There are new rules governing federal grants for charter schools. What difference will they make?

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The Federal Charter School Program (CSP) has been distributing grants for the opening and expansion of charter schools since 1995; in recent years, the program has come under increasing criticism, suggesting that the program has not received enough oversight and accountability to protect mountains of taxpayers’ money waste and fraud.

Earlier this year, the Biden administration proposed a tougher set of regulations for the program. Charter Defenders Rebuffed against the proposal. Now, after months of bickering, final version of the regulations has been published.

What concrete changes do these new regulations represent?

More transparency.

Contracts with for-profit management companies must be published. Public hearings must be held regarding the proposed charter school. And schools should make policies easily accessible to parents considering school, including essentials such as transportation plans and participation in free and reduced lunch programs. This saves parents wasting time applying for a school they cannot afford to send their child to.

Additionally, states must specify the process by which they will award grants. Carol Burris, executive director of the Network for Public Education, explained via email: “The most problematic parts of the program are probably due to a lack of transparency and oversight from states. Our analysis shows that many states simply push the money out the door without worrying about who gets the money and how it is spent.

Fill in some gaps.

Charter operators have long figured out how to circumvent the restriction that charter schools must be nonprofit. It is common for a nonprofit charter to be operated by a for-profit charter management organization, sometimes through a contract that gives the CMO near-total operational control as well as nearly all of the revenue raised by the charter ( known as “swipe contract”).

Most people agree that a for-profit school would be a bad idea, as it would put corporate profits and student needs in direct opposition. Yet we’ve had exactly this situation for years, with taxpayers’ money used for private profit barely hidden behind a technical fig leaf.

The new CSP regulations close this loophole. Real estate contracts must be reported, for-profit contracts must be disclosed, and the beneficiary must be clear that a for-profit CMO “does not exercise complete or substantial control” over the school.

The regulations also tighten the rules around grant spending by startup charters. Before being fully licensed and having facilities in place, a charter can only use grant funds marked for the planning phase. This helps solve the past problem of proposed charters that spent all their grant money and yet never opened.

Community links.

Charter advocates have strongly opposed the idea that proposed charters must collaborate with the local public school.

“It’s like letting General Motors veto where Honda can sell cars,” said Robert Maranto in the national magazine. Comments of this nature have made a quiet part of the charter sector loud and clear; for many, charters are not teaching laboratories meant to join and complement the public system, but competitors to the public system.

Collaboration was never a proposed requirement, just an optional way to score points for a CSP grant (and in recent years, like 2019, the full CSP pool was not awarded, so competition is not not necessarily so hard). Now the collaborative element just gives the grant application a warm welcome rather than actual points.

The original proposal also included a community impact analysis; in its final form, the regulation only requires an “analysis” of needs. Charter supporters objected to the idea that they might be shut out of the market because the numbers suggested the market was saturated.

The proposed regulations also sought to exclude white flight charters by prohibiting segregation; these regulations have been weakened. This is a delicate issue to regulate. As Anna Hinton, director of the department’s charter school program, said that the department recognizes that many districts serve “almost entirely students of color or students from low-income backgrounds” and that “high-quality charter schools that increase educational opportunities in these already homogeneous and isolated communities , or for underserved students” will never be at a “funding disadvantage”. But Burris argues that “Whiteflight charter schools could circumvent the regulations by arguing that their mission is to provide a Eurocentric classical curriculum.”

Much of the debate over these regulations has passed under the radar. Those who don’t follow education policy issues closely don’t pay much attention to a little-known federal grant program. Why is this small change in federal grant rules important?

For one thing, as Burris notes, “because 40% of all charter schools receive CSP grants, program rules often begin to drive state policy.”

And while these rules may impose limits on charters’ business practices, Burris says that “new mandates around grant oversight and transparency will hopefully mean that fewer shoddy charters get the funds and therefore less money.” ‘schools will open only to close and leave children and families stranded.’

It should be possible to provide greater stability and protection for students and families without completely stifling the rental industry. These new subsidy regulations could be a step in that direction.

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