Charter schools are a new and increasingly popular entrant in the debate on restructuring and improving U.S. public education. The model offered by charter schools differs substantially from the traditional model for governing and funding public schools. Charter schools operate under a charter or contract that specifies the terms under which the schools may operate and the student outcomes they are expected to achieve. Charter schools may be exempt from most local and state rules, hire their own staff, determine their own curriculum, receive funding directly from the state, and control their own budgets. In contrast, traditional public schools are subject to substantial external controls, such as local, state, and federal requirements, which limit their authority over curriculum and personnel decisions. Federal, state, and local funding for traditional public schools usually flows through the district, and individual schools often have little control over their budgets. Between 1991 and 1994, 11 states enacted legislation authorizing charter schools to achieve a variety of purposes, including encouraging innovative teaching, promoting performance-based accountability, expanding choices in the types of public schools available, creating new professional opportunities for teachers, improving student learning, and promoting community involvement. The federal government has also acted on behalf of charter schools. Two major pieces of federal education legislation passed in 1994 include provisions on charter schools. The Improving America’s Schools Act, which reauthorized and amended the ESEA of 1965, includes a new federal grant program to support the design and implementation of charter schools (see app. II for a description of this program). The Improving America’s Schools Act also specifies the conversion of a school to charter school status as a possible corrective action that a school district can require of a school that has been identified for school improvement. The Goals 2000: Educate America Act allows states to use federal funds provided under the act to promote charter schools. As of January 1995, nine states had approved 134 charter schools with diverse instructional and operating characteristics. Another two states—Georgia and Kansas—had adopted laws authorizing charter schools but had not yet approved any. (See table 1.) As many as 14 more states may consider legislation in 1995. Approved charter schools include 85 new schools and 49 conversions of existing schools (see fig. 1), with some states only allowing such conversions (see table 2). Charter schools’ diverse instructional programs include approaches such as instructing children of multiple ages in the same classroom, known as multiage grouping; teaching subjects in the context of a certain theme, known as thematic instruction; and using the Internet as an instructional tool. Some charter schools specialize in certain subject areas, such as the arts, sciences, or technology; others emphasize work experience through internships or apprenticeships. Some charter schools target specific student populations, including students at risk of school failure, dropouts, limited English proficient students, noncollege-bound students, or home-schooled students. Under the state laws in California, Colorado, Kansas, and Wisconsin, charter schools that target students at risk of school failure receive preference for approval. As some advocates envision them, charter schools would operate with far greater autonomy than traditional schools. They would operate independently from the school districts where they are located and unconstrained by government regulations; they would control their own budgets, personnel, curriculum, and instructional approaches. While this is the case for charter schools in some states, other states have laws that authorize charter schools with more limited autonomy. State laws influence charter schools’ autonomy by how they provide for their (1) legal status, (2) approval, (3) funding, and (4) exemption from rules. Charter schools under four states’ laws are legally independent from the school districts where they are located; that is, the charter schools are legally responsible for their operations (see table 3). Charter schools in Minnesota, for example, operate as nonprofit corporations or cooperatives. In five states, charter schools must be part of a school district that is legally responsible for the school’s operations (see table 3). In one state, California, a charter school’s legal status is determined through negotiation with the local school board that approves its charter. Some charter schools in California have organized as legally independent nonprofit corporations; others are legally part of a district; and some schools’ legal status remains to be determined. In one state, Hawaii, the legal status of charter schools remains uncertain and awaits a decision by the State Attorney General. The legal status of a charter school may influence its authority over budgeting and personnel decisions. Legally independent charter schools generally control their own budgets and make their own hiring and firing decisions. Charter schools that remain legally part of a school district may have little control over budgeting or personnel, although this varies. All charter schools must be approved by some public institution. Most have been approved by a school district or state board of education, although some states involve neither. State laws vary considerably in the options they give to charter schools seeking approval. State laws also vary in allowing applicants to appeal a decision to reject a charter school application. (See table 4.) Required school district approval could result in less autonomous charter schools if districts use their leverage with the schools to maintain more traditional relationships with them. The availability of multiple approval options could result in more autonomous charter schools because applicants could seek the least restrictive situation. As a condition for approving a charter, for example, one district required charter schools’ terms of employment—for teacher tenure, salary, and schedule for advancement—to be the same as those for other schools in the district. Evidence from California indicates that districts were least supportive of charter schools seeking the most independence. Charter schools’ funding arrangements vary in (1) the extent to which the funding amounts are negotiable and (2) how funds flow to the schools. Charter schools’ autonomy could be limited when funding amounts are subject to negotiation with the school district that approves the charter. Districts may seek to retain control over some funds as a condition for approval. In six states, the amount of state or local funding for charter schools is subject to negotiation with the school districts that approve the charters. In four states, funding for charter schools is set by the state, and the amount is not subject to negotiation with school districts. In one state, Arizona, funding is subject to negotiation when charter schools are approved by school districts, but not when they are approved by the state. In states in which funding is not subject to negotiation, funds flow from the state directly to the charter school, with the exception of Massachusetts and Michigan. In states in which funding is subject to negotiation, funds flow from the state to the district to the charter school. (See table 5.) Charter schools’ autonomy from state and district rules varies considerably across states. Some state laws exempt charter schools from most state education rules; that is, charter schools receive a blanket exemption. Other states require charter schools to request exemption from specific rules (rule-by-rule exemption), requests that are subject to district or state approval or both. (See table 6.) Legally independent charter schools are not subject to district rules unless agreed to as part of negotiations leading to charter approval. In contrast, charter schools that are legally part of a district are subject to district rules unless waivers are negotiated. Some districts have denied waivers from local rules requested by charter schools. The extent to which charter schools can be held accountable depends on how the schools assess student performance and report results to the public institutions responsible for their oversight and contract renewal. The schools’ charters indicate plans to use a wide variety of assessment methods to measure a wide variety of student outcomes. Some of these assessments and outcomes were subject to negotiation with the charter-granting institution; others are mandated under law in some states (see table 7). Some charter schools state their plans for assessment in great detail, have their assessment systems in place, and have begun collecting data. Others—including some schools already open—state their plans in more general terms and are still developing their assessment systems. Student assessments used by charter schools include portfolios, exhibitions, demonstrations of students’ work, and often standardized achievement tests. Student outcomes include objective outcomes—such as specific achievement levels or gains on standardized tests, attendance and graduation rates—and subjective outcomes, such as becoming an independent learner, understanding how science is applied to the real world, participating in community service, and understanding the responsibilities of citizenship. Because charter schools’ efforts to assess and report student performance are fairly recent, several important questions about accountability are unanswered. First, are charter schools collecting adequate baseline data to judge changes in student performance? Accurate judgments may be difficult in schools that opened before their assessment methods were developed. Second, will charter schools report data by race, sex, or socioeconomic status so that the performance of specific student groups can be assessed? No state laws require charter schools to do so; some include no reporting requirements; and most leave the type of reporting to local discretion (see table 7). Third, what are the implications of requiring charter schools to meet state performance standards and to use standardized, norm-referenced tests? Will it discourage charter schools with specialized purposes or that target low-achieving student populations? Will it encourage charter schools to have more traditional instructional programs? Charter schools pose new challenges for federal programs in allocating funds, providing services, and assigning legal responsibility. These challenges stem from the lack of connection of some charter schools to school districts—the usual local point of federal program administration. School districts are considered LEAs for the purposes of federal program administration; they receive allocations of federal funds from their states and are held legally responsible for meeting program requirements. However, an important issue is whether some charter schools—those with legal independence—can be considered LEAs. While legally independent charter schools appear to meet the definition of an LEA, states are uncertain about this and have approached the issue differently. Title I and special education programs illustrate challenges posed by charter schools to federal education program administration.