Charter schools are public schools established under contracts that grant them greater levels of autonomy from certain state and local laws and regulations in exchange for agreeing to meet certain student performance goals. D.C. charter schools must comply with select laws, including those pertaining to special education, civil rights, and health and safety conditions. In addition, charter schools are accountable for their educational and financial performance, including the testing requirements under the Elementary and Secondary Education Act of 1965, as amended (ESEA). A wide range of individuals or groups, including parents, educators, nonprofit organizations, and universities, may apply to create a charter school. Charter schools in the District are nonprofit organizations and, like other nonprofits, are governed by a board of trustees. The board of trustees, which is initially selected by the school founders, oversees compliance with laws, financial management, contracts with external parties, and other school policies. School board trustees are also responsible for identifying existing and potential risks facing the charter school and taking steps to reduce or eliminate these risks. Charters to operate a school are authorized by various bodies, and may include local school districts, municipal governments, or special chartering boards. In 1996, Congress passed the District of Columbia School Reform Act of 1995 (School Reform Act), creating PCSB as a chartering authority. PCSB was established with the purpose of approving, overseeing, renewing, and revoking charters. After granting charters to schools, PCSB is responsible for monitoring charter schools’ academic achievement, operations, and compliance with applicable laws. While the Mayor and Chancellor of the District of Columbia Public Schools (DCPS) oversee traditional public schools, PCSB is responsible for holding the District’s charter schools accountable for academic results and compliance with applicable laws. PCSB is comprised of seven unpaid board members with expertise relevant to charter school operation and approximately 25 employees who implement the board’s policies and oversee charter schools. Under D.C. law, the seven-member board is appointed by the Mayor, and members of PCSB may serve up to two 4-year terms. To support its operations, PCSB receives local funds through the annual D.C. Appropriations Act. PCSB also receives administrative fees from charter schools based on the number of students enrolled as well as revenue from grants. PCSB’s largest expenditures are for its personnel and program-related costs, such as technology upgrades and charter school reviews that are conducted, in part, by consultants (see table 1). The D.C. School Reform Act allows PCSB to grant up to 10 charters per year. Each charter remains in force for 15 years, and may be renewed for an unlimited number of times. PCSB is required to review each charter at least once every 5 years to determine whether the charter should be revoked. Each year PCSB is required to submit an annual report to the Mayor, the District of Columbia Council, the U.S. Secretary of Education, the appropriate congressional committees, and others that includes information on charter renewals, revocations, and other actions related to public charter schools. A total of 76 charter schools have opened in the District since BOE and PCSB began chartering schools in 1996 and 1997, respectively. However, between 1998 and 2010, 24 charter schools closed, many for fiscal mismanagement discovered through PCSB monitoring. As of the 2010-11 school year, 52 charter schools across 93 campuses are in operation, serving over 29,000 students at all education levels, including early childhood and adult education. Charter schools in the District represent varied instructional and academic models. For example, some schools have a particular curricular emphasis, such as math and science, art, or foreign language, while other charter schools focus on specific populations, such as students with learning disabilities, students who have dropped out or are at risk of doing so, youth who have been involved in the criminal justice system, and adults. In addition, one charter school is a college preparatory boarding school. See appendix I for more information on D.C. charter school characteristics. Unlike traditional public schools, which are generally part of a larger local educational agency (LEA), or school district, each D.C. charter school operates as its own LEA for most purposes. As a result, charter schools are responsible for a wide range of functions associated with being a local school district, such as applying for certain federal grants and acquiring and maintaining facilities. Charter schools may operate in a variety of facilities, such as surplus D.C. school buildings, shared spaces with other schools, and converted commercial buildings, including warehouses. However, public charter schools in D.C.—like charter schools across the nation—face challenges in acquiring facilities and funding facilities-related projects. GAO has previously reported that charter schools consistently encountered problems obtaining cost-effective and appropriate facilities. The District provides various forms of assistance to charter schools for facilities, including preference in leasing or purchasing former D.C. school buildings. The District prefers to lease rather than sell these buildings to charter schools so that they remain assets to D.C. residents. While the Mayor appoints members to the board, PCSB functions as an independent agency within D.C. government. As such, it operates outside of the policies and direction of the Mayor, and operates outside of DCPS and the Chancellor’s purview (see figure 1). While PCSB functions as an independent agency, PCSB and the Office of the Deputy Mayor for Education coordinate on issues of mutual concern. The School Reform Act, which created PCSB, outlines the operations of PCSB and grants the board the power to appoint, terminate, and fix the pay of its executive director and other staff who carry out the daily operations of PCSB. The appointed seven-member board developed by- laws that established its operational procedures, including how appointed board members will be removed. The by-laws also include a reference to the board’s rules on gifts and conflicts of interest, which board members must follow. In addition, the appointed board members establish policies and procedures for evaluating the financial management, governance, and performance of charter schools. PCSB staff implement the policies set by the board and handle the day-to-day charter school oversight activities. According to PCSB, its staff comply with all applicable D.C. laws and regulations, including those related to procurement, ethics, and employment. While several agencies may conduct activities to review the performance and operations of PCSB, the most regular and comprehensive activities are conducted by the D.C. Council and Office of the Chief Financial Officer (OCFO) (see figure 2). Similar to hearings the D.C. Council conducts for other District agencies, boards, and commissions, its Committee of the Whole holds annual performance hearings for PCSB to examine its expenditures and performance. In preparation for these hearings, the Committee generally requests information from PCSB on the following: budget, including approved budget and actual spending; programs and policies, including information on all policy initiatives, studies PCSB prepared or contracted for, and a description of the activities taken to meet key performance indicators; ongoing or completed investigations or audits of PCSB or any of its employees, and actions taken to address all recommendations identified during the previous 3 years by the D.C. Office of the Inspector General or Auditor; and contracting and procurement. In addition, OCFO oversees PCSB’s financial management. According to OCFO and PCSB, OCFO’s oversight of PCSB includes reviewing budget estimates and proposals, reviewing financial processes, and overseeing cash management and procurement activities. OCFO manages PCSB’s accounts payable, ensures procurement activities are administered according to approved PCSB financial policies, and provides monthly reports to the PCSB executive director and board members on financial activities and budget variance. OCFO also oversees and coordinates PCSB’s fiscal year-end process which includes ensuring the accurate and timely closing of books for auditing purposes. In addition to the oversight by OCFO, the School Reform Act requires PCSB to provide for an audit of its financial statements by an independent certified public accountant and forward the findings and recommendations of these audits to the Mayor, Council, and OCFO of the District. According to an OCFO official, OCFO may also conduct audits of PCSB. Other agencies may conduct audits or investigations when issues arise. The D.C. Office of Campaign Finance monitors appointed PCSB members’ submission of annual financial disclosure statements, has the authority to investigate conflict of interest violations, and may impose fines and refer cases to the United States Attorney for the District of Columbia. In 2009, the Office of Campaign Finance conducted investigations of allegations of conflicts of interest in response to concerns raised in local news reports and concluded that the appointed PCSB members under investigation did not violate conflict of interest laws. The District of Columbia Office of the Attorney General (OAG) conducted a similar conflict of interest inquiry regarding one of the same board members. OAG did not find any violations, but made recommendations that the board strengthen its ethics standards and formal policies which have largely been implemented. These include recusal, financial disclosure, gift rules, and participation in regular ethics training. PCSB has participated in ethics training but has not yet established formal policies for implementing such training on a regular basis. The D.C. Inspector General and the D.C. Auditor may also conduct investigations or audits of PCSB. To improve oversight of charter schools, PCSB launched a new accountability system—called the Performance Management Framework (PMF)—to capture school performance information for the 2009-2010 school year (see figure 3 for the current version of the PMF).