schools. We also consulted with Education’s Charter  School Program officials. In addition, we conducted an exploratory site  visit to Ohio charter school organizations to develop an understanding of  authorizers’ and charter schools’ perspectives on state oversight actions.  We also discussed their charter school accountability research with  representatives of the state legislative oversight agency and state audit  agency. The survey included both a primary data collection instrument and  a second data collection instrument used to verify state responses to the  primary data collection instrument and to collect additional contextual  data. In addition to an internal expert technical review by our survey  coordination group, we conducted a two-stage pretest of the primary data  collection instrument in 6 states to ensure that the data collection  instrument was clear and could be answered accurately in a reasonable  amount of time. These states were Arizona, Indiana, Louisiana, New  Jersey, Oregon, and Texas. We modified the data collection instrument to  incorporate findings from the pretest. On the basis of this work, we  decided on a two-pronged approach: a primary self-administered survey  and a follow-up telephone survey. The primary data collection instrument,  used for the self-administered survey, was an electronic instrument that  was sent to the state agencies by e-mail.
As intended, state agency respondents completed the data collection  instrument electronically and returned the completed instrument to GAO  headquarters by e-mail. The second data collection instrument, used for  the follow-up survey, was also an electronic document with open-ended  questions that collected narrative data. This data collection instrument  was administered by telephone by a GAO analyst. The second follow-up  survey provided for clarification and verification of responses to the  primary data collection instrument to ensure that any variation among  charter school state agencies in approaches to flexibility, accountability  practices, and organizational structures was in fact due to differences in  their approaches. This follow-up interview was conducted with each of the  39 states that returned the primary data collection instrument. Another set  of follow-up contacts for data that required inquiries with additional state  agency representatives or searches of state agency records also was  conducted by e-mail.
Our approach also involved two additional data gathering and verification  steps. During the follow-up telephone interview, additional information  was obtained from all participating states on survey questions concerning  actions state agencies took to oversee authorizers and set statewide  policies and procedures for charter schools, and a short supplemental  instrument was completed. In addition, the 6 states selected to pretest the  data collection instrument were asked to complete a short modification  instrument that included only those questions that had changed or been  added from the pretest version to the final version of the primary data  collection instrument.
To expedite data preparation, responses on the electronic version of the  primary data collection instrument were transferred electronically directly  into the survey data file. Changes to responses on the electronic version of  the instruments originally submitted by state respondents, arising from (1)  the follow-up interviews and (2) the supplemental instruments on  accountability practices, were recorded manually on a hard copy of the e- mail submission and entered into the survey data file through  programming codes. For the pretest states, integrated electronic versions  of the original survey responses on the primary data collection instrument,  and responses to the second data collection instrument, the supplemental  instrument, and changes collected by the modification instrument were  transferred to a new instrument, and a 100 percent verification of this  information was completed. As with other states’ responses, the pretest  states’ responses on the integrated electronic data collection instrument  were then read directly into the survey data file.
Thirty-nine states responded to the survey, yielding a 100 percent response  rate. In two instances, we adapted our survey data collection strategy to  suit local circumstances. In Arizona, although we initially contacted the  state education agency, that agency and the independent charter school  board agreed that the independent board would take the lead in  completing the survey. However, both entities worked together to provide  a completed survey. In the District of Columbia, the Board of Education  opted to answer the survey only for the charter schools it authorized. To  obtain complete information, we asked the District of Columbia’s  independent charter school board to complete a separate survey for its  charter schools. Where appropriate, we have provided the additional  information we obtained from the independent charter school board.
The survey relied on state agency officials’ self-reporting of flexibility,  accountability, and NCLBA implementation information. To ensure the  reliability of the data collected, responses from the follow-up interviews  were used to verify survey responses and to make corrections. Changes  made to the original survey were verified independently. An independent  analyst compared the programming done to incorporate the corrections  arising from the follow-up interview with responses in the survey data file.
The survey data were analyzed using descriptive statistics and cross- tabulations. In collecting and analyzing the financial statement audit data,  we employed the following definitions of audit results:    Unqualified opinion. The financial statements present fairly, in all  material respects, the financial position, results of operations, and cash  flows of the entity in conformity with generally accepted accounting  principles.
Qualified opinion. Except for the effects of the matter to which the  qualification relates, the financial statements present fairly, in all material  respects, the financial position, results of operations, and cash flows of the  entity in conformity with generally accepted accounting principles.
Disclaimer of opinion. A disclaimer of opinion states that the auditor  does not express an opinion on the financial statements.
Going concern. The entity cannot meet current operating costs without  incurring debt or liquidating assets.
However, in analyzing the data on states’ financial oversight actions, we  did not assess how well the oversight was conducted, that is, whether the  required financial audit reports were in fact reviewed by the oversight  agencies or whether agency officials had the skills needed to make  financial assessments.
Because the school performance data reported were incomplete or not  comparable with data reported by other states, we excluded data on  charter schools’ performance in achieving state performance goals in  school year 2002-03 reported by 5 states from our state performance  summary:    Arkansas. All seven of Arkansas’ charter schools were assessed, but all  seven were not rated because the charter schools had not all been in  operation for 3 years. Arkansas uses a 3-year model to determine student  proficiency.
Connecticut. The designated contact disclosed that the state tested charter  schools in the fall of 2003 and attributed the results to spring 2003. Thus,  the Connecticut charter school performance data did not reflect the same  time period as data for other states.
Indiana. Because test results for the 2002-03 school year were not yet  available, Indiana reported results from the test administered in school  year 2001-02. Indiana had no operating charter schools in 2001-02.
New York. New York’s charter school performance data were incomplete.
The designated contact reported results for 5 of the state’s 38 charter  schools.
Wisconsin. Wisconsin’s charter school performance data were incomplete.  The designated contact reported results for the charter schools authorized  by the state agency, a small proportion of the state’s 128 charter schools.
section_title: Interviews with Education Officials
paragraphs: To determine Education’s role in charter school flexibility and  accountability, we conducted interviews with representatives of the  Charter School Program, Title I, the Individuals with Disabilities  Education Act (IDEA), selected other formula and discretionary grant  programs, the Grant Administration and Payment System (GAPS) financial  information system, the Office of Inspector General, and Education’s  research offices. We also interviewed charter school experts, including  Bryan Hassel, Public Impact; Katrina Bulkley, Rutgers University; Mark  Cannon, National Association of Charter School Authorizers; Louann  Bierlein-Palmer, Western Michigan University; and Anna Varghese, Center  for Education Reform. We identified grant programs for inclusion in our  assessment on the basis of program size and nomination by Education  officials, and we asked Education officials to identify grant programs in  which charter schools were likely to participate. We also reviewed  documentation for the grant programs, the Performance-Based Data  Management Initiative (PBDMI), GAPS, and the charter school impact  study design.
We also used findings from the interviews and document review to  determine the implications of NCLBA for charter schools.
section_title: Review of Existing Charter School Accountability Studies
paragraphs: To examine Education’s role in sponsoring charter school research, we  reviewed existing studies of charter school accountability for school  performance and financial integrity. This review was designed to identify  the research sponsored by Education and other policy research  organizations that assessed some aspect of charter school accountability.  We framed our search for existing research broadly enough to identify  studies that focused on the oversight relationship between authorizers and  charter schools. We included research sponsored by Education and other  organizations to identify the range and quality of research evidence on  charter school accountability available to charter school state agencies  and authorizers.
To identify a potential population of studies, we consulted with  knowledgeable Education officials and conducted a search of automated  bibliographic data bases for studies of charter schools focused, in whole  or in part, on any aspect of charter school accountability for school  performance and financial integrity. We gave priority to studies that  covered all or multiple states with operating charter schools or had highly  salient findings. Appendix III lists the studies identified.
section_title: Appendix II: Selected Data Tables from Survey
paragraphs: Appendix II: Selected Data Tables from  Survey education (DOE) education (BOE) agencies (LEAs)
Choice is restricted to some locations or circumstances.
Did not respond.
Law changed April 2003 to further expand choices available.
The respondent from Texas chose not to answer this question. However, the respondent  acknowledged that when the legislation was passed, the intent was to have both state and LEA  authorizers.
subsections: section_title: Municipal governments
section_title: Appendix III: Summary of Selected Charter School Research Projects Sponsored by the Department of Education
subsections: section_title: Office of Educational Research and Improvement
paragraphs: Employed annual surveys of all  charter schools, operating in school  years 1995-96 to 1998-99.
Employed random sample  telephone surveys of charter  schools and charter school  authorizers  Conducted site visits to seven  charter schools in six states  Analyzed data collected by the  National Study of Charter Schools  Conducted descriptive statistical  analysis of survey data. Qualitative  data are used to help explain some  of the quantitative findings and  provide examples.
Students on charter school waiting  lists who are accepted will be  assigned to the treatment group.  Students not selected will be  assigned to control groups.
section_title: Appendix IV: Comments from the Department of Education
section_title: Appendix V: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
section_title: Related GAO Products
paragraphs: No Child Left Behind Act: Education Needs to Provide Additional  Technical Assistance and Conduct Implementation Studies for School  Choice Provision, GAO-05-007, Washington, D.C.: December 2004.
No Child Left Behind Act: Improvements Needed in Education’s Process  for Tracking States’ Implementation of Key Provisions, GAO-04-734,  Washington, D.C.: September 2004.
Special Education: Additional Assistance and Better Coordination  Needed among Education Offices to Help States Meet the NCLBA Teacher  Requirements, GAO-04-659, Washington, D.C., July 2004.
Charter Schools: New Charter Schools across the Country and in the  District of Columbia Face Similar Start-Up Challenges, GAO-03-899,  Washington, D.C.: September 2003.
No Child Left Behind Act: More Information Would Help States  Determine Which Teachers Are Highly Qualified, GAO-03-631,  Washington, D.C.: July 17, 2003.
Title I: Characteristics of Tests Will Influence Expenses; Information  Sharing May Help States Realize Efficiencies, GAO-03-389, Washington,  D.C.: May 8, 2003.
Title I: Education Needs to Monitor States’ Scoring of Assessments,   GAO-02-393, Washington, D.C.: April 2002.
Title I Funding: Poor Children Benefit though Funding Per Poor Child  Differs, GAO-02-242, Washington, D.C.: January 2002.
School Vouchers: Publicly Funded Programs in Cleveland and  Milwaukee, GAO-01-914, August 31, 2001.
Charter Schools: Limited Access to Facility Financing,   GAO/HEHS-00-163, Washington, D.C.: September 2000.
Title I Program: Stronger Accountability Needed for Performance of  Disadvantaged Students, GAO/HEHS-00-89, Washington, D.C.: June 2000.
Charter Schools: Federal Funding Available but Barriers Exist,  GAO/HEHS-98-84, Washington, D.C.: April 1998.
Charter Schools: Issues Affecting Access to Federal Funds,   GAO/T-HEHS-97-216, Washington, D.C.: September 16, 1997.