Charter Schools in the States: Charter School Finance

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Charter schools are publicly funded, privately managed and semi-autonomous schools of choice. They do not charge tuition. They must hold to the same academic accountability measures as traditional schools. They receive public funding similarly to traditional schools. However, they have more freedom over their budgets, staffing, curricula and other operations. In exchange for this freedom, they must deliver academic results and there must be enough community demand for them to remain open. The number of charter schools has continued to grow since the first charter law was passed in Minnesota in 1991. Some have delivered great academic results, but others have closed because they did not deliver on promised results. Because state laws enable and govern charter schools, state legislatures are important to ensuring their quality. This series provides information about charter schools and state policy topics, including finance, authorizing, limits to expansion, teaching, facilities and student achievement.

Charter School Finance

Charter schools are growing rapidly nationwide. Since the first charter school law passed in Minnesota in 1991, forty states and the District of Columbia have passed laws allowing the publicly funded, privately managed and semi-autonomous schools of choice. Charter schools now educate more than 3 percent of all public school students, and the proportion of students enrolled continues to increase at more than 10 percent a year, according to the National Alliance for Public Charter Schools. As with traditional public schools, funding for charter schools varies significantly across states and districts. The central question in most debates about charter school funding is the level of funding. Some claim it is unfair that charters receive less funding per pupil than traditional public schools, while others argue that the different nature of charter schools justify lower funding. (Funding for charter school facilities is addressed in a separate NCSL brief.) This brief discusses the following topics related to charter school expenditures and revenues:

  • how charter schools are funded
  • types of charter funding
  • tradeoffs between the different types of funding
  • charter school and traditional school funding differences
  • policy questions to consider