There Are New Rules Governing Federal Grants For Charter

The federal Chart School Program (CSP) has been handing out grants for opening and expanding charter schools since 1995; in recent years, there has been increasing criticism of the program suggesting that the program has had insufficient oversight and accountability to guard mountains of taxpayer dollars from waste and fraud.

Earlier this year the Biden administration proposed a tighter set of regulations for the program. Charter advocates pushed back against the proposal. Now, after months of wrangling, the final version of the regulations has been published.

What actual changes do these new regulations represent?

More transparency.

Contracts with for-profit management companies must be published. Public hearings must be held about the proposed charter school. And schools must make policies readily available to parents considering the school, including critical items such as plans for transportation and participation in free and reduced lunch programs. This saves parents the trouble of wasting time applying for a school to which they could not actually afford to send their child.

Additionally, states must specify the process by which they will award grants. Carol Burris, executive director of the Network for Public Education, explained via e-mail, “Probably the most problematic parts of the program have been due to a lack of transparency and supervision by the states. Our analysis shows that many states simply push the money out the door with little care as to who gets the money and how it is spent.”

Closing some loopholes.

Charter operators have long understood how to get around the restriction that charter schools must be non-profits. It has been common practice for a non-profit charter to be operated by a for-profit charter management organization, sometimes via contract that gives the CMO near-total operational control as well as virtually all the revenue collected by the charter (known as a “sweeps contract”).

Most folks agree that a for-profit school would be a bad idea, since it would put corporate profits and student needs in direct opposition. Yet we have had exactly that situation for years, with taxpayer dollars used for private profit barely hidden behind a technical fig leaf.

The new CSP regulations tighten that loophole. Real estate contracts must be reported, for-profit contracts must be revealed, and the grantee must be clear that a for-profit CMO “does not exercise full or substantial control” over the school.

The regulations also tighten rules about grant spending by start-up charters. Before it is fully authorized and has a facility in place, a charter may only use the grant monies marked for the planning stage. This helps with the past problem of proposed charters that spent all their grant money and yet never opened.

Community ties.

Charter advocates objected strongly to the idea that proposed charters must collaborate with the local public school.

“This is like letting General Motors veto where Honda can sell cars,” said Robert Maranto in The National Review. Comments of this nature made a quiet part of the charter sector loud and clear; for many, charters are not laboratories of education meant to join and supplement the public system, but competitors to the public system.

Collaboration was never a proposed requirement, but merely an optional way to score points for a CSP grant (and in some recent years, such as 2019, the full CSP pool hasn’t been awarded, so competition isn’t necessarily all that stiff). Now the collaborative item merely gives the grant application a favorable warm reception rather than actual points.

The original proposal also called for a community impact analysis; in final form, the regulations only call for a needs “analysis.” Charter advocates objected to the notion that they could be boxed out of market because the numbers suggested that market was saturated.

The proposed regulations also aimed to box out white flight charters through disallowing segregation; those regulations have been weakened. It’s a tricky 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 “disadvantage for funding.” But Burris argues that “White-flight charter schools could skirt the regulation by arguing that their mission is to provide a Eurocentric, classical curriculum.”

The debate over these regulations has largely flown under the radar. Those who don’t closely follow education policy issues don’t pay much attention to a little-known federal grant program. Why does this small shift in federal grant rules matter?

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

And while these rules may put some limits on charter business practices, Burris says “the new mandates around grant supervision and transparency will hopefully mean that fewer low quality charters get the funds and therefore fewer schools will open only to shut down and leave children and families stranded.”

It should be possible to offer greater stability and protection for students and families without choking the charter sector entirely. These new grant regulations could be a step in that direction.

Education