Since Massachusetts launched its experiment with charter schools in 1993, tensions between Commonwealth charter schools and public school districts have steadily intensified. Proposed as laboratories of innovation that, by suspending bureaucratic and union rules, would produce exceptional results for children and provide examples of innovation that could be replicated, charter schools have not met these high expectations, here or around the country. Only a few Massachusetts charter schools appear to outperform their community’s public schools while some have been declared “in need of improvement” or “underperforming.” Four have closed – after expending $37 million in public funds. Meanwhile, resentment has grown in the school districts that lose precious dollars to charter schools of dubious quality, and in the communities that have charter schools imposed on them against their will.

What’s wrong with the Massachusetts charter school program? Four things: 1) a funding mechanism that drains valuable resources from school districts; 2) a lack of financial accountability; 3) an application and approval process that fails to ensure local input, unbiased review, and quality programming for all, particularly for special education students and English language learners; and 4) no comprehensive and independent research documenting the value of the state’s investment in charter schools.

The Massachusetts Association of School Superintendents convened a group of more than 20 superintendents to thoroughly review charter funding, policy, and performance. Despite the tensions, we concluded that a workable charter school experiment could succeed alongside the existing public school system, but only if charter funding is restructured and the policies that guide their approval, development, and implementation are reformed. Here is how the four major problems should be addressed:

FUNDING: Since 1993, Massachusetts has invested more than $1 billion to fund the charter school experiment. In fiscal year 2005, the charter school program cost the state and school districts $171.2 million to serve 17,733 students, or $9,655 per student. The Department of Education has projected that it will cost over $200 million to support charter schools in 2006. As a group, charter schools are now equivalent to the fourth largest school district in the state, with per-pupil expenditure higher than the state average.

Why are charter costs so high? The current funding formula requires that sending districts pay the charter school the entire tuition, based on the per-pupil foundation cost of a similar student in a district school, plus a per-pupil assessment for capital costs. Sending districts also compensate charter schools for students’ transportation costs.

Charter advocates often say that dollars simply follow the students. But this hides two important facts. First, the creation of the 48 existing charter schools has added layers of administrative, bureaucratic, and operational cost. If the charter experiment were to end tomorrow, the state and local districts could save over $100 million.

Only a few charters have outperformed district schools.

Second, and most important, sending school districts only realize marginal savings, not the full cost of a student who attends a charter school. When students leave the district, expenditures for capital projects, maintenance, administration, utilities, and other teaching and administrative costs remain constant. But the formula does not recognize this. As a result, for every four to five students who attend a charter school, the sending district loses the equivalent of one teaching position. (Last year’s formula change adjusted how the tuition was calculated, but not who paid the tuition. Though a positive step, for most districts the cost of charter tuition increased as a result.)

Currently, the state provides districts with relief funds, in declining amounts, over three years. This is not a long-term solution. Eventually, the district assumes the entire tuition burden, as well as those teaching, administrative, and infrastructure costs that are not reduced when students transfer to charters. In the long term, funds lost to charter schools force districts to reduce staffing and programming. Instead of stimulating reform and innovation in public education, the funding formula undermines improvement efforts and compromises the education of children remaining in district schools.

There is a well-tested alternative – the school choice formula. Currently, if a student transfers through inter-district school choice, the sending district is charged a maximum of $5,000, representing the marginal savings to the sending district and the marginal cost to the receiving district. This also would be a fair way to handle charter tuitions. The state would then have to pay the difference between the district’s $5,000 and the actual charter school tuition. (If the charter school tuition is $9,500, the district would pay $5,000 and the state would pay $4,500.) Thus, the state would share the financial burden of its educational experiment.

The cost of this change would be modest. In fiscal year 2006, the state will spend $70 million to fully fund tuition relief and facilities aid for charters under current rules. To reduce district cost to the school-choice level of $5,000 per student, it would cost the state only an additional $8 million to $14 million. But it would significantly improve relations between charter and district schools over funding.

Charter advocates have been reluctant to accept this formula, arguing that it would make charter schools vulnerable to state funding cuts. In fact, charter schools have been protected from the recent cuts that almost all school districts have had to endure. Direct state funding of a portion of charter tuition would enhance public and legislative accountability for this experiment.

FINANCIAL ACCOUNTABILITY: Charter schools must provide an audited financial report every year, but they are not required to use a consistent reporting format or to complete the same financial report that school districts submit. In June 2004, the state auditor found that charter schools used four different types of financial reports, making comparisons among charter schools and between charters and sending districts difficult, if not impossible.

In addition, charters do not have to comply with the state’s Chapter 30B procurement law, opening up the potential for financial abuse, such as giving contracts to favored vendors. Given that charters will expend over $200 million next year, and that a number of charter schools have failed for financial reasons, all charter schools should be required to spend their public dollars in more publicly accountable ways.

Finally, charters are now provided a per-pupil allocation for capital costs – $745 per student next year. But, unlike school districts, which have to justify and document their capital expenditures to city and town authorities or to the state School Building Assistance program, charters are not accountable for this spending. They don’t even have to expend these funds on capital costs.

To enhance their financial accountability, charter schools should have to submit the same financial reports as all school districts, comply with state procurement laws, and utilize the School Building Assistance program to access resources for capital expenditures.

APPLICATION AND APPROVAL: The Education Reform Act gave charter schools a particular mission in public education – to provide replicable models of innovation. To demonstrate their effectiveness, charters were required to draw a student population representative of the sending schools and not discriminate on the basis of academic performance. In addition, the process dictated local input to ensure there was community need for the charter school. Serious failures to live up to these principles exacerbate tensions between district and charter schools.

Often, the first time a community learns about a charter school is when an application has already been formally filed. Although the local school committee is given the opportunity to respond, there is no requirement that charter applicants seek to build collaboration from the inception of the proposal. In addition, local support is often documented only through vague petitions garnered by proponents standing outside supermarkets and malls. The names on these petitions are rarely checked to verify community residence, children in school, or sincere interest in the charter school.

After they are approved, charters are free to arbitrarily change the areas from which they draw students. For example, one regional charter school proposed to draw students from four lower-wealth communities and based its proposal on the performance in those communities. Once the charter was approved, however, the school attempted to attract students from over 40 communities, many of them high-wealth communities. In other cases, charters simply moved from one community to another, with the new one getting little input into the decision.

Educational experimentation was such a fundamental rationale for launching charters that lawmakers made replication of innovation central to charter renewal. But many charter schools lack innovative programs that don’t already exist in a local district school, while very few, if any, charters have created replicable models. Nevertheless, when renewing charters, the state Board of Education appears to have ignored the requirement that they provide models of best practice for replication.

Indeed, many observers believe that charters fail to draw a representative sample of students from sending school districts, instead skimming the students who are easiest to educate. Most charters enroll far fewer English language learners and special education students than the districts from which their students are drawn. In many cases, the proposals submitted by charter schools do not adequately detail how the school will address the needs of such children.

Finally, there are concerns about the Department of Education’s review process, which is supposed to be unbiased and fair. To date, the review panels that assess charter proposals have included only charter school educators and advocates. The Board of Education itself is heavily biased in favor of charters, with one member serving on the board of a charter school and the chairman working for a charter advocacy organization. In contrast, public school educators and school committee members are legally prohibited from serving on the Board of Education.

To help charter schools achieve their original mission, and reduce conflict with district schools, the charter school program must reestablish the centrality of replicable innovation; provide for local engagement from the inception of the proposal; create an appropriate process for changes in a charter’s recruitment area; ensure that charters recruit, retain, and address the needs of special education students and English language learners; and enhance fairness, transparency, and accountability throughout the review process.

INDEPENDENT EVALUATION: Finally, a reform experiment on such a large scale deserves thorough scrutiny to ensure it is worthy of scarce taxpayer dollars. Many have raised concerns about high attrition rates among students, teachers, and administrators; student performance; diversity of enrollment; qualifications of teachers and administrators; spending patterns in comparison to public schools; and overall effectiveness. Before issuing additional charters, the state needs to conduct a full and independent review of the effectiveness of charter school policies, practices, and performance. A comprehensive and independent study could provide policy recommendations to improve the success rate for future charter schools and assure citizens that their tax dollars are being spent wisely.

If charter schools are to be a successful experiment, if school districts are to live with and learn from charter successes, and if the state is to provide policy guidance that will advance reform and improve student performance, now is the time to correct the flaws in the current funding formula and policies. With these changes we can resolve the discord and level the playing field so that a workable charter school experiment can coexist with the existing public school system.

Sheldon Berman is superintendent of the Hudson public schools and past president of the Massachusetts Association of School Superintendents, of which Thomas Scott is executive director.