Charter Schools: Recent Experiences in Accessing Federal Funds
(Testimony, 03/31/98, GAO/T-HEHS-98-129).

GAO discussed charter schools' experiences in accessing selected federal
funds, focusing on: (1) start-up grants under title I of the Elementary
and Secondary Education Act (ESEA) and the Individuals with Disabilities
Education Act (IDEA); (2) factors that help and hinder charter schools'
in accessing title I and IDEA funds; (3) charter school operators'
opinions about whether they are receiving a fair share of these funds;
and (4) state and federal efforts intended to help charter schools gain
access to title I and IDEA funds.

GAO noted that: (1) slightly more than half of the schools GAO surveyed
received fiscal year 1996 start-up grants ranging from $7,000 to
+$84,000; the average grant amount was $36,000; (2) the schools used the
start-up grant funds for a variety of purposes, including curriculum
materials and equipment, other technology, and facilities renovation or
leasing; (3) about two-fifths of the charter schools GAO surveyed
received title I funds, and slightly more than half of the schools
received IDEA funds or IDEA-funded special education services; (4) most
charter school operators GAO surveyed who expressed an opinion told GAO
they believe they received a fair share of federal title I and IDEA
funds; (5) nonetheless, charter school operators also cited a variety of
barriers to accessing title I and IDEA funds, including: (a)
difficulties in establishing program eligibility; (b) workload demands;
and (c) a lack of program and administrative experience; (6) they
reported that outreach and technical assistance were critical to helping
them access federal funds; (7) several states and the Department of
Education have begun initiatives to help charter schools' access federal
funds; (8) some states, for example, are revising or developing
alternative allocation policies and procedures to better accommodate
charter schools' access to federal funds and providing training and
technical assistance to charter school operators; and (9) the Department
has recently issued guidance to states and school districts on
allocating title I funds to charter schools, and, among other things,
has sponsored national meetings for state officials and charter school
operators.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-HEHS-98-129
     TITLE:  Charter Schools: Recent Experiences in Accessing Federal 
             Funds
      DATE:  03/31/98
   SUBJECT:  Educational grants
             Educational facilities
             Charter schools
             Technical assistance
             Special education
             School management and organization
             School districts
             State/local relations

             
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Cover
================================================================ COVER


Before the Committee on Labor and Human Resources, U.S.  Senate

For Release on Delivery
Expected at 10:00 a.m.
Tuesday, March 31, 1998

CHARTER SCHOOLS - RECENT
EXPERIENCES IN ACCESSING FEDERAL
FUNDS

Statement of Cornelia M.  Blanchette, Associate Director
Education and Employment Issues
Health, Education, and Human Services Division

GAO/T-HEHS-98-129

GAO/HEHS-98-129T


(104926)


Abbreviations
=============================================================== ABBREV

  ESEA - ABC
  IDEA - ABC
  LEA - ABC
  SEA - ABC

CHARTER SCHOOLS:  RECENT
EXPERIENCES IN ACCESSING FEDERAL
FUNDS
============================================================ Chapter 0

Mr.  Chairman and Members of the Committee: 

We are pleased to be here today to discuss charter schools'
experiences with accessing selected federal education funds designed
to help charter schools get started and to serve special populations. 

The number of charter schools is growing rapidly, offering a new
model for public schools.  This model is intended to address concerns
about our educational system, including unresponsive school district
bureaucracies, restrictive rules, and a lack of accountability for
student performance.  In addition, charter schools provide
opportunities for parents and others to create schools that reflect
their visions for their children's education, including design,
governance, and delivery features.  Charter schools are generally
designed to operate with more autonomy from state and local rules and
regulations than are other public schools.  In exchange for this
autonomy, charter schools are held accountable for meeting the terms
of their charters, which may include achieving stipulated academic
outcomes.  Schools that do not meet the terms of their charters face
revocation of their charters. 

Today, I will discuss charter schools' experiences in accessing
selected federal funds--namely, start-up grants and grants under
title I of the Elementary and Secondary Education Act (ESEA) and the
Individuals With Disabilities Education Act (IDEA), factors that help
and hinder charter schools in accessing title I and IDEA funds, and
charter school operators' opinions about whether they are receiving a
fair share of these funds.  Finally, I will discuss state and federal
efforts intended to help charter schools gain access to title I and
IDEA funds.  My discussion is based on the results of a study that we
are conducting at your request.  We are now preparing our final
report, which we expect to issue in April. 

For this study, we have conducted case studies in seven states\1 that
collectively accounted for 91 percent of charter schools operating in
the 1996-97 school year and surveyed by telephone a sample of 41
charter schools in these states.  We also spoke with state department
of education officials in each state and visited several charter
schools located in four of the seven states.  Because of our sampling
methodology, our results can be applied to the charter schools
operating in our sample states.  (App.  I provides additional
information about our sample.)

In summary, slightly more than half of the schools we surveyed
received fiscal year 1996 start-up grants ranging from $7,000 to
$84,000; the average grant amount was $36,000.  The schools used the
start-up grant funds for a variety of purposes, including curriculum
materials and equipment, other technology, and facilities renovation
or leasing.  About two-fifths of the charter schools we surveyed
received title I funds, and slightly more than half of the schools
received IDEA funds or IDEA-funded special education services.  Most
charter school operators we surveyed who expressed an opinion told us
they believe they received a fair share of federal title I and IDEA
funds.  Nonetheless, charter school operators also cited a variety of
barriers to accessing title I and IDEA funds, including (1)
difficulties in establishing program eligibility, (2) workload
demands, and (3) a lack of program and administrative experience. 
They reported that outreach and technical assistance were critical to
helping them access federal funds. 

Several states and the Department of Education have begun initiatives
to help charter schools' access federal funds.  Some states, for
example, are revising or developing alternative allocation policies
and procedures to better accommodate charter schools' access to
federal funds and providing training and technical assistance to
charter school operators.  The Department has recently issued
guidance to states and school districts on allocating title I funds
to charter schools, and, among other things, has sponsored national
meetings for state officials and charter school operators. 


--------------------
\1 The states are Arizona, California, Colorado, Massachusetts,
Michigan, Minnesota, and Texas. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

Charter schools are public schools that operate under charters (or
contracts) specifying the terms by which they may operate.  In
general, they are established under state law, do not charge tuition,
and are nonsectarian.  State charter school laws and policies vary
widely regarding the degree of autonomy provided to the schools, the
number of charter schools that may be established, the qualifications
of charter school applicants and teachers, and the accountability
criteria that charter schools must meet.  As of September 1997, 29
states and the District of Columbia had enacted laws authorizing
charter schools, according to the Center for Education Reform.  In
school year 1996-97, over 100,000 students were enrolled in nearly
500 charter schools in 16 states and the District of Columbia.  (App. 
II shows the states with charter school laws as of September 1997 and
the number of charter schools operating during the school year by
state.)

To explore the effects of various education reform efforts, in
January 1997, the Congress began holding hearings in Washington,
D.C., and around the country.  Among other reform efforts, the
Congress has focused on the development of charter schools.  Charter
school operators and others at the hearings raised concerns about
charter schools' receiving the share of federal title I and IDEA
grant funds they are eligible to receive.  These concerns were raised
in part because of differences in the way charter schools receive
funds.  Some charter schools receive funds directly from their
states, while other charter schools depend on their local school
districts for title I and IDEA program benefits.  In addition to
learning more about this issue, the Congress has expressed interest
in learning how charter schools use federal funds intended to help
them get started as new schools. 


      PUBLIC CHARTER SCHOOLS GRANT
      PROGRAM
-------------------------------------------------------- Chapter 0:1.1

To improve understanding of the charter school model, the Congress
authorized the Public Charter Schools Program (start-up grants) as
part of its 1994 reauthorization of ESEA.  Under the program, the
federal government provides financial assistance for the design and
initial implementation of charter schools.  The Department of
Education has the authority to competitively award grants to states
with laws authorizing the operation of charter schools.  In
evaluating state grant applications, the Department must use a peer
review process and judge states' applications on the basis of several
criteria, including the (1) contribution that a state's program will
make toward helping educationally disadvantaged and other students in
achieving state content and student performance standards, (2) degree
of flexibility that a state will offer charter schools, and (3)
likelihood that a state's program will improve students' educational
results. 

States that receive grants, in turn, award subgrants to charter
schools.  (If a state does not apply for a grant, individual or
groups of charter schools may apply directly for grants to the
Department.) States may use up to 5 percent of their grant award for
administration and may set aside 20 percent for establishing a
charter school revolving loan fund.  Grants awarded to charter
schools must be used for either (1) the planning and design of a
charter school, which may include establishing achievement and
assessment standards and providing professional development for
teachers and other staff, or (2) the initial implementation of a
charter school, which may include informing the community about the
school, acquiring equipment and supplies, developing curricula, or
initial operational costs. 


      TITLE I AND IDEA PROGRAMS
-------------------------------------------------------- Chapter 0:1.2

Although dozens of financial aid programs exist for public elementary
and secondary schools, two programs, title I and IDEA, are by far the
largest federal programs.  Under title I and IDEA, the Department
allocates funds to state educational agencies (SEA), which then
allocate funds to local educational agencies (LEA) or school
districts.  Charter schools receive title I and IDEA funds from their
SEAs therefore in states that treat charter schools as LEAs (called
the independent model).  LEAs allocate title I funds to schools in
their districts.  In addition, LEAs provide special education and
related services to eligible children enrolled in their schools and
use IDEA funds to help pay the costs of doing so.  Charter schools in
states that treat these schools as dependents of an LEA (called the
dependent model) benefit from the title I and IDEA programs on the
same basis as do the LEAs' other schools.  The seven states in our
review used both the independent and dependent funding models. 
Although Massachusetts and Minnesota consider all charter schools as
independent LEAs, California and Colorado consider all charter
schools as dependent members of a school district.  Arizona,
Michigan, and Texas use both models within their states depending on
the particular program involved, the chartering authority, or other
circumstances. 


      TITLE I PROGRAM
-------------------------------------------------------- Chapter 0:1.3

Title I is the largest federal elementary and secondary education aid
program.  The program provides grants to school districts or LEAs to
help them educate disadvantaged children--those with low academic
achievement attending schools serving high-poverty areas.  To be
eligible for title I funds, LEAs must meet statutory and regulatory
guidelines for minimum poverty thresholds. 

LEAs that have more than one school--including charter schools
operating under the dependent model--allocate title I funds among
their schools.  The federal statute and regulations lay out complex
criteria and conditions that LEAs use in deciding how to allocate
funds to their schools, which results in shifting title I funds
received by LEAs to individual schools with relatively higher
percentages of students from low-income families.  An individual
school that is part of an LEA in a high-poverty area therefore might
have to have enrolled a higher percentage of low-income children to
receive title I funds than it would have if the school were treated
as an independent LEA.  In this case, a charter school that would
have received title I funds as an independent LEA may not receive
title I funds under the dependent model because other schools in the
LEA served higher percentages of low-income children. 


      IDEA PROGRAM
-------------------------------------------------------- Chapter 0:1.4

The IDEA federal grant program is designed to help states pay for the
costs of providing a free appropriate public education to all
eligible children with disabilities between the ages of 3 and 21
living in the state, depending on state law or practice.  The act
requires, among other things, that states make such education
available to all eligible children with disabilities in the least
restrictive environment. 

Under the current formula, the Department of Education annually
allocates funds to SEAs on the basis of their reported numbers of
eligible children receiving special education and related services
for the preceding fiscal year,\2 the national average per pupil
expenditure, and the amount the Congress appropriates for the
program.  The most funding that a state may receive for any fiscal
year is capped at 40 percent of the national average per pupil
expenditure multiplied by the number of eligible children with
disabilities in the state who receive special education and related
services.\3

Under the current formula, states must distribute at least 75 percent
of the IDEA funds they receive from the Department to LEAs and may
reserve the rest for state-level activities.\4 In general, SEAs
allocate IDEA funds to eligible LEAs on the basis of their relative
share of their state's total number of eligible children receiving
special education and related services. 

The benefits that individual schools may receive from IDEA funds vary
by state.  States may allocate IDEA funds to LEAs or to other
agencies included in the act's definition of LEAs.  These other
agencies include, for example, regional educational service agencies
authorized by state law to develop, manage, and provide services or
programs to LEAs.  Some states allocate IDEA funds to regional
educational service agencies for providing special education and
related services to children with disabilities enrolled in the
schools of one or more LEAs, including charter schools.  Other states
allocate IDEA funds directly to school districts, which then develop,
manage, and provide their own such services to children with
disabilities. 


--------------------
\2 This number may not exceed 12 percent of all school-aged children
in the state during the same time period. 

\3 This cap has not affected the allocation of funds because the
amount appropriated has not exceeded the cap. 

\4 The 1997 IDEA amendments capped the amount SEAs may retain for
state-level activities.  In the future, SEAs may retain an amount
that is 25 percent of the amount of IDEA part B funds that the SEA
received in fiscal year 1997, cumulatively adjusted by the lesser of
(1) the percentage increase, if any, in the state's allocation of
IDEA part B funds from the preceding fiscal year or (2) the inflation
rate. 


   CHARTER SCHOOLS' EXPERIENCE
   WITH FEDERAL FUNDS
---------------------------------------------------------- Chapter 0:2

A majority of the charter school operators that we surveyed reported
that they received fiscal year 1996 federal start-up grant funds. 
Operators used these funds for a variety of purposes to establish
their charter schools.  Although no centralized repository of data
exists for determining the extent to which charter schools have
received federal funds nationwide, our study suggests that charter
schools in the seven states we surveyed have not been systematically
denied access to title I and IDEA funds. 


      PUBLIC CHARTER SCHOOLS
      PROGRAM
-------------------------------------------------------- Chapter 0:2.1

To date, the Congress has appropriated $155 million for start-up
grants under this program.  In fiscal year 1996, the Department of
Education awarded grants to 19 states and the District of Columbia,
ranging from about $191,000 to about $1.9 million, according to
Education.\5 In turn, each state made grant funds available to
charter schools in their states.  The seven states in our survey all
received fiscal year 1996 program funds; the amounts they received
ranged from $500,000 to almost $1.9 million.  (See table 1.)



                          Table 1
          
          Department of Education Fiscal Year 1996
          Charter School Start-up Grant Awards to
                        Seven States

State                                                Award
------------------------------------------  --------------
Arizona                                         $1,150,000
California                                       1,250,000
Colorado                                         1,000,000
Massachusetts                                    1,586,780
Michigan                                         1,872,828
Minnesota                                          749,730
Texas                                              500,000
----------------------------------------------------------
Source:  Department of Education. 

Of the 41 charter schools responding to our survey, slightly more
than half (or 23) received fiscal year 1996 start-up grants.  States
awarded grants to these schools ranging from $7,000 to $84,000; the
average grant amount was about $36,000 and the median was $32,500. 
Funds received by individual charter schools varied by state.  These
differences reflect states' flexibility in administering their grant
programs and in allocating funds. 

States may determine the amount of funds to award to any one charter
school.  Consequently, the amount of funds awarded does not depend on
school enrollment or the particular need for which charter schools
sought funding.  In Texas, for example, all charter schools received
an equal amount of fiscal year 1996 grant funds ($26,785), even
though enrollment at these schools varied greatly--from 90 students
in one school to 180 students in another. 

The charter schools in our survey that received start-up grants used
these funds most often to help pay for school equipment and
curriculum materials, technology, and facilities renovation or
leasing.  Several charter schools used these funds for multiple
purposes.  (See table 2.)



                          Table 2
          
          Use of Seven States' 23 Charter Schools'
           Start-up Grant Funds, Fiscal year 1996

                                                 Number of
Purpose (not mutually exclusive)                   schools
------------------------------------------  --------------
School equipment and curriculum materials               11
Technology                                              11
Facilities leasing/renovation                           10
School evaluation and student testing                    6
Training                                                 5
----------------------------------------------------------
Operators of charter schools we surveyed that did not receive grant
funds told us that their schools were either (1) ineligible for
grants under their state guidelines, (2) unsuccessful in competing
for a grant, or (3) did not apply for a grant.  Schools ineligible
for funds included schools that were no longer considered start-up
operations or had previously received funds and did not qualify under
state guidelines.  Some charter school operators told us that
although they applied for start-up grants, their applications were
scored lower than other schools' and, as a result, did not receive
awards.  Finally, a few charter school operators said that they did
not apply for start-up grants because they were uninterested, did not
need funds, or did not know that funds were available. 


--------------------
\5 Education also awarded grants to three schools in New Mexico; that
state did not apply for funds under the program. 


      TITLE I AND IDEA PROGRAMS
-------------------------------------------------------- Chapter 0:2.2

Charter schools, as public schools, have access to federal program
funds on the same basis as traditional public schools.  Under these
programs, such as title I of ESEA and IDEA, the federal government
provides several billion dollars annually.  Nationwide, the
Department makes an annual average amount of about $800 available to
LEAs for each child counted in the title I allocation formula.  In
total, the federal government will provide more than $7 billion in
title I assistance during fiscal year 1998 to help schools provide
additional services to educationally disadvantaged children.  Under
IDEA, the federal government will provide about $4.2 billion in
fiscal year 1998 to help schools pay for providing a free appropriate
public education to children with disabilities.  According to
Education, these funds are expected to provide, on average, about
$639 per student for services provided to the nearly 6 million
eligible students aged 3 through 21, plus an additional $650 per
student to provide services for approximately 575,800 eligible
preschool children aged 3 through 5.  Despite concerns about issues
related to the funding of charter schools raised during the 1997
congressional hearings, most charter school operators we surveyed who
had applied for title I and IDEA funds received them.\6 Overall,
about two-fifths of the charter schools we surveyed received title I
funds for the 1996-97 school year.  Survey results indicated that
slightly more than one-third of charter schools operating under the
independent model and almost one-half of the schools operating under
the dependent model received title I funds.  Table 3 shows the number
of charter schools surveyed that received title I funds by funding
model. 



                          Table 3
          
          Number of Surveyed Charter Schools That
            Received or Did Not Receive Title I
            Funds for the 1996-97 School Year by
                       Funding Model

                        Independen
                                 t   Dependent       Total
----------------------  ----------  ----------  ----------
Received title I funds           9           7          16
Did not receive title           16           9          25
 I funds\a
----------------------------------------------------------
\a Operators of 16 of these schools told us they did not apply for
title I funds.  We could not determine whether they would have
received title I funds had they applied. 

About two-fifths of the charter schools we surveyed did not apply for
title I funds.  Charter school officials who did not apply cited
reasons such as (1) a lack of time to do so, (2) their school was
ineligible for funds and therefore they did not apply, or (3) they
found that applying for these funds would cost more than the funding
would provide.  Of those schools that applied for title I funds,
two-thirds, or 16 of 25, reported receiving funds.  Title I funding
for these schools ranged from $96 to $941 per poverty student; the
average amount was $466 per poverty student and the median amount was
$413.  The difference in per student funding relates to the
allocation formulas, which consider the number and proportion of
low-income children in the school, district, and county.  Title I
funds received by these schools represented between 0.5 and 10.0
percent of their total operating budgets.\7 For all but four of these
schools, funds received represented 5 percent or less of the schools'
total operating budgets. 

Regarding the IDEA program, slightly more than half of our survey
respondents received funds or IDEA-funded services.  Of all charter
schools surveyed, two-fifths operating under the independent model
received funds or IDEA-funded services; three-quarters of those
operating under the dependent model received funds or services. 
Table 4 shows the number of charter schools surveyed that received
IDEA funds or IDEA-funded services by funding model. 



                          Table 4
          
          Number of Surveyed Charter Schools That
           Received or Did Not Receive IDEA Funds
          or IDEA-Funded Services for the 1996-97
                School Year by Funding Model

                        Independen
                                 t   Dependent       Total
----------------------  ----------  ----------  ----------
Received IDEA funds or          10          12          22
 funded services
Did not receive IDEA            15           4          19
 funds or funded
 services\a
----------------------------------------------------------
\a Operators of 14 of these schools told us they did not apply for
IDEA funds or services.  We could not determine whether they would
have received funds or services had they applied. 

Overall, about a third of the charter schools we surveyed did not
apply for IDEA funds or services.  Charter school officials who did
not apply cited reasons similar to those who did not apply for title
I funds such as (1) a lack of time to do so, (2) they were not
eligible for funds, (3) they did not know about the availability of
IDEA funds, or (4) they found that applying for these funds would
cost more than the funding would provide.  Four-fifths of the charter
school officials who told us that they applied for IDEA funds or
services reported that they received funds or services for the
1996-97 school year.  For schools that obtained IDEA funds, rather
than services, amounts received ranged from $30 to $1,208 per
eligible student; the average school value was $421 per eligible
student, and the median value was $206.  IDEA funds received by
schools represented between 0.08 percent and 2.50 percent of their
total operating budgets.\8


--------------------
\6 Although schools dependent on an LEA do not technically apply for
federal funds, we use the term to describe the process by which
charter schools must provide the necessary data to the LEA so the LEA
may apply for funds. 

\7 This is for the 14 schools reporting a 1996-97 operating budget
and receiving title I funds. 

\8 This is for the six schools reporting a 1996-97 operating budget
and receiving IDEA funds. 


   MOST CHARTER SCHOOL OPERATORS
   BELIEVE THAT THEIR SHARE OF
   TITLE I AND IDEA FUNDS IS FAIR
---------------------------------------------------------- Chapter 0:3

Regardless of funding model, two-thirds of the charter school
operators expressing an opinion believe that they received a fair
share of title I and IDEA funding.  About one-fifth of the charter
school operators we surveyed had no opinion or did not answer the
question.  Regarding title I funds, twice as many survey
respondents--under both the independent and dependent funding
models--believe that they received a fair share of these funds than
believe otherwise.  Regarding IDEA funding or IDEA-funded services,
however, about as many survey respondents under the independent
funding model believe that they received a fair share as believe
otherwise.  For charter schools under the dependent model, however,
about four times as many survey respondents believe that their
schools received a fair share of IDEA funds or services as believe
otherwise. 


   SOME BARRIERS HINDER CHARTER
   SCHOOLS IN ACCESSING TITLE I
   AND IDEA FUNDS
---------------------------------------------------------- Chapter 0:4

Even though many charter school operators we surveyed believe that
they received a fair share of federal funds, they reported, as did
state officials and technical assistance providers, that several
barriers hindered charter schools' access to title I and IDEA funds. 
These barriers included (1) difficulties in establishing program
eligibility, (2) workload demands that prohibited schools from
pursuing program funds or made doing so too costly, and (3) charter
school operators' and district and state administrators' lack of
program and administrative experience. 

One barrier reported by charter school operators was the difficulty
in establishing program eligibility primarily due to a lack of a
prior year's enrollment data and problems collecting student
eligibility data.  For example, three charter school officials told
us that because they had no prior year's enrollment or student
eligibility data, they were not eligible under state guidelines for
federal funds.  School officials noted that besides this being a
problem for new schools, using even 1-year-old enrollment data can
significantly understate the number of title I-eligible students
enrolled in schools that are incrementally increasing the number of
grades they serve.  Other school officials reported difficulty in
collecting required student eligibility data because some families
are reluctant, due to privacy concerns, to return surveys sent home
with students asking for the amount of household income. 

Competing workload demands were another barrier reported by charter
school officials.  In our survey, several school officials emphasized
that other administrative and educational responsibilities left them
little time and resources to devote to accessing title I and IDEA
funds.  These officials often played many roles at their schools,
including principal, office manager, nurse, and janitor.  In
addition, even though a majority of a charter school operators who
noted in our survey that the title I and IDEA application processes
were only somewhat or not at all difficult, some operators told us
that, nonetheless, it was not worth their while to pursue these
funds.  One operator, for example, said that application and program
compliance costs would exceed the amount of funds his school would be
eligible for, while another said that the amount of funds his school
could expect to receive was simply not worth his while to apply for
them. 

Finally, we spoke to technical assistance providers and consultants
who told us that charter school operators are often dedicated
educators but who lack business and administrative experience in
general or experience with federal programs in particular.  They told
us that such inexperience may likely discourage individuals from
pursuing federal funding for their schools.  Some operators told us
that their lack of experience with the title I and IDEA programs was
a barrier to accessing these funds.  In addition, charter schools
represent new and additional responsibilities for districts and SEAs
that administer federal programs.  As a result, state and district
officials told us that it has taken time to develop new policies and
procedures to accommodate charter schools. 

Charter school operators reported that outreach and technical
assistance were critical to their ability to access federal funds. 
Charter school officials most often cited receiving information about
the availability of federal funds and the amount their schools would
be eligible for as factors helping them access title I and IDEA
funds.  Officials cited a number of sources from which they had
obtained such information, including their own states' departments of
education and local school district officials.  In addition, other
operators told us that state and local program officials' flexibility
facilitated their access to funds. 


   STATE AND FEDERAL EFFORTS TO
   HELP CHARTER SCHOOLS ACCESS
   FEDERAL FUNDS
---------------------------------------------------------- Chapter 0:5

Several states and the Department have taken steps to help charter
schools access federal funds.  Some states, for example, are changing
allocation procedures to better accommodate charter schools and
providing training and technical assistance to school operators. 
Among other things, some states are allowing charter schools to use
comparable--and more easily obtainable--data to establish the income
levels of students' families.  Such efforts will allow charter
schools to demonstrate eligibility for title I funds without having
historical data.  In addition, some states have actively sought to
inform charter school operators of available funds and provide
training to school operators on applying for and administering these
funds. 

During our study, the Department developed guidance for states and
LEAs on allocating title I funds to charter schools.  This guidance
clarifies that SEAs and LEAs must take all reasonable steps to ensure
that charter schools receive their full title I allocation.  The
guidance strongly encourages SEAs and LEAs to be flexible in
accommodating charter schools by, for example, allowing charter
schools leeway in collecting and submitting data and using state
administrative and excess title I funds to serve new charter schools. 

Under the charter school start-up grant program, the Congress
provided that the Department may reserve up to 10 percent of
appropriated funds to conduct national activities.  Using these
funds, the Department has sponsored national meetings for state
officials and charter school operators.  In November 1997, for
example, the Department sponsored a national conference for charter
schools in Washington, D.C.  The Department invited state officials
and charter school operators from across the country and conducted
workshops on topics, including federal grant programs, new
requirements under IDEA, and developing and implementing charter
schools.  The Department has also funded the development of an
Internet web site\9 with information on federal programs, charter
school operational issues, a charter school resource directory as
well as profiles of charter school states and charter schools. 


--------------------
\9 The web site address is www.uscharterschools.org. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 0:6

Charter schools have used federal start-up funds for a variety of
purposes, depending on the schools' particular needs.  These needs
have most often included school equipment and curriculum materials,
technology, and facilities renovation or leasing.  Our study suggests
that charter schools in the seven states we surveyed have not been
systematically denied access to title I and IDEA funds and that the
barriers charter schools face in accessing these funds appear to have
no relation to charter schools' treatment as school districts or as
members of school districts.  Rather, other barriers, many of which
have no relation to the path federal funds take, have more
significantly affected charter schools' ability to access title I and
IDEA funds.  These other barriers include state systems that base
funding allocations on the prior year's enrollment and student
eligibility data, the costs of accessing funds compared with the
amounts that schools would receive, and time constraints that prevent
charter school operators from pursuing funds.  Despite these
barriers, most charter school operators who expressed an opinion in
our survey believe that title I and IDEA funds are fairly allocated
to charter schools.  Although a variety of factors help charter
schools access federal funds, according to our review, training and
technical assistance are critical to ensuring that charter school
operators have access to these funds.  Several states and the
Department of Education have initiatives under way to facilitate such
access. 


-------------------------------------------------------- Chapter 0:6.1

This concludes my statement, Mr.  Chairman.  I would be happy to
answer any questions you or the members of the Committee may have. 


CHARTER SCHOOLS OPERATING DURING
THE 1996-97 SCHOOL YEAR IN
SELECTED STATES, INCLUDED IN OUR
SAMPLE, AND RESPONDING TO OUR
SURVEY
=========================================================== Appendix I

                                                                                  Schools
                                                                                     that
                                           Cumulative                          refused to
                      Charter  Percentage  percentage  Schools in     Schools  participat
States                schools    of total  of total\a      sample    surveyed           e
-----------------  ----------  ----------  ----------  ----------  ----------  ----------
Arizona                   164          34          34        13\b          10           2
California                109          22          57        15\c          12           2
Colorado                   32           7          64           3           3           0
Massachusetts              22           5          68           7           5           2
Michigan                   76          16          84           5           4           1
Minnesota                  19           4          88           6           6           0
Texas                      16           3          91           1           1           0
All others\d               42           9         100          \e          \e          \e
=========================================================================================
Total\f                   480         100                      50          41           7
-----------------------------------------------------------------------------------------
\a Cumulative percentages of total may not add due to rounding of
percentages. 

\b Although included in our universe of charter schools, one school
had its charter revoked before the 1996-97 school year. 

\c Although included in our universe of charter schools, one school
did not operate under a charter during the 1996-97 school year. 

\d Charter schools were also operating in Alaska, Delaware, the
District of Columbia, Florida, Georgia, Hawaii, Illinois, Louisiana,
New Mexico, and Wisconsin during the 1996-97 school year. 

\e Not applicable. 

\f Totals do not include alternative schools operating in Oregon
during the 1996-97 school year. 

Sources:  Center for Education Reform, Washington, D.C., and our
analysis. 


STATES WITH CHARTER LAWS AS OF
SEPTEMBER 1997 AND NUMBER OF
SCHOOLS OPERATING IN SCHOOL YEAR
1996-97
========================================================== Appendix II



   (See figure in printed
   edition.)

Source:  Center for Education Reform, Washington, D.C. 


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