Charter schools are public schools established under contracts that grant  them greater levels of autonomy from school regulations in exchange for  agreeing to certain student performance goals. Facilities, Funding, and, to a Lesser Extent, Expertise Pose Challenges for New Charter Schools, but Some Assistance Is Available

New charter school founders across the country share common  challenges: securing adequate facilities, obtaining start-up funding, and,   to a lesser extent, acquiring the expertise necessary to run a charter  school, although various forms of assistance are available to help with the  start-up process. Charter schools also  report facing difficulties obtaining funding during the application and early  implementation periods, although the federal government and a small  number of states provide funding for charter school start-up grants. In addition to providing charter schools with funding for facilities, states  may provide charter schools with other forms of facilities assistance. Eighteen states and the District of Columbia have enacted laws that allow  charter schools access to vacant public buildings. The extent to which  these laws enable charter schools to gain access to public buildings varies  considerably both in terms of how proactive the states are in providing  access and in terms of the cost of this access to charter schools. Under the Public Charter  Schools Program, the federal government is also authorized to provide  grants to states to establish or enhance per-pupil facilities aid programs;  however, as of July 2003, this program has never received funding. Charter  schools incur many start-up expenses during the planning and early  implementation stages, such as hiring lawyers and business consultants to  review charter plans and applications, buying curriculum programs and  instructional materials, purchasing school furniture and supplies, hiring  key staff, purchasing insurance, and placing down payments on facilities. District Charter Schools Have Additional Resources to Address Facilities Problem, but Real Estate Costs in the District Continue to Limit Options

According to D.C. charter school founders and other knowledgeable  sources with whom we spoke, securing appropriate facilities is the  greatest challenge to opening a charter school in the District. Until fiscal year 2003, charter schools were not eligible for public funds  prior to receiving preliminary approval. The District Charter School Resource Center’s Closing Has Diminished Access to Start-Up Knowledge, although Some Local Resources Are Available

New charter school founders in the District are similar to charter school  founders across the country in that they must have expertise in a wide  range of areas to successfully open and operate a charter school. In our  discussions, some D.C. charter school experts said that one of the  challenges that many charter school founders encounter is acquiring the  business and legal knowledge necessary to run a school. We also provided a draft of this report to officials at both of the D.C.  charter school authorizing bodies - the D.C. Board of Education and the  D.C. Public Charter School Board. Other major contributors to this report are listed in appendix V.

Appendix I: Scope and Methodology

To obtain information about the challenges faced by charter school start- ups across the country and the resources available, we analyzed federal  and state charter school laws. We interviewed officials from the District of  Columbia Board of Education Public Charter Schools Oversight Office, the  District of Columbia Public Charter School Board, the District of Columbia  Public Schools, and several other D.C. government offices, including the  Executive Office of the Mayor, the Department of Banking and Financial  Institutions, and the Office of the Chief Financial Officer. State has a “stimulus fund” which provides financial support for start-up costs and costs associated with  facilities’ renovations or remodeling. Charter schools are offered a preference to  use surplus school buildings. Charter Schools: Limited Access to Facility Financing.
Why GAO Did This Study

As of the 2002-2003 school year, nearly 2,700 charter schools operated in 36 states, the District of Columbia, and Puerto Rico. Charter schools are public schools that are exempt from certain state and local regulations in exchange for agreeing to certain student performance goals. To increase their understanding of problems faced during the start-up process, Congress included a provision in the Omnibus Appropriations Bill for Fiscal Year 2003 (P.L. 108-7), which required GAO to report on charter school start-ups, including a comparison with charter schools in the District of Columbia. This report examines (1) the challenges faced by charter school start-ups across the nation and the resources available in various states to address these challenges and (2) how the District of Columbia compares in terms of charter school challenges and resources. To address these objectives, GAO analyzed federal, state, and D.C. charter school laws and interviewed Education and District officials, including representatives of the D.C. charter school authorizing boards, the D.C. public school system, and various city offices. GAO also conducted a discussion group consisting of District charter school experts and D.C. charter school founders.

What GAO Found

Securing a facility, obtaining start-up funding, and, to a lesser extent, acquiring the expertise necessary to run a charter school are the three greatest challenges facing new charter school founders nationwide, although the extent of the challenges varied from state to state. Charter school advocates report that charter schools need buildings that allow them to grow as their enrollment grows and that they have limited access to financing for facilities--both of which make securing facilities one of the most difficult aspects of opening a new charter school. Additionally, charter schools report that obtaining start-up money, particularly early in the charter application and planning periods, is difficult. In gaining approval for charters, they may incur significant expenses, such as hiring experts to review charters, purchasing curriculum programs, and placing down payments on facilities, before becoming eligible to receive most forms of public funding. Another challenge facing new charter school founders is acquiring the expertise--business, legal, managerial--necessary to open and run a charter school. Several federal, state, and local programs are available to help charter schools address these challenges across the country and in the District of Columbia. At the federal level, the Public Charter Schools Program has awarded about $1 billion in grants since 1994 to charter schools to help offset their start up costs. The program has also provided additional funding for a limited number of grants to organizations to increase charter schools' access to facilities financing. Some states also provide assistance to charter schools to address these challenges. The challenges facing D.C. charter schools are similar to those around the country; however, obtaining facilities is particularly difficult in D.C. due to the cost of real estate and poor condition of available buildings. To offset this challenge, the District provides charter schools with various forms of assistance, including a limited preference to buy or lease surplus public school buildings and a per-pupil allotment for the cost of facilities. To address challenges associated with start-up funding, the District provides charter schools with some funding prior to schools' opening. Although the District chartering authorities provide some guidance to charter applicants, they do not provide them with general technical assistance.