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entitled 'Charter Schools: New Charter Schools Across the Country and 
in the District of Columbia Face Similar Start-Up Challenges' which was 
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Report to Congressional Requesters:

United States General Accounting Office:

GAO:

September 2003:

Charter Schools:

New Charter Schools across the Country and in the District of Columbia 
Face Similar Start-Up Challenges:

GAO-03-899:

GAO Highlights:

Highlights of GAO-03-899, a report to congressional requesters

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 as shown in the following table. 

[See PDF for image]

[End of table]

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. 

www.gao.gov/cgi-bin/getrpt?GAO-03-899

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Marnie Shaul, (202) 
512-7215 or shaulm@gao.gov.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Facilities, Funding, and, to a Lesser Extent, Expertise Pose Challenges 
for New Charter Schools, but Some Assistance Is Available:

District of Columbia Charter Schools Face Similar Challenges, but More 
Facilities Assistance Is Available:

Concluding Observations:

Appendix I: Scope and Methodology:

Appendix II: Charter School Facility Assistance Provisions, as of July 
2003:

Appendix III: Charter Schools Operating during 2002-03 School Year in 
D.C. and Facility Status:

Appendix IV: A Comparison of Number of Charter Schools and Select 
Resources Available:

Appendix V: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Staff Acknowledgments:

Related GAO Products:

Tables:

Table 1: D.C. Chartering Authorities:

Table 2: Major Types of Facilities Assistance Offered by States:

Figures:

Figure 1: Status of Charter School Laws by Jurisdiction as of July 
2003:

Figure 2: Expertise Needed to Open a Charter School:

Figure 3: Kinds of Facilities Assistance Provided through the District 
to Charter Schools Operating during School Year 2002-2003:

Figure 4: Timeline of D.C. Public Chartering Process and Eligibility 
for Public Funds:

Abbreviations:

DCPS: District of Columbia Public Schools:

CSDC: Charter Schools Development Corporation:

PCS: Public Charter School:

QZAB: Qualified Zone Academy Bond:

United States General Accounting Office:

Washington, DC 20548:

September 3, 2003:

The Honorable Mike DeWine 
Chairman 
The Honorable Mary Landrieu 
Ranking Minority Member 
Subcommittee on the District of Columbia 
Committee on Appropriations 
United States Senate:

The Honorable Rodney P. Frelinghuysen 
Chairman 
The Honorable Chaka Fattah 
Ranking Minority Member 
Subcommittee on the District of Columbia 
Committee on Appropriations 
House of Representatives:

The growing popularity of educational choice was highlighted in a May 
2003 study by the Department of Education's National Center for 
Education Statistics that reported a shift in public school enrollment 
away from public, assigned schools into public, chosen schools from 
1993-1999. Charter schools are one of the primary ways that parents can 
exercise choice in the public school system. While their impact on 
student achievement is still being debated, charter schools are a form 
of educational reform that has enjoyed bipartisan support from Congress 
and other policy makers. Since 1994, the federal government has 
provided about $1 billion in grants to charter schools in addition to 
financial support provided by state and local governments.

Currently about 1.5 percent of students nationwide, and 15 percent in 
the District of Columbia, are attending charter schools. Charter 
schools are public schools that are exempt from certain state and local 
regulations in exchange for accountability for improving student 
achievement. Like traditional public schools, charter schools receive 
funding from state and local governments on a per-pupil basis; however, 
unlike traditional public schools, charter schools are responsible for 
a wide range of functions that are usually administered by the local 
school district, such as managing faculty payroll and securing and 
maintaining school facilities. Other resources available to charter 
schools depend on specific state laws, local school district decisions, 
and the availability of private or nonprofit assistance.

The opening of a charter school can present challenges to the founders. 
While the challenges are similar, the extent of these challenges varies 
from state to state, depending on state laws and procedures and the 
resources available to assist in the start-up process. This report 
provides information on (1) challenges faced by charter school start-
ups across the nation and resources available in various states to 
address these challenges and (2) how the District of Columbia compares 
in terms of challenges and resources.[Footnote 1]

To obtain information about charter school start-ups across the 
country, we analyzed federal and state charter school laws. We 
conducted interviews with Department of Education (Education) 
officials, charter school policy experts, and charter school advocates 
in various states, including a charter school founder. We also reviewed 
a variety of national studies and surveys of charter schools, including 
those done by the Education Commission of the States and for the 
Department of Education. To obtain information about charter schools in 
the District of Columbia, we analyzed District of Columbia and federal 
laws affecting charter schools in the District. We interviewed 
officials from the Mayor's office and the City Council, the District of 
Columbia Public Schools, and both charter school authorizing bodies--
the District of Columbia Public Charter School Board and the District 
of Columbia Board of Education--from whom we obtained much of our 
information about the facility status of currently operating charter 
schools. We conducted a discussion group consisting of District 
representatives from charter school advocacy groups, researchers, 
charter school founders, and other individuals knowledgeable of charter 
school issues in the District of Columbia. We also visited 1 of the 39 
charter school campuses operating in the District in the 2002-2003 
school year. See appendix I for a more complete description of our 
scope and methodology. We conducted our work between February and 
September 2003 in accordance with generally accepted government 
auditing standards.

Results in Brief:

Although various forms of assistance are available to help with the 
start-up process, new charter schools across the country share common 
difficulties securing adequate facilities, obtaining start-up funding, 
and, to a lesser extent, acquiring the expertise necessary to run a 
charter school. According to studies conducted for Education and 
national charter school experts, finding and financing adequate 
facilities is one of the two most challenging aspects of starting a new 
charter school. To address this problem, the federal Public Charter 
Schools Program provides a limited number of grants to improve the 
creditworthiness of charter schools and help offset the cost of 
acquiring, constructing, or renovating facilities. Additionally, 27 of 
the 40 states with charter school laws and the District of Columbia 
have provisions in law providing for facilities-related assistance to 
charter schools. The extent of this assistance varies considerably; 
however, ranging from allowing charter schools to use vacant public 
buildings if they are available to providing funding and low-interest 
loans to cover some building expenses. A second major challenge cited 
by studies conducted for Education is obtaining sufficient start-up 
funding. New charter schools incur numerous expenses during the school 
design and planning phases, such as purchasing supplies and hiring 
faculty, before many are eligible to receive most forms of public 
funding. One federal resource available to mitigate this problem is the 
federal Public Charter Schools Program, which provides annual grants 
that can be used for charter school planning, design, and 
implementation. Additionally, approximately one-quarter of states with 
charter school laws provide charter school start-up grants or low-
interest loans. Finally, charter school advocates cite the wide range 
of expertise needed, including accounting, budgeting, education law, 
and general school management as a significant challenge to opening a 
new school. Few federal government resources exist to help charter 
school founders acquire issue area expertise; however, 28 states and 
Puerto Rico provide charter schools with some technical assistance 
according to the Education Commission of the States. Nonprofit resource 
centers and other nongovernment sources have been established in some 
states to provide new charter schools with various forms of technical 
assistance to help bridge knowledge gaps.

Charter school founders and others knowledgeable about charter schools 
in the District of Columbia report these same three challenges, and 
except for receiving greater assistance with funding facilities, have 
generally similar resources. Charter school founders in the District 
report difficulties locating appropriate buildings and paying for them, 
citing real estate costs and the age and poor condition of available 
buildings as contributing factors. However, in contrast to charter 
schools in most states, the D.C. law gives charter schools a limited 
preference to access surplus public school buildings and a facilities 
allowance. Like charter schools in other states, new charter school 
founders in the District reported a variety of expenses early in the 
design and planning stages and thus cited obtaining start-up funding as 
a significant challenge to starting a new charter school. To help with 
this problem, the District provides some early funding prior to 
schools' opening. However, to obtain this funding charter schools must 
meet eligibility requirements, such as acquiring a facility. Finally, 
new charter school founders in the District also reported that they 
need expertise in a wide range of areas to successfully open and 
operate a charter school. Similar to charter schools in other parts of 
the country, District charter school founders receive some advice and 
technical assistance during the chartering process; however, unlike 
charter schools in some other states, District charter schools have few 
readily available resources to address this challenge. According to 
some local charter school founders, the nonprofit D.C. Charter School 
Resource Center's recent closing has limited the amount of assistance 
available to help new charter schools founders acquire the necessary 
expertise.

Background:

Since the opening of the first public charter school in Minnesota in 
1992, approximately 2,700 public charter schools have opened across the 
country. As shown in figure 1, 40 states, the District of Columbia, and 
Puerto Rico have enacted charter school laws, although, as of July 
2003, no charter schools had opened in 4 of these states--Iowa, 
Maryland, New Hampshire, and Tennessee. In the 2002-2003 school year, 
public charter schools enrolled nearly 700,000 students or 
approximately 1.5 percent of America's 48 million public school 
students in pre-kindergarten through 12th grade. Students enrolled in 
charter schools are more likely to be members of minority groups than 
students enrolled in traditional public schools according to a 4-year 
study of charter schools conducted for Education.[Footnote 2]

Figure 1: Status of Charter School Laws by Jurisdiction as of July 
2003:

[See PDF for image]

[End of figure]

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. Charter 
schools are often exempt from certain state and school district 
education laws and in some states may receive waivers for exemptions 
from other laws; however, charter schools must comply with select 
regulations, including those pertaining to special education, civil 
rights, and health and safety conditions. While charter schools are 
free from many educational regulations, they are accountable for their 
educational and budgetary performance, including the assessment 
requirements of the No Child Left Behind Act.[Footnote 3] Charter 
schools may have their charters revoked by the authorizing body if they 
fail to perform adequately.

Charters to operate a school are awarded by various entities, depending 
on the state's laws, but may include local school districts, state 
education agencies, institutions of higher education, municipal 
governments, or special chartering boards. The majority of charter 
school authorizing bodies have formal procedures to regulate the 
charter application process, including formal application deadlines and 
public hearings. The ease of the authorizing process for charter 
schools varies from state to state, depending on the specifications in 
state law governing charters and local support or resistance to charter 
schools. For instance, some states limit the number of charters that 
may be awarded either in total or by year. Also, some state laws 
specify multiple authorizers, while others restrict approval authority 
to a single entity, for example, a local school board, and provide for 
appeal when a charter is denied.

In addition to awarding charters, authorizing bodies are responsible 
for monitoring school performance in areas such as student performance, 
compliance with regulations, financial record keeping, and special 
education services. If charter schools do not meet expected performance 
measures, authorizing bodies may revoke a school's charter or decide 
not to renew the school's charter when it expires. Since 1992, more 
than 100 charter schools have been closed, either through charter 
revocation or nonrenewal. According to a recent study published by the 
Thomas B. Fordham Institute, the majority of these closings have been 
due to financial mismanagement, while the rest have been closed due to 
unsatisfactory student achievement or other performance 
failures.[Footnote 4]

A wide range of individuals or groups, including parents, educators, 
nonprofit organizations, and universities, may apply for a school 
charter as nonprofit organizations. Similar to other nonprofit 
organizations, charter schools are governed by a board of trustees, 
which is selected by the school founders. Although requirements for 
charter school board membership vary across states, charter school 
boards are responsible for school oversight. Specifically, charter 
school boards oversee legal compliance, contracts with external 
parties, financial management and policies, and facilities and 
equipment acquisition and maintenance. Charter school board members are 
also responsible for identifying real and potential risks facing the 
charter school, such as financial and school liability risks and 
emergency preparedness, and taking steps to reduce or eliminate these 
risks.

Charter schools may be established in one of two ways. First, an 
existing school may be converted to a public charter school. 
Traditional public schools may convert to charter schools to focus on a 
specific segment of the student body, such as at-risk students, to 
apply a new curriculum or educational approach, or to operate in a less 
regulatory environment. Charter schools may also be established when a 
new school is created and awarded a charter. The majority of charter 
schools are newly created schools rather than conversion schools. 
According to a study done for Education, in the 2000-2001 school year, 
76 percent of new charter schools were newly created.[Footnote 5] 
Charter schools that are converted from existing schools generally 
remain in their buildings, while newly created charter schools must 
acquire facilities. These newly created charter schools may operate in 
a variety of facilities, including surplus school buildings, shared 
space with other groups, such as the YMCA or other charter schools, and 
converted commercial buildings, including office and retail space. In 
September 2000, we reported that new charter schools often experience 
difficulty financing the purchase or lease of their 
facilities.[Footnote 6]

With approximately 15 percent of its public school students attending 
charter schools, the District of Columbia has one of the highest 
concentrations of public students in charter schools in the country. 
Like most charter schools, District charter schools have lower average 
total enrollments and student to teacher ratios than traditional public 
schools. Additionally, District charter schools, like their national 
counterparts, serve a higher percentage of minority and low-income 
students than traditional public schools. Charter school applicants in 
the District may apply to either of two authorizing entities, the 
District of Columbia Public Charter School Board or the District of 
Columbia Board of Education. As of the 2002-2003 school year, the D.C. 
Public Charter School Board has authorized charters for 23 schools, 1 
of which closed voluntarily. The D.C. Board of Education has authorized 
charters for 21 schools, 6 of which closed for performance and 
management reasons. Three new charter schools, 1 authorized by the 
Board of Education and 2 by the D.C. Public Charter School Board, are 
expected to open in the 2003-2004 school year.

Table 1: D.C. Chartering Authorities:

D.C. chartering authorities: Fiscal year 2003 chartering authority 
budget; D.C. Board of Education Chartering Office: $300,000; D.C. 
Public Charter School Board: $589,000.

D.C. chartering authorities: Number of chartering authority board 
members; D.C. Board of Education Chartering Office: 9; D.C. Public 
Charter School Board: 5.

D.C. chartering authorities: Number of charter schools authorized[A]; 
D.C. Board of Education Chartering Office: 21; D.C. Public Charter 
School Board: 23.

D.C. chartering authorities: Number of charter schools closed; D.C. 
Board of Education Chartering Office: 6; D.C. Public Charter School 
Board: 1.

D.C. chartering authorities: Number of charter schools operating during 
the 2002-2003 school year; D.C. Board of Education Chartering Office: 
14; D.C. Public Charter School Board: 21[B].

D.C. chartering authorities: Number of new charter schools expected to 
open in the 2003-2004 school year; D.C. Board of Education Chartering 
Office: 1; D.C. Public Charter School Board: 2.

D.C. chartering authorities: Number of enrolled students as of 2002-
2003 school year; D.C. Board of Education Chartering Office: 2,949; 
D.C. Public Charter School Board: 8,723.

D.C. chartering authorities: Average school size; D.C. Board of 
Education Chartering Office: 211 students; D.C. Public Charter School 
Board: 411 students.

Source: GAO's analysis of D.C. public school data.

[A] The number of charter schools authorized reflects the number of 
charters awarded. Each charter is awarded to one school that may 
operate on one campus or on a number of campuses. For example, 
Friendship-Edison was awarded 1 charter, but operates 4 campuses, each 
with its own building.

[B] One of the 21 Public Charter School Board charter schools closed in 
June of 2003.

[End of table]

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. Securing adequate facilities is one of the 
greatest challenges facing new charter schools, according to research 
articles and national charter school experts. The federal government 
and 27 states provide limited assistance to address this problem. 
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. The wide array of knowledge and skills 
necessary to open and operate a new charter school, such as business, 
law, management, and education expertise, also presents a challenge, 
according to charter school founders. Few federal programs exist that 
specifically address this challenge; however, some assistance is 
available from state, local, and nonprofit sources.

Securing Adequate Facilities Is a Major Challenge; Limited Assistance 
Provided in Most States:

According to research articles and national charter school experts, 
securing adequate facilities is one of the most challenging aspects of 
starting a new charter school. Unlike traditional public schools that 
rely on school districts for support, charter schools are responsible 
for locating, securing, and renovating their school buildings. Locating 
an appropriate facility can be difficult for new charter schools. 
Because new charter schools often open with few classrooms or grades 
and a limited number of enrolled students, charter schools frequently 
expand significantly, sometimes by several grades, during their first 
few years of operation. As a result, new charter schools either look 
for a smaller building that will meet their current size needs or a 
larger one that will accommodate future growth. Both options can pose 
problems for new charter schools, as opening in a smaller building 
requires an ongoing search for a larger facility and the expense of a 
future move, while selecting a larger facility, if one can be found, 
may not be financially feasible in a school's early years. 
Additionally, schools have facilities requirements--they need 
facilities that will enable them to subdivide space into classrooms and 
also contain common space to serve as gymnasiums, cafeterias, or 
auditoriums. Transforming commercial space into educational facilities 
with classrooms and common rooms can be expensive. Some charter schools 
are able to acquire existing school buildings to use for facilities, 
which can reduce transformation costs; however, the number of excess 
school buildings available is generally limited.

In addition to encountering difficulties locating appropriate 
facilities, charter schools have difficulty financing the building 
purchase or lease and renovations. Traditional public schools generally 
rely on school districts for facility financing, which is often 
provided either by raising taxes or issuing municipal bonds.[Footnote 
7] Charter schools, however, are generally not part of a local school 
district and rarely have the authority to raise taxes or issue tax-
exempt bonds independently. Charter schools' access to other facility 
financing options, such as private lending, is also limited. Charter 
schools are often considered credit risks because they may have limited 
credit histories, lack significant cash flows, and have short-term 
charters that can be revoked. As a result, private loans are not easily 
accessible to charter schools for facility financing. Because municipal 
bonds and private loans may be inaccessible to charter schools, many 
charter schools finance their facilities through per-pupil allocations 
provided by the state or district. These per-pupil allotments are 
provided to all public schools, including charter schools, to cover 
operating expenses, such as teachers' salaries and the purchase of 
books and supplies.[Footnote 8] Additionally, some charter schools 
finance their facilities through private donations.

Several states provide financial assistance to charter schools that is 
specifically designated for facilities. Eleven states and the District 
of Columbia provide direct funding to charter schools for facilities, 
either through grant programs to help cover building acquisition costs 
or lease-aid programs to help cover building maintenance and facility 
lease or mortgage payments. Of these 11 states, 5 --Arizona, 
California, Florida, Massachusetts, and Minnesota --and the District of 
Columbia have provided charter schools with a designated annual revenue 
source to offset facilities expenses. Approximately half of all charter 
schools operate in these 5 states and D.C., where charter schools 
receive a supplemental per-pupil allotment that is designated to cover 
facilities expenses. For example, charter schools in low-income areas 
in California may receive up to $750 per student to cover lease 
expenses, while charter schools in Florida may receive up to 
approximately $1,300 per student to offset facilities costs.[Footnote 
9] Additionally, at least 5 states --Colorado, Georgia, Missouri, North 
Carolina, and Texas --and the District of Columbia have enacted 
legislation that would enable the state bonding authorities to issue 
tax-exempt bonds on behalf of charter schools.

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. Some state laws, such as those in Alaska, simply 
make it legal for charter schools to operate in excess public space if 
it is available, while other state laws provide charter schools with 
preferential access to available space or mandate procedures for 
informing charter schools when public space becomes available. For 
instance, Arizona law requires that an annual list of appropriate 
public buildings be made available to charter schools. Additionally, 
the amount charter schools must pay for this space varies. In Virginia, 
charter schools do not have to pay rent for available school buildings, 
while in Louisiana, charter schools must pay fair market value to use 
excess public facilities. Table 2 summarizes the various types of 
facility assistance provided. Appendix II provides greater detail about 
facilities assistance provisions in state laws.

Table 2: Major Types of Facilities Assistance Offered by States:

Type of facilities assistance: Funding assistance for facilities; 
Number of states: 11 and D.C.

Type of facilities assistance: Issue tax-exempt bonds on behalf of 
charter schools; Number of states: 5 and D.C.

Type of facilities assistance: Access to vacant public buildings; 
Number of states: 18 and D.C.

Source: GAO analysis of state charter school laws.

[End of table]

Some federal support also exists to help public charter schools acquire 
facilities.[Footnote 10] Under the Public Charter Schools Program, the 
federal government provides a limited number of grants to public or 
private organizations for the development of facilities-related "credit 
enhancement initiatives." Organizations use credit enhancement grants 
to leverage additional capital for charter schools for the acquisition, 
construction, or renovation of facilities. Charter schools do not 
receive this grant money directly; instead the grant money is provided 
to organizations that use the funding for a range of activities to help 
charter schools improve their credit. These activities include insuring 
or facilitating the issuance of bonds, subsidizing interest payments, 
creating a facilities loan pool, or serving as a loan guarantor. Grant 
recipients generally provide support to charter schools in specific 
states or regions or to specific types of charter schools. For example, 
one 2001 grant recipient, the Raza Development Fund, a nonprofit 
Hispanic advocacy organization, is using its grant to increase 30 
Hispanic charter schools' access to direct loans. The credit 
enhancement program has received funding twice, in fiscal years 2001 
and 2003.[Footnote 11] 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. Like traditional 
public schools, charter schools may access federally administered 
Qualified Zone Academy Bonds (QZAB), which provide financial assistance 
for public school renovations. To qualify for these bonds, public 
schools must be located in an empowerment zone or enterprise 
community[Footnote 12] or have at least 35 percent of their students 
eligible for free or reduced-price school lunch. In addition, federal 
law permits local school districts, including charter schools, to enter 
into public-private partnerships that allow private entities to take 
advantage of tax-exempt bonds--often referred to as private activity 
bonds--for school construction and renovation. However, as we reported 
in a 2000 study of charter school facilities financing, the credit 
worthiness of most new charter schools and concerns about their ability 
to repay remain a concern for bond raters and buyers.[Footnote 13]

Obtaining Sufficient Start-Up Funding Is also a Major Challenge; 
Assistance Provided Primarily by Federal Programs:

According to national studies of new charter schools, obtaining 
sufficient start-up funding is one of the two greatest challenges 
facing charter schools during the planning and early implementations 
stages. 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. Unlike traditional public schools, 
most charter schools do not receive financial support from local school 
districts during the early planning stages, and many are not eligible 
for local funds until the school opens. While the timetable for 
disbursing funds varies by location, charter schools can incur a 
variety of expenses--for example, attorney and consultant fees--before 
they are eligible to receive most sources of public funding. To help 
meet these early expenses, many charter schools rely on funds raised 
through private sources, such as individual fundraising or awards from 
private foundations.

Charter schools become eligible for financial assistance under the 
Public Charter Schools Program after the application has been submitted 
and certain other requirements met. Through this program, charter 
schools can receive funding to help defray planning, design, and 
implementation expenses. Grants are awarded under this program by 
Education to state departments of education to be distributed directly 
to charter schools for a period of not more than 3 years, of which no 
more than 18 months may be used for planning and program design and no 
more than 24 months may be used for implementation.[Footnote 14] 
Education recommends that states provide charter schools with $450,000 
over the 3-year period to be distributed in $150,000 annual 
allotments.[Footnote 15] Charter schools that are still in the early 
planning stages and have not yet submitted an application may apply for 
a waiver to the program's eligibility requirements to receive a "pre-
planning" subgrant. Education recommends that states awarding pre-
planning subgrants provide sums of $10,000 to $20,000 and requires that 
pre-planning grants count towards a charter school's 3-year subgrant 
time limit. According to an evaluation of the Public Charter Schools 
Program conducted for Education in 2001,[Footnote 16] almost two-thirds 
of charter schools are recipients of Public Charter School subgrants. 
The data also indicated that of those schools not receiving subgrants 
through the Public Charter Schools Program, about half did not apply. 
According to Education officials, charter schools that are turned down 
for subgrants through this program may have applied for the funding 
after they had completed their early planning and implementation 
stages, which would make them ineligible.

An analysis of data collected by the Education Commission of the States 
showed that in 2003 approximately one-fourth of states with charter 
school laws had established programs to assist new charter schools with 
start-up costs through grants or loans. Nine states, Alaska, 
California, Georgia, Illinois, Louisiana, Minnesota, New Mexico, 
Oklahoma, and Pennsylvania, and the District of Columbia made start-up 
loans[Footnote 17] or grants available to new charter schools. The size 
and timing of these grants and loans varied from state to state. In 
Georgia, for example, new charter school founders were eligible for 
$5,000 grants during the school planning phase, while new charter 
school founders in Pennsylvania were eligible for $25,000 grants to 
cover expenses during the charter application process. Additionally, 
Louisiana had established a $3 million loan fund to provide charter 
schools with money during the start-up period, and charter schools in 
California are eligible to receive loans for as much as $250,000, which 
could be repaid over a 5-year period. Although these grant and loan 
programs had been authorized, funding for these programs is uncertain. 
For example, Minnesota will not fund its charter school start-up grant 
program for fiscal year 2004 for budgetary reasons. Additionally, 
according to the Education Commission of the States data, Nevada, which 
has authorized a loan program, has never funded it.

Lack of Specific Expertise also Poses Difficulties; Some Assistance Is 
Available from Local or Nonprofit Sources:

The wide array of knowledge and skills necessary to open and operate a 
charter school often presents a challenge for charter school founders. 
For instance, according to charter school advocates with whom we spoke 
many charter school founders may have extensive educational experience 
but limited knowledge of legal and business issues. In order for a 
charter school to be successful, charter school founders must 
coordinate a wide range of activities: planning the school's 
educational system and curriculum, hiring leadership and teaching 
staff, assembling a board of directors, ensuring the school's 
compliance with all laws and regulations, locating and acquiring school 
facilities, creating the school's budget and accounting systems, and 
managing the day-to-day operations of the school. As figure 2 shows, to 
successfully achieve these tasks, charter school founders must have 
expertise in a variety of areas, including educational systems, legal 
issues, and general business practices; however, few individuals are 
well versed in all of these subjects. National surveys of charter 
school founders cite their limited knowledge of certain areas as a 
challenge to opening new charter schools.

Figure 2: Expertise Needed to Open a Charter School:

[See PDF for image]

[End of figure]

The federal government provides limited assistance to charter school 
founders to help them acquire expertise. Education sponsors a Web site, 
www.uscharterschools.org, that provides an overview of state charter 
laws, lists state charter school advocacy groups, and promotes 
exchanges between charter school founders. In addition, 5 percent of 
the Public Charter Schools Program grant money may be used by the 
states to cover administrative expenses, which can include funding for 
technical assistance programs. For example, the Florida Department of 
Education uses a small percentage of its approximately $26 million 
Public Charter Schools grant to fund a resource center that provides 
new charter schools with technical assistance throughout the chartering 
process. The Florida program provides charter schools with assistance 
in management, governance, and budgeting and fosters mentoring 
relationships between new and established charter schools. Under the 
Public Charter Schools Program, some states provide subgrants to high-
performing charter schools that have been open for at least 3 
consecutive years to share best practices with new charter school 
founders.

Technical assistance programs that help charter school founders learn 
more about how to open and operate a school are generally administered 
by state or local governments. According to the Education Commission of 
the States, 28 states and Puerto Rico provide some technical assistance 
to charter schools through their state departments of education or 
local school boards. The extent and type of this assistance varies. 
Some states conduct periodic workshops, others provide targeted 
assistance to individual charter schools upon request, and some states 
provide both types of assistance. For example, the Pennsylvania 
Department of Education conducts monthly regional workshops and 
provides assistance to individual charter schools upon request. 
Additionally, states or local school boards may provide charter school 
founders with assistance during the charter application period or after 
the charter school has opened. Types of assistance that are designed to 
help charter school founders operate their schools include staff 
development and management, use of student data, technology training, 
and curriculum development.

Charter school founders also rely on nonprofit organizations to help 
them gain expertise. Charter school resource centers, which are 
primarily nonprofit organizations, assist charter schools in specific 
states or regions in the opening and operation of the school. According 
to data from a national charter school advocacy organization, these 
resource centers operate in approximately half of the states with 
charter school laws. The resource centers address founders' lack of 
expertise by providing new charter schools with a wide range of 
services, such as budgeting assistance, board development, and 
classroom management. The type of services provided by these resource 
centers varies significantly. For example, a charter school resource 
center in Wisconsin helps charter schools with board development, 
networking, business management, and legal compliance. The 
Massachusetts Charter School Resource Center provides a fellowship to a 
small number of charter school founders. Charter school founders 
selected to participate in this competitive program are paid $50,000 
for 1 year, as they learn how to effectively found and operate a 
charter school through a training and internship program. According to 
resource center representatives with whom we spoke, charter school 
resource centers also may help potential founders make decisions about 
moving forward with the application and chartering process. By helping 
potential charter school founders better understand what is involved 
with founding a new charter school, resource centers can also offer 
potential founders advice as they decide whether or not they should 
attempt to open a charter school. The funding and operation of charter 
school resource centers also varies significantly. Charter school 
resource centers may be funded by private donations, supported by fee-
for-service arrangements, sponsored by university programs, or financed 
by state or local governments.

In addition to more formal resources, charter school founders rely on 
other charter school founders and their own boards of directors to help 
them gain needed expertise. Charter school founders often rely upon 
other charter school founders who had opened schools in the same state 
or region for expertise and advise. One charter school founder we 
interviewed said that the insights and expertise provided by people who 
had also gone through the local chartering process enabled him to more 
fully understand what was required to charter and open a school. 
Additionally, charter school founders seek expertise and assistance 
from their boards of directors. As nonprofit organizations, all charter 
schools must have a board of directors responsible for school 
governance issues. Charter school boards often include members with 
varying areas of expertise, such as lawyers, accountants, management 
consultants, and community organizers. Founders, therefore, have an 
additional resource available to assist them with issues that may be 
outside of their own area of expertise.

District of Columbia Charter Schools Face Similar Challenges, but More 
Facilities Assistance Is Available:

Charter school founders in the District of Columbia, like charter 
schools nationwide, face challenges with facilities, start-up funding, 
and expertise, and except for receiving greater assistance with funding 
facilities, have generally similar resources. Although D.C. charter 
schools receive greater facilities assistance, charter school founders 
report that real estate costs and the current unavailability of public 
buildings make securing appropriate buildings difficult. New charter 
schools in the District also report incurring substantial costs early 
in the design and planning stages and cite obtaining start-up funding 
as a significant challenge to starting a new charter school. However, 
in addition to design and planning funds available through the Public 
Charter Schools Program, new charter schools in the District can 
receive partial access to local funds prior to the opening of the 
school. Finally, new charter school founders in the District reported 
that developing the expertise needed to successfully open and operate a 
charter school presents a problem that has been exacerbated by the 
recent closing of the nonprofit organization, the D.C. Charter School 
Resource Center.

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. Charter 
school officials and charter school authorizing officials told us that 
in recent years the expense of real estate in the District of Columbia 
has limited the options available to new charter schools. National 
reports on commercial real estate markets show that commercial property 
in the District is among the most expensive in the nation and that 
there is continued strong demand for commercial property. Additionally, 
D.C. charter school founders reported that available buildings tend to 
be older, in need of extensive and costly renovations, or not fit to be 
used as schools. For example, one charter school organization that 
purchased an unoccupied District of Columbia Public Schools (DCPS) 
building estimated that the cost of renovating the building would be 
over $5 million.

To help alleviate some of this strain, the D.C. charter school law 
provides charter schools with a limited preference in acquiring surplus 
DCPS buildings.[Footnote 18] Specifically, the law provides charter 
schools with a preference to purchase or lease DCPS surplus buildings 
at below market rates, provided that doing so will not result in a 
significant loss of revenue that might be obtained from other 
dispositions or use of the property. In March 2000, DCPS conducted an 
inventory of all its schools and designated 38 surplus school 
buildings. As of June 2003, charter schools are using 14 of these 
buildings: 11 set aside for their exclusive use by order of the mayor 
in October 2000 and 3 others.[Footnote 19] According to District 
officials, of these 14 buildings, charter school groups have purchased, 
or are in the process of purchasing, about half at a 25 percent 
discount from fair market value.[Footnote 20] The other half are being 
leased to charter schools at discounted rates--about 50 percent of fair 
market value. As of June 2003, DCPS had designated no additional 
surplus buildings. However, as a part of its Facilities Master Plan, a 
comprehensive plan for renovating or modernizing its schools, DCPS is 
currently finalizing a facilities assessment. This assessment, which 
DCPS expects to complete by September 2003, could potentially identify 
additional surplus school buildings.[Footnote 21] If such buildings 
were identified, a list of them would be sent to the mayor's office, 
which would determine how to dispose of them.

In addition to these preferences, DCPS designated one of its public 
school buildings as a "hub school," where charter schools can lease 
space for up to 3 years. Since 1998, the hub school has housed a total 
of 6 charter schools, 3 charter schools at a time, with each charter 
school occupying its own floor. All the schools in the building share 
common space, such as the auditorium, gymnasium, and outdoor field 
space. The two authorizing boards notify charter schools when space in 
the hub school becomes available, and charter schools can submit an 
application to the Mayor's Office of Property Management for 
consideration.

In addition to the hub school, DCPS occasionally provides charter 
schools with other temporary space. It provides such space when a DCPS 
school is not using part of the building it occupies or when DCPS has a 
vacant building that it has not designated as surplus. In such cases, 
DCPS allows charter schools to lease the space on a year-to-year basis. 
According to an official in the DCPS realty office, 2 charter schools 
rented excess space in an occupied DCPS school building under this type 
of agreement in school year 2002-2003. Currently, DCPS has no formal 
process for making temporary space available to charter schools. In 
providing charter schools with temporary space, the District and DCPS 
meet some needs particular to charter schools. Specifically, the hub 
school and the DCPS temporary space allow charter schools, which are 
often initially smaller than traditional schools, to benefit from the 
economies of scale realized by sharing space, such as cafeterias and 
gymnasiums, with another school. Temporary space also allows charter 
schools to focus on the educational component of their school first 
rather than focusing on finding a permanent facility.

Recent legislation increased the potential for additional shared space 
arrangements. This legislation requires DCPS to present a plan to the 
City Council for the co-location of charter and other public schools 
where underutilized DCPS space exists.[Footnote 22] As of July 2003, 
the co-location plan had not been completed, but DCPS was finalizing a 
use and capacity study of all its school buildings, which should 
identify any underutilized space that currently exists.

In addition to the District, two nonprofit organizations have provided 
D.C. charter schools with assistance in sharing facilities. The 
Appletree Charter School Incubator--a charter school start-up facility 
operated by a nonprofit organization--provided temporary space to 2 
District charter schools between 1998 and 2002. The Appletree Institute 
rented space in a federally leased building at a discount for 4 years 
and then provided space to District charter schools at a discounted 
rate. The Incubator closed when the lease expired in 2002 and as of 
June 2003, both schools were leasing space in other buildings. In 2003, 
another nonprofit group, the Charter Schools Development Corporation 
(CSDC),[Footnote 23] purchased a surplus DCPS building,[Footnote 24] 
which it is renovating and will use to permanently house 2 charter 
schools, according to a CSDC official.

Besides providing some access to facilities, the District of Columbia 
also provides financial assistance to help charter schools acquire 
facilities through a variety of mechanisms. One of these is a per-pupil 
facilities allotment. In addition to a per-pupil allotment that covers 
operating expenses, District charter schools receive a per-pupil 
allotment for facilities expenses. In the 2002-2003 school year, 
charter schools in the District received a facilities allotment of 
approximately $1,600 per pupil for traditional students and about 
$3,600 per pupil for students at public charter boarding 
schools.[Footnote 25]

Another way the District provides financial support for facilities to 
charter schools is through its Credit Enhancement Revolving 
Fund.[Footnote 26] Under the authority of the D.C. Department of 
Banking and Financial Institutions, this program provides loan 
guarantees and collateral to help finance the purchase or new 
construction of charter school facilities. The Credit Enhancement 
Revolving Fund was first appropriated $5 million in fiscal year 2000. 
It was not until 2003 that it received its second appropriation 
totaling $8 million. To date, the Credit Enhancement Revolving Fund has 
been able to enhance 6 charter school loans.

In addition to the Credit Enhancement Revolving Fund, in fiscal year 
2003, the District allocated $5 million to a new direct-loan program. 
Under this program, the District can provide low-interest loans 
directly to charter schools, rather than through private lenders. 
Charter schools can use the proceeds from these loans as collateral for 
a larger loan on a purchase, new construction, or renovation of a 
building. This program will potentially benefit new charter schools the 
most because private lenders often do not lend to charter schools that 
have not begun operating. District officials told us that as of August 
2003, the District has obligated funds from the direct loan program to 
7 charter schools for varying amounts, but the loan process has not yet 
been completed.

The District also provides financial assistance to help charter schools 
acquire facilities by allowing charter schools to raise revenues 
through tax-exempt bonds. The District will issue bonds on behalf of 
charter schools if the charter school meets certain eligibility 
requirements, including that the charter school holds nonprofit status, 
has sufficient collateral, and has been operating as a school for at 
least 2 years. According to the D.C. official overseeing the bond 
program, new charter schools have not been able to benefit from this 
source of funding because they have not been operating long enough to 
qualify. As of August 2003, the District has issued 7 bonds on behalf 
of 6 charter schools, which has allowed District charter schools to 
borrow over $39.4 million in bond revenues to use for their facilities. 
[Footnote 27] One additional charter school has a bond issue pending.

In addition to tax-exempt bonds, two other federal bond programs are 
available to both traditional schools and charter schools in the 
district--QZAB and private activity bonds. According to District 
officials, as of June 2003, no charter schools had applied for either 
of these programs.

Figure 3 shows a summary of the kinds of facility assistance received 
by D.C. charter schools operating during the 2002-2003 school year. 
Some of this assistance was received at start-up, such as temporary 
housing in the hub school, some was received after start-up, for 
example, tax-exempt bonds for facilities, and some is received on an 
on-going basis, for example, the per-pupil facilities allotment 
received by all schools. For a list of charter schools operating in the 
District in the 2003-2003 school year and their facility status, see 
appendix III.

Figure 3: Kinds of Facilities Assistance Provided through the District 
to Charter Schools Operating during School Year 2002-2003:

[See PDF for image]

[A] These numbers are current as of school year 2002-2003 and schools 
can benefit from multiple resources.

[B] The direct loan program has obligated its funds to 7 charter 
schools, but has not completed distributing funds.

[End of figure]

The District, Like a Few States, Provides Early Access to Funds to 
Lessen Start-Up Funding Issues:

Like new charter schools in other parts of the country, new charter 
schools in the District also incur high start-up costs early in the 
design and planning stages. A variety of District charter school 
founders and others knowledgeable about charter school issues said that 
there were limited options for obtaining start-up funding to plan a new 
school, but that once the charter application was approved, more 
funding options became available. The D.C. Public Charter School Board 
and the D.C. Board of Education have similar application processes, 
which usually start over a year before the school's intended opening. 
Figure 4 shows a typical timeline, including when a charter school 
might expect to become eligible for public funds. Charter schools in 
the District must apply for their charter by June for the school year 
that starts in September of the following year. Between July and 
August, both chartering boards hold public hearings to ask questions of 
the charter schools and to allow the community to provide input on the 
charter school. In August, preliminary decisions are made on the 
charter. At that point, charter applications receive a preliminary 
approval, a full approval, or a denial. According to officials from 
both authorizing boards, many of their applications receive a 
preliminary approval before a full approval.[Footnote 28]

Figure 4: Timeline of D.C. Public Chartering Process and Eligibility 
for Public Funds:

[See PDF for image]

[A] The D.C. Board of Education does not have a specific date for 
making final decisions, as those decisions are made on a case-by-case 
basis.

[B] This payment consists of both the per-pupil facilities allotment 
and the per-pupil operational allotment.

[End of figure]

Until fiscal year 2003, charter schools were not eligible for public 
funds prior to receiving preliminary approval. As a result, charter 
schools relied on private sources of funding to cover their expenses. 
For example, one recently approved charter school founder reported 
spending close to $200,000 in private foundation funds during the early 
planning stages of the charter school to pay for fees and feasibility 
studies on a facility she planned to use for her charter school. 
Another charter school founder said that he had to take out a personal 
loan to put a deposit on a facility. Charter school founders said that 
early funds would be helpful in paying for such things as compensation 
for the time professionals spent on writing the charter application and 
initial inspections of facilities.

Beginning in fiscal year 2003, D.C. began awarding pre-planning 
subgrants for up to $10,000 from its federal Public Charter Schools 
Program grant, making some funds available earlier in the 
process.[Footnote 29] Potential charter school applicants can obtain 
these grants prior to the submission of the charter application. The 
D.C. program specifies that these funds may be used for up to 12 months 
of pre-planning activities, such as the professional development of the 
charter school planning team and informing the community about the 
school. In fiscal year 2003, nine D.C. charter school groups received 
these grants.

D.C. charter school applicants that have received preliminary approval 
are eligible to apply for Public Charter Schools Program subgrants for 
up to $110,000 to be used the first year following preliminary 
approval. In the second and third years, charter schools can receive 
subgrants in amounts from $95,000 to $200,000 to be used for 
implementation purposes. In fiscal year 2003, DCPS awarded 4 first-year 
subgrants for $110,000 each and 5 second/third year subgrants for 
$200,000 each. Applicants can apply for one or all of these subgrants-
-pre-planning, first, second, and third year--but the total period of 
time in which these funds are received cannot exceed 36 months.

The District also provides charter schools with access to some local 
funds--a short-term loan against their annual funds and early payment 
of their first-quarter funds--after the charter is fully approved and 
prior to the schools opening. To receive either type of funding, 
schools must have obtained full approval of their charter, secured a 
facility, and hold nonprofit status. According to District officials, 
no charter schools have applied for the short-term loan in the past 3 
years because the District changed its policy and now disburses its 
first-quarter payment in July, approximately 6-8 weeks prior to the 
start of the school year. The timeline for receiving the first-quarter 
payment is now consistent with when many charter schools can meet the 
eligibility requirements for receiving this loan.

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. 
D.C. charter school experts said that many charter school founders have 
a vision for the education they want to provide their students but do 
not always know how to manage the many tasks involved with 
administering a school. To address this issue, the District chartering 
authorities provide some assistance with the application and other 
technical assistance to school founders during the chartering process. 
However, this support is often limited to assisting charter school 
groups with the application process and does not always include support 
once the application has been approved. For this reason, many charter 
schools turn to private and nonprofit resources to assist them with 
these issues.

The nonprofit D.C. Charter School Resource Center offered assistance to 
charter school groups until it closed in the spring of 2003. According 
to individuals familiar with the D.C. resource center, since 1998 it 
offered classes on how to fill out the charter application and put 
charter school groups in contact with organizations that would 
potentially provide some monetary assistance.[Footnote 30] Local 
charter school advocates told us that the nonprofit D.C. Charter School 
Resource Center's recent closing has limited the amount of assistance 
available to help new charter schools founders acquire necessary 
expertise.

Concluding Observations:

The clear consensus among those with whom we spoke and in the 
literature we reviewed was that start-up funds and obtaining an 
adequate facility remain significant obstacles for charter schools, 
especially in those locations like the District of Columbia, where the 
cost of and demand for property is high. Relative to charter schools in 
many other locations, District charter schools benefit from a greater 
variety of facilities-related support, such as a per-pupil facility 
allowance and preference to surplus school buildings. In addition, 
recent steps taken to identify surplus property and underutilized 
school buildings have potential for making additional space available 
to charter schools. However, although the law provides for giving 
charter schools a limited preference in acquiring surplus DCPS 
property, it also contains the stipulation that the preference is only 
to be given provided that doing so will not result in a significant 
loss of revenue that might otherwise be obtained. 

Agency Comments and Our Evaluation:

We provided a draft of this report to the Department of Education for 
its review and comment. Education's Executive Secretariat confirmed 
that Education officials had reviewed the draft and found the 
information in the draft to be helpful. Education officials had no 
comments except for a few technical clarifications, which we 
incorporated as appropriate in this report.

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. In addition, we provided 
portions of the draft report pertaining to the District of Columbia to 
officials from D.C. Public Schools, the Executive Office of the Mayor, 
the Department of Banking and Financial Institutions, and the Office of 
the Chief Financial Officer. Officials from these offices provided 
technical comments, which we incorporated as appropriate in this 
report.

We are sending copies of this report to the Secretary of the Department 
of Education, relevant congressional committees, relevant District of 
Columbia officials, and other interested parties. We will also make 
copies available to others upon request. In addition, the report will 
be available at no charge on GAO's Web site at http://www.gao.gov. 
Please contact me at (202) 512-7215 if you or your staffs have any 
questions about this report. Other major contributors to this report 
are listed in appendix V.

Marnie S. Shaul 
Director, Education, Workforce, and Income Security Issues:

Signed by Marnie S. Shaul: 

[End of section]

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 conducted interviews with 
U.S. Department of Education officials, charter school policy experts, 
and charter school advocates in various states. Specifically, we 
interviewed representatives from the Charter School Friends National 
Network, the Progressive Policy Institute, and other advocacy and 
research groups. We also interviewed representatives from charter 
school resource centers in some states--Florida, Massachusetts, 
Minnesota, Pennsylvania, Tennessee, and Wisconsin--that were 
identified as having proactive resource centers by those knowledgeable 
about charter schools. We also conducted a review of all state laws on 
charter school facilities. We reviewed the Department of Education's 4-
year studies on the state of charter schools and Education's Public 
Charter Schools Program evaluation. Additionally, we analyzed Education 
Commission of the States data published in the Collection of Charter 
School ECS StateNotes.

To obtain information about charter schools in the District of 
Columbia, we analyzed District of Columbia and federal laws affecting 
charter schools in the District. 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. We conducted a discussion group consisting of 
District representatives from charter school advocacy groups, 
researchers, charter school founders, and other individuals 
knowledgeable of charter school issues in the District of Columbia. We 
also interviewed founders of D.C. charter schools, as well as other 
representatives from the D.C. charter school community, including the 
AppleTree Institute, Friends of Choice in Urban Schools (FOCUS), and 
the Charter Schools Development Corporation. We also visited César 
Chávez Public Charter High School for Public Policy, 1 of the 39 
charter school campuses in the District. 

[End of section]

Appendix II: Charter School Facility Assistance Provisions, as of July 
2003 :

State: Alabama; State requirements pertaining to facility assistance 
for charter schools. N/A.

State: Alaska; State requirements pertaining to facility assistance for 
charter schools. Law permits operation of schools in existing school 
district facilities upon approval of district's administrative staff.

State: Arizona; State requirements pertaining to facility assistance 
for charter schools. State has a "stimulus fund" which provides 
financial support for start-up costs and costs associated with 
facilities' renovations or remodeling. The Arizona Department of 
Education must publish an annual list of existing vacant and unused 
buildings, and unused portions of buildings available to charter 
schools. (No lease/purchase preference is given to charter schools.).

State: Arkansas; State requirements pertaining to facility assistance 
for charter schools. No facilities assistance provisions.

State: California; State requirements pertaining to facility assistance 
for charter schools. State has established a "Charter School 
Facilities Account" funded by bond proceeds (K-12). Additionally, the 
state has set up a charter school facility grant program for charter 
schools located in low-income areas which awards up to $750 per student 
to provide assistance for up to 75 percent of the charter school's 
annual facilities rent and lease costs. Each school district must make 
any vacant school facilities available to charter schools at minimum 
charge.

State: Colorado; State requirements pertaining to facility assistance 
for charter schools. Charter schools must be able to use district 
facilities "deemed available" by the school district at no cost, except 
for operations and maintenance expenses. The state must distribute a 
portion of its education funds to charter schools to help cover capital 
construction costs. A charter school may ask its local school board to 
issue bonds to fund capital construction expenses.

State: Connecticut; State requirements pertaining to facility 
assistance for charter schools. State has established a grant program 
that provides charter schools with up to $500,000 for assistance with 
capital expenses; to be eligible, the charter school must have been 
operating during the prior fiscal year.

State: Delaware; State requirements pertaining to facility assistance 
for charter schools. School districts must make unused buildings or 
space available for charter schools, and must "bargain in good faith" 
over the cost of rent, services, and maintenance. The Delaware 
Department of Education must publish an annual list of facilities 
available for charter school use.

State: District of Columbia; State requirements pertaining to facility 
assistance for charter schools. District of Columbia offers charter 
schools a limited preference to lease or purchase surplus public school 
buildings provided that doing so will not result in a significant loss 
of revenue that might be obtained from other dispositions or uses of 
the facility or property. An "enhanced credit fund" has also been 
established to help charter schools finance the purchase, construction, 
and/or renovation of facilities. District charter schools also receive 
an annual per-pupil facilities allowance.

State: Florida; State requirements pertaining to facility assistance 
for charter schools. State agencies may issue revenue bonds to provide 
for charter school facilities assistance. Charter schools are also 
eligible for facilities assistance from a state capital outlay fund. 
Charter schools are offered a preference to use surplus school 
buildings.

State: Georgia; State requirements pertaining to facility assistance 
for charter schools. Georgia State Board of Education may require a 
local referendum to decide whether a local board of education must 
provide funds from school tax levies or incur bonded indebtedness or 
both, to support a charter school.

State: Hawaii; State requirements pertaining to facility assistance for 
charter schools. State oversees annual maintenance and repairs for 
charter school facilities and establishes a priority-of-need list for 
charter school facilities requiring assistance.

State: Idaho; State requirements pertaining to facility assistance for 
charter schools. A charter school's board of directors may borrow 
money to finance the purchase of facilities for charter schools.

State: Illinois; State requirements pertaining to facility assistance 
for charter schools. A charter school may negotiate and contract with 
a school district, a state college or university, or any other public, 
nonprofit, or for-profit entity for a school charter site. If a charter 
school uses an existing school building, the school is only required to 
pay the building operation and maintenance costs--no rent is required.

State: Indiana; State requirements pertaining to facility assistance 
for charter schools. No facilities assistance provisions.

State: Iowa; State requirements pertaining to facility assistance for 
charter schools. No facilities assistance provisions.

State: Kansas; State requirements pertaining to facility assistance for 
charter schools. No facilities assistance provisions.

State: Kentucky; State requirements pertaining to facility assistance 
for charter schools. N/A.

State: Louisiana; State requirements pertaining to facility assistance 
for charter schools. Local school boards must make any vacant facility 
available to charter schools at fair market value. Facilities that were 
constructed at no cost to the school board must be provided to the 
charter school at no cost.

State: Maine; State requirements pertaining to facility assistance for 
charter schools. N/A.

State: Maryland; State requirements pertaining to facility assistance 
for charter schools. No facilities assistance provisions.

State: Massachusetts; State requirements pertaining to facility 
assistance for charter schools. Massachusetts funds charter schools on 
a per-pupil basis. As part of this payment, the state includes the 
charter school's cost of leasing a facility, as well as facility 
maintenance and operation expenses, in the payment.

State: Michigan; State requirements pertaining to facility assistance 
for charter schools. No facilities assistance provisions.

State: Minnesota; State requirements pertaining to facility assistance 
for charter schools. The state provides building lease aid grants to 
charter schools. A charter school may lease space from an eligible 
charter school sponsor or from another public or private nonprofit 
nonsectarian organization.

State: Mississippi; State requirements pertaining to facility 
assistance for charter schools. No facilities assistance provisions.

State: Missouri; State requirements pertaining to facility assistance 
for charter schools. A state school district may incur bonded 
indebtedness or "take other measures" to provide for physical 
facilities and other capital items to charter schools that it sponsors 
or contracts with.

State: Montana; State requirements pertaining to facility assistance 
for charter schools. N/A.

State: Nebraska; State requirements pertaining to facility assistance 
for charter schools. N/A.

State: Nevada; State requirements pertaining to facility assistance for 
charter schools. No facilities assistance provisions.

State: New Hampshire; State requirements pertaining to facility 
assistance for charter schools. Charter schools and their "host" 
school district are encouraged to enter into "mutually advantageous" 
contracting relationships resulting in the sharing of facilities. A 
charter school is not eligible for facility assistance unless the 
school is leasing a building owned by the school district, and the 
lease does not include an option to purchase the building.

State: New Jersey; State requirements pertaining to facility assistance 
for charter schools. No facilities assistance provisions.

State: New Mexico; State requirements pertaining to facility assistance 
for charter schools. Charter schools are not required to pay rent for 
available school district facility space. New Mexico has established a 
"Charter School Stimulus Fund" for the initial costs of renovating and 
remodeling existing buildings.

State: New York; State requirements pertaining to facility assistance 
for charter schools. State must publish an annual list of available 
state buildings for use by charter schools. State established a charter 
school "stimulus fund" for acquisition, renovation, and construction of 
charter school facilities.

State: North Carolina; State requirements pertaining to facility 
assistance for charter schools. If a charter school that has applied 
for approval to the State Board of Education is unable to find a 
building, the Board can approve the charter school to operate in an 
"adjacent local school administrative unit" for one year. At the 
request of a charter school, a school district must lease "any" 
available building or land to the charter school, unless the lease is 
not economically practical or feasible, or the district does not have 
adequate classroom space to meet its enrollment needs. A school 
district may lease a building to a charter school free of charge, 
except for maintenance and insurance expenses. North Carolina Capital 
Facilities Finance Agency (or its successor) may issue bonds on behalf 
of charter schools.

State: North Dakota; State requirements pertaining to facility 
assistance for charter schools. N/A.

State: Ohio; State requirements pertaining to facility assistance for 
charter schools. Charter schools may use a school district facility 
under any contract terms that the district agrees to. Charter schools 
may use loans obtained under the state facilities loan guarantee 
program for the construction of new school buildings. If a board of 
education decides to dispose of property suitable for classroom space, 
it must first offer the property for sale to start up community 
schools.

State: Oklahoma; State requirements pertaining to facility assistance 
for charter schools. State has established an "incentive fund" for 
charter school renovation and remodeling of existing building.

State: Oregon; State requirements pertaining to facility assistance for 
charter schools. To the extent such information is readily available, 
education service districts must make lists of vacant buildings 
available to the public; however, there is no preference or obligation 
to lease to a charter school.

State: Pennsylvania; State requirements pertaining to facility 
assistance for charter schools. No facilities assistance provisions.

State: Puerto Rico; State requirements pertaining to facility 
assistance for charter schools. No facilities assistance provisions.

State: Rhode Island; State requirements pertaining to facility 
assistance for charter schools. Public charter schools sponsored by 
school districts are eligible for reimbursement of "school housing 
costs." Public charter schools not sponsored by school districts are 
eligible for 30 percent reimbursement of "school housing costs.".

State: South Carolina; State requirements pertaining to facility 
assistance for charter schools. State must publish an annual list of 
vacant state buildings. Charter schools have a "right of first refusal" 
for vacant school buildings.

State: South Dakota; State requirements pertaining to facility 
assistance for charter schools. N/A.

State: Tennessee; State requirements pertaining to facility assistance 
for charter schools. No facilities assistance provisions.

State: Texas; State requirements pertaining to facility assistance for 
charter schools. Nonprofit revenue bonds may be issued for facilities 
assistance.

State: Utah; State requirements pertaining to facility assistance for 
charter schools. No facilities assistance provisions.

State: Vermont; State requirements pertaining to facility assistance 
for charter schools. N/A.

State: Virginia; State requirements pertaining to facility assistance 
for charter schools. Charter schools do not have to pay rent for 
available school buildings.

State: Washington; State requirements pertaining to facility assistance 
for charter schools. N/A.

State: West Virginia; State requirements pertaining to facility 
assistance for charter schools. N/A.

State: Wisconsin; State requirements pertaining to facility assistance 
for charter schools. No facilities assistance provisions.

State: Wyoming; State requirements pertaining to facility assistance 
for charter schools. Charter schools are not required to pay rent for 
school property "deemed available" in school district.

Source: GAO analysis.

[End of table]

[End of section]

Appendix III: Charter Schools Operating during 2002-03 School Year in 
D.C. and Facility Status :

Authorized by D.C. Public Charter School Board:

1; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Arts and Technology Academy; Occupied a former DCPS building at 
start-up: Yes; Current facility status: Purchased former DCPS building.

2; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Associates for Renewal in Education[A]; Occupied a former DCPS 
building at start-up: Yes; Current facility status: Leasing DCPS 
building.

3; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Capital City; Occupied a former DCPS building at start-up: No; 
Current facility status: Leasing commercial space.

4; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Carlos Rosario International; Occupied a former DCPS building at 
start-up: Yes; Current facility status: Leasing nonprofit and commercial 
space, purchased facility for use beginning SY 2003.

5; Charter schools campus: Authorized by D.C. Public Charter School 
Board: César Chávez Public Charter High School for Public Policy; 
Occupied a former DCPS building at start-up: No; Current facility 
status: Leasing commercial space.

6; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Friendship-Edison Blow Pierce Junior Academy Public Charter 
School; Occupied a former DCPS building at start-up: Yes; Current 
facility status: Purchased former DCPS building.

7; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Friendship-Edison CG Woodson Senior Academy Public Charter 
School; Occupied a former DCPS building at start-up: Yes; Current 
facility status: Leasing DCPS building.

8; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Friendship-Edison Chamberlain Public Charter School; Occupied a 
former DCPS building at start-up: Yes; Current facility status: Purchased 
former DCPS building.

9; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Friendship-Edison Woodridge Public Charter School; Occupied a 
former DCPS building at start-up: Yes; Current facility status: Purchased 
former DCPS building.

10; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Howard Road Academy Public Charter School; Occupied a former 
DCPS building at start-up: Yes; Current facility status: Owns new 
building.

11; Charter schools campus: Authorized by D.C. Public Charter School 
Board: KIPP DC/KEY Academy Public Charter School; Occupied a former 
DCPS building at start-up: No; Current facility status: Leasing 
commercial space.

12; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Marriott Hospitality Public Charter High School; Occupied a 
former DCPS building at start-up: No; Current facility status: Leasing 
former D.C. government building.

13; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Maya Angelou See Forever Public Charter School; Occupied a 
former DCPS building at start-up: Yes; Current facility status: Purchased 
commercial building.

14; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Meridian Public Charter School; Occupied a former DCPS building 
at start-up: No; Current facility status: Leasing commercial space.

15; Charter schools campus: Authorized by D.C. Public Charter School 
Board: New School for Enterprise and Development Public Charter School; 
Occupied a former DCPS building at start-up: Yes; Current facility 
status: Leasing commercial space.

16; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Paul JHS Public Charter School; Occupied a former DCPS building 
at start-up: Yes; Current facility status: Conversion school - leasing 
from DCPS.

17; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Sasha Bruce Public Charter School; Occupied a former DCPS 
building at start-up: No; Current facility status: Will lease space from 
CSDC in fall 2003.

18; Charter schools campus: Authorized by D.C. Public Charter School 
Board: School for Arts in Learning Public Charter School; Occupied a 
former DCPS building at start-up: No; Current facility status: Purchased 
private building.

19; Charter schools campus: Authorized by D.C. Public Charter School 
Board: SEED Public Charter School; Occupied a former DCPS building at 
start-up: No; Current facility status: Leasing DCPS building.

20; Charter schools campus: Authorized by D.C. Public Charter School 
Board: South East Academy Public Charter School; Occupied a former DCPS 
building at start-up: No; Current facility status: Purchased commercial 
building.

21; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Thurgood Marshall Academy Public Charter School; Occupied a 
former DCPS building at start-up: No; Current facility status: Leases 
from a nonprofit; sale pending for DCPS building.

22; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Tree of Life Public Charter School; Occupied a former DCPS 
building at start-up: No; Current facility status: Leases commercial 
space.

23; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Tri-Community Public Charter Schoool; Occupied a former DCPS 
building at start-up: No; Current facility status: Leasing from 
soldier's home (federal government property) beginning school year 
2003.

24; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Washington Math Science and Technology Public Charter School; 
Occupied a former DCPS building at start-up: No; Current facility 
status: Leasing commercial space.

Authorized by the D.C. Board of Education: 

25; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Barbara Jordan PCS; Occupied a former DCPS building at start-up: 
Yes; Current facility status: Leasing DCPS space in the hub school.

26; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Booker T. Washington PCS; Occupied a former DCPS building at 
start-up: No; Current facility status: Leasing commercial space.

27; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Children's Studio PCS; Occupied a former DCPS building at start-
up: Yes; Current facility status: Leasing a DCPS building.

28; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Community Academy PCS; Occupied a former DCPS building at start-
up: Yes; Current facility status: Leasing DCPS building; pending sale.

29; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Elsie Whitlow Stokes Community Freedom PCS; Occupied a former 
DCPS building at start-up: No; Current facility status: Leasing from a 
nonprofit.

30; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Hyde Leadership PCS; Occupied a former DCPS building at start-
up: Yes; Current facility status: Leasing DCPS building.

31; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Ideal Academy PCS; Occupied a former DCPS building at start-up: 
Yes; Current facility status: Leasing DCPS space in the hub school.

32; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Integrated Design Electronic Academy (IDEA) PCS; Occupied a 
former DCPS building at start-up: Yes; Current facility status: Purchased 
former DCPS building.

33; Charter schools campus: Authorized by D.C. Public Charter School 
Board: JOS-ARZ Therapeutic PCS; Occupied a former DCPS building at 
start-up: No; Current facility status: Leasing commercial space.

34; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Kamit Institute for Magnificent Achievers (KIMA) PCS; Occupied a 
former DCPS building at start-up: Yes; Current facility status: Leasing 
DCPS space in the hub school.

35; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Next Step PCS; Occupied a former DCPS building at start-up: No; 
Current facility status: Leasing commercial space from Latin American 
Youth Center.

36; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Options PCS; Occupied a former DCPS building at start-up: No; 
Current facility status: Leasing commercial space, will move into CSDC 
space fall 2003.

37; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Roots PCS; Occupied a former DCPS building at start-up: No; 
Current facility status: Purchased the building.

38; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Village Learning Center PCS (elementary school); Occupied a 
former DCPS building at start-up: No; Current facility status: Leasing 
commercial space.

39; Charter schools campus: Authorized by D.C. Public Charter School 
Board: Village Learning Center PCS (middle and high school); Occupied a 
former DCPS building at start-up: Yes; Current facility status: Leasing 
DCPS building.

Source: D.C. Public Charter School Board and DCPS Board of Education.

Note: Public Charter School (PCS).

[A] Associates for Renewal in Education PCS closed in June 2003.

[End of table]

[End of section]

Appendix IV: A Comparison of Number of Charter Schools and Select 
Resources Available:

State: Alaska; Number of charter schools 2002-03 school year[A]: 15; 
Size of federal Public Charter School State Grant ($ for FY 02): 0; Law 
provides for facilities funding: No; Law allows access to public 
facilities: Yes.

State: Arizona; Number of charter schools 2002-03 school year[A]: 
464; Size of federal Public Charter School State Grant ($ for FY 02): 
$16,850,260; Law provides for facilities funding: Yes; Law allows 
access to public facilities: Yes.

State: Arkansas; Number of charter schools 2002-03 school year[A]: 8; 
Size of federal Public Charter School State Grant ($ for FY 02): 
$1,022,000; Law provides for facilities funding: No; Law allows access 
to public facilities: No.

State: California; Number of charter schools 2002-03 school year[A]: 
428; Size of federal Public Charter School State Grant ($ for FY 02): 
$24,845,129; Law provides for facilities funding: Yes; Law allows 
access to public facilities: Yes.

State: Colorado; Number of charter schools 2002-03 school year[A]: 
93; Size of federal Public Charter School State Grant ($ for FY 02): 
$7,141,048; Law provides for facilities funding: Yes; Law allows access 
to public facilities: Yes.

State: Connecticut; Number of charter schools 2002-03 school year[A]: 
16; Size of federal Public Charter School State Grant ($ for FY 02): 
$200,000; Law provides for facilities funding: Yes; Law allows access 
to public facilities: No.

State: Delaware; Number of charter schools 2002-03 school year[A]: 
11; Size of federal Public Charter School State Grant ($ for FY 02): 
$1,066,666; Law provides for facilities funding: No; Law allows access 
to public facilities: Yes.

State: District of Columbia; Number of charter schools 2002-03 school 
year[A]: 35[B]; Size of federal Public Charter School State Grant ($ 
for FY 02): $2,941,177; Law provides for facilities funding: Yes; Law 
allows access to public facilities: Yes.

State: Florida; Number of charter schools 2002-03 school year[A]: 
227; Size of federal Public Charter School State Grant ($ for FY 02): 
$25,564,000; Law provides for facilities funding: Yes; Law allows 
access to public facilities: Yes.

State: Georgia; Number of charter schools 2002-03 school year[A]: 35; 
Size of federal Public Charter School State Grant ($ for FY 02): $100; 
Law provides for facilities funding: No; Law allows access to public 
facilities: No.

State: Hawaii; Number of charter schools 2002-03 school year[A]: 25; 
Size of federal Public Charter School State Grant ($ for FY 02): 
$4,368,421; Law provides for facilities funding: No; Law allows access 
to public facilities: No.

State: Idaho; Number of charter schools 2002-03 school year[A]: 13; 
Size of federal Public Charter School State Grant ($ for FY 02): 
$1,129,412; Law provides for facilities funding: No; Law allows access 
to public facilities: No.

State: Illinois; Number of charter schools 2002-03 school year[A]: 
29; Size of federal Public Charter School State Grant ($ for FY 02): 
$1,136,446; Law provides for facilities funding: No; Law allows access 
to public facilities: Yes.

State: Indiana; Number of charter schools 2002-03 school year[A]: 10; 
Size of federal Public Charter School State Grant ($ for FY 02): 
$3,947,638; Law provides for facilities funding: No; Law allows access 
to public facilities: No.

State: Iowa; Number of charter schools 2002-03 school year[A]: 0; 
Size of federal Public Charter School State Grant ($ for FY 02): 0; Law 
provides for facilities funding: No; Law allows access to public 
facilities: No.

State: Kansas; Number of charter schools 2002-03 school year[A]: 30; 
Size of federal Public Charter School State Grant ($ for FY 02): 
$3,000,000; Law provides for facilities funding: No; Law allows access 
to public facilities: No.

State: Louisiana; Number of charter schools 2002-03 school year[A]: 
20; Size of federal Public Charter School State Grant ($ for FY 02): 
$100; Law provides for facilities funding: No; Law allows access to 
public facilities: Yes.

State: Maryland; Number of charter schools 2002-03 school year[A]: 
0[C]; Size of federal Public Charter School State Grant ($ for FY 02): 
0; Law provides for facilities funding: No; Law allows access to public 
facilities: No.

State: Massachusetts; Number of charter schools 2002-03 school 
year[A]: 46; Size of federal Public Charter School State Grant ($ for 
FY 02): $3,387,247; Law provides for facilities funding: Yes; Law 
allows access to public facilities: No.

State: Michigan; Number of charter schools 2002-03 school year[A]: 
196; Size of federal Public Charter School State Grant ($ for FY 02): 
$6,081,376; Law provides for facilities funding: No; Law allows access 
to public facilities: No.

State: Minnesota; Number of charter schools 2002-03 school year[A]: 
87; Size of federal Public Charter School State Grant ($ for FY 02): 
$9,970,543; Law provides for facilities funding: Yes; Law allows access 
to public facilities: Yes.

State: Mississippi; Number of charter schools 2002-03 school year[A]: 
1; Size of federal Public Charter School State Grant ($ for FY 02): 0; 
Law provides for facilities funding: No; Law allows access to public 
facilities: No.

State: Missouri; Number of charter schools 2002-03 school year[A]: 
26; Size of federal Public Charter School State Grant ($ for FY 02): 
$100; Law provides for facilities funding: No; Law allows access to 
public facilities: No.

State: Nevada; Number of charter schools 2002-03 school year[A]: 13; 
Size of federal Public Charter School State Grant ($ for FY 02): 
$2,627,520; Law provides for facilities funding: No; Law allows access 
to public facilities: No.

State: New Hampshire; Number of charter schools 2002-03 school 
year[A]: 0; Size of federal Public Charter School State Grant ($ for FY 
02): $10,000; Law provides for facilities funding: No; Law allows 
access to public facilities: Yes.

State: New Jersey; Number of charter schools 2002-03 school year[A]: 
56; Size of federal Public Charter School State Grant ($ for FY 02): 
$3,552,828; Law provides for facilities funding: No; Law allows access 
to public facilities: No.

State: New Mexico; Number of charter schools 2002-03 school year[A]: 
28; Size of federal Public Charter School State Grant ($ for FY 02): 
$5,125,000; Law provides for facilities funding: Yes; Law allows access 
to public facilities: Yes.

State: New York; Number of charter schools 2002-03 school year[A]: 
38; Size of federal Public Charter School State Grant ($ for FY 02): 
$4,727,267; Law provides for facilities funding: Yes; Law allows access 
to public facilities: Yes.

State: North Carolina; Number of charter schools 2002-03 school 
year[A]: 93; Size of federal Public Charter School State Grant ($ for 
FY 02): $4,284,210; Law provides for facilities funding: No; Law allows 
access to public facilities: Yes.

State: Ohio; Number of charter schools 2002-03 school year[A]: 131; 
Size of federal Public Charter School State Grant ($ for FY 02): 
$21,044,050; Law provides for facilities funding: No; Law allows access 
to public facilities: Yes.

State: Oklahoma; Number of charter schools 2002-03 school year[A]: 
10; Size of federal Public Charter School State Grant ($ for FY 02): 
$529,412; Law provides for facilities funding: Yes; Law allows access 
to public facilities: No.

State: Oregon; Number of charter schools 2002-03 school year[A]: 25; 
Size of federal Public Charter School State Grant ($ for FY 02): 
$5,293,582; Law provides for facilities funding: No; Law allows access 
to public facilities: Yes.

State: Pennsylvania; Number of charter schools 2002-03 school 
year[A]: 91; Size of federal Public Charter School State Grant ($ for 
FY 02): $8,507,000; Law provides for facilities funding: No; Law allows 
access to public facilities: No.

State: Puerto Rico; Number of charter schools 2002-03 school year[A]: 
1[D]; Size of federal Public Charter School State Grant ($ for FY 02): 
0; Law provides for facilities funding: No; Law allows access to public 
facilities: No.

State: Rhode Island; Number of charter schools 2002-03 school 
year[A]: 8; Size of federal Public Charter School State Grant ($ for FY 
02): $100; Law provides for facilities funding: Yes; Law allows access 
to public facilities: No.

State: South Carolina; Number of charter schools 2002-03 school 
year[A]: 13; Size of federal Public Charter School State Grant ($ for 
FY 02): $4,193,313; Law provides for facilities funding: No; Law allows 
access to public facilities: Yes.

State: Tennessee; Number of charter schools 2002-03 school year[A]: 
0; Size of federal Public Charter School State Grant ($ for FY 02): 
$1,710,526; Law provides for facilities funding: No; Law allows access 
to public facilities: No.

State: Texas; Number of charter schools 2002-03 school year[A]: 221; 
Size of federal Public Charter School State Grant ($ for FY 02): 
$10,900,000; Law provides for facilities funding: No; Law allows access 
to public facilities: No.

State: Utah; Number of charter schools 2002-03 school year[A]: 12; 
Size of federal Public Charter School State Grant ($ for FY 02): 
$2,252,250; Law provides for facilities funding: No; Law allows access 
to public facilities: No.

State: Virginia; Number of charter schools 2002-03 school year[A]: 8; 
Size of federal Public Charter School State Grant ($ for FY 02): 
$525,694; Law provides for facilities funding: No; Law allows access to 
public facilities: Yes.

State: Wisconsin; Number of charter schools 2002-03 school year[A]: 
130; Size of federal Public Charter School State Grant ($ for FY 02): 
$9,452,160; Law provides for facilities funding: No; Law allows access 
to public facilities: No.

State: Wyoming; Number of charter schools 2002-03 school year[A]: 1; 
Size of federal Public Charter School State Grant ($ for FY 02): 
$168,500; Law provides for facilities funding: No; Law allows access to 
public facilities: Yes.

Source: GAO analysis.

[A] Center for Education Reform.

[B] GAO analysis - 35 charter schools operate on 39 campuses.

[C] Maryland did not pass its charter school law until May 2003.

[D] As of the 1999-2000 school year, according to Education.

[End of table]

[End of section]

Appendix V: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Deborah L. Edwards, (202) 512-5416, edwardsd@gao.gov Tamara Fucile, 
(202) 512-9895, fucilet@gao.gov:

Staff Acknowledgments:

The following staff also contributed to this report: Anjali 
Tekchandani, Behn Miller Kelly, Ronald La Due Lake, and Patrick 
Dibattista.

[End of section]

Related GAO Products:

Public Schools: Insufficient Research to Determine Effectiveness of 
Selected Private Education Companies. GAO-03-11. Washington, D.C. 
October 29, 2002.

School Vouchers: Characteristics of Privately Funded Programs. GAO-02-
752. Washington, D.C. September 26, 2002.

School Vouchers: Publicly Funded Programs in Cleveland and Milwaukee. 
GAO-01-914. Washington, D.C. August 31, 2001.

Charter Schools: Limited Access to Facility Financing. GAO/HEHS-00-163. 
Washington, D.C. September 12, 2000.

Charter Schools: Federal Funding Available but Barriers Exist. GAO/
HEHS-98-84. Washington, D.C. April 30, 1998.

Charter Schools: Recent Experiences in Accessing Federal Funds. GAO/T-
HEHS-98-129. Washington, D.C. March 31, 1998.

Charter Schools: Issues Affecting Access to Federal Funds. T-HEHS-97-
216. Washington, D.C. September 16, 1997.

Private Management of Public Schools: Early Experiences in Four School 
Districts. GAO/HEHS-96-3. Washington, D.C. April 19, 1996.

Charter Schools: New Model for Public Schools Provides Opportunities 
and Challenges. GAO/HEHS-95-42. Washington, D.C. January 18, 1995.

FOOTNOTES

[1] The Consolidated Appropriations Resolution for Fiscal Year 2003, 
Division C, Title III, § 140, Pub. L. No. 108-7 (2003), required GAO to 
report on the national effort to establish adequate charter school 
facilities, including a comparison to the efforts in the District of 
Columbia.

[2] RPP International, Office of Educational Research and Improvement, 
U.S. Department of Education, The State of Charter Schools 2000: Fourth 
Year Report (Washington, D.C. Jan. 2000).

[3] P. L. 107-110 (2002). The No Child Left Behind Act reauthorized the 
Elementary and Secondary Education Act of 1965 and instituted a number 
of new features that hold schools accountable for student achievement.

[4] Thomas B. Fordham Institute, Charter School Authorizing: Are States 
Making the Grade? (Washington, D.C. June 2003). The Thomas B. Fordham 
Institute is a nonprofit organization associated with the Thomas B. 
Fordham Foundation, which supports research, publications, and action 
projects about elementary and secondary education reform.

[5] SRI International, Policies and Program Studies Service, U.S. 
Department of Education, A Decade of Public Charter Schools, Evaluation 
of the Public Charter Schools Program: 2000-2001 Evaluation 
(Washington, D.C. Nov. 2002).

[6] See U.S. General Accounting Office, Charter Schools: Limited Access 
to Facility Financing, GAO/HEHS-00-163 (Washington, D.C. Sept. 12, 
2000).

[7] Municipal bonds are tax-exempt bonds issued by a local government 
entity, such as a school district, city, or county.

[8] Per-pupil allotments provided to charter schools may not be as high 
as those provided to traditional public schools in the same districts.

[9] Education Commission of the States, StateNotes, Charter Schools: 
Charter School Finance (Denver, CO: Apr. 2003).

[10] Similarly, little federal funding is provided to support 
facilities for traditional public schools.

[11] In both fiscal years 2001 and 2003, the program received $25 
million. From the fiscal year 2001 funding, Education awarded five 
grants, ranging between $3 million and $6.4 million. The five grant 
recipients will provide credit enhancement programs to charter schools 
in at least 10 states and the District of Columbia. Education expects 
to award grants of similar values for the fiscal year 2003 funding.

[12] Empowerment zones and enterprise communities are communities with 
high levels of poverty that participate in the U.S. Department of 
Agriculture's community empowerment program, which provides tax 
benefits to help communities meet long-term strategic goals regarding 
private investment and job creation.

[13] See U.S. General Accounting Office, Charter Schools: Limited 
Access to Facility Financing, GAO/HEHS-00-163, (Washington, D.C. Sept. 
12, 2000), 20.

[14] The state departments of education in Arizona, New Hampshire, and 
Wyoming do not participate in the Public Charter Schools Program. 
Charter schools in states not participating may apply directly to the 
U.S. Department of Education for 3-year grants under this program.

[15] In addition to providing subgrants to charter schools, a state may 
dedicate up to 10 percent of its Public Charter Schools grant to 
establish a charter school revolving loan fund. Through this fund, 
participating states provide new charter schools with loans to offset 
initial operating expenses. The terms of these loans are determined by 
state education agencies.

[16] SRI International, Policies and Program Studies Service, U.S. 
Department of Education, A Decade of Public Charter Schools, Evaluation 
of the Public Charter Schools Program: 2000-2001 Evaluation 
(Washington, D.C. Nov. 2002).

[17] We were unable to determine if these start-up loans were funded 
through the Public Charter Schools Revolving Loan Program or state 
funds.

[18] Surplus buildings are those not needed for educational purposes by 
DCPS. They are referred to the Mayor's office for final disposition.

[19] According to DCPS officials, some of these buildings were occupied 
by charter schools prior to the Mayor's order and some charter schools 
have negotiated long-term leases in DCPS school buildings that were not 
in the order.

[20] According to District officials, fair market value is based on the 
building's use as a school. Charter schools that purchased buildings 
valued at over $1,000,000 received a 15-percent discount.

[21] DCPS officials told us that not all vacant buildings are 
considered surplus, as some are needed to temporarily house students 
displaced from buildings undergoing renovations and some are reserved 
for future use.

[22] See D.C. Code 38-1851.

[23] CSDC is a nonprofit organization that has provided financing 
assistance, primarily through a Credit Enhancement Program, to charter 
schools across the country for 6 years. 

[24] CSDC purchased the Kingsman School building in 2003. The Kingsman 
school was included as one of the 38 buildings deemed as a surplus 
building by DCPS in 2000. 

[25] The $1,600 per-pupil facilities allotment is in addition to the 
approximately $6,500 per pupil given to charter schools for their 
operating expenses. The $6,500 figure is a base amount and is adjusted 
upwards according to grade level, special education status, and 
language proficiency. 

[26] This Credit Enhancement Revolving Fund is separate from the credit 
enhancement initiatives under the federal Public Charter Schools 
Program. The federal program awarded grants with fiscal year 2001 
funding to five nonprofit organizations, two of which specify that they 
plan to assist D.C. charter schools with obtaining credit.

[27] All 6 bonds have been purchased by private entities, such as Bank 
of America and SunTrust, and are not available for purchase on the open 
market. As such, they have not been rated for credit risk. 

[28] To receive full approval, it is required that charter schools 
secure a facility. According to officials from the charter school 
authorizing boards, this is the most difficult part of the application 
process. 

[29] The DCPS Office of Federal Grant Programs administers federal 
funding opportunities for charter schools authorized by the DCPS Board 
of Education and the District of Columbia Charter School Board.

[30] We were unable to contact officials from the D.C. Resource Center, 
as the Center closed during the time of our review.

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