Tag Archives: charter authorizers

9 Considerations for Charter School Mergers in an Era of Limited Budgets

Since March, school funding experts have sought to understand how the economic turmoil coming out of the COVID-19 pandemic would affect school revenue. Most analysts agree that the impact will be significant and will be felt most by those who are the furthest from opportunity. Unfortunately, charter schools — which nationally enroll a student population that is 52 percent low-income, 25 percent Black, and 34 percent Hispanic — are particularly vulnerable to variations in state funding. 

Charter schools struggling with financial sustainability may consider whether the school’s mission might be better served by merging with another charter school. However, while charter school mergers can work, they are far from a simple solution and must be approached carefully.

As our colleagues Lina Bankert and Lauren Schwartze have previously written, a “merger” can take many shapes but, fundamentally, it involves joining together two or more organizations as one entity — through a formal legal agreement — in pursuit of a common goal. In the current financial climate, financial sustainability may be what prompts schools to explore a merger, but any merger conversation should start by defining all of the reasons why it could be a strategic move for each partner in the merger.

These nine considerations will help school leaders determine whether a merger might make sense for their school:

While a merger can support better financial efficiency in the long-term, financial efficiency is neither immediate nor guaranteed. If school leaders are pursuing a merger first and foremost because they believe it promises immediate financial benefits, they should stop and reconsider. A successful merger between two or more charter schools requires a short-term infusion of funding to support the merger process. To conduct due diligence, support internal decision making, plan implementation, and ensure a smooth transition period, school leaders will need financial resources for necessary staff time and legal expertise. Any long-term financial efficiencies will only occur after an initial up-front investment that can sometimes total hundreds of thousands of dollars.  

While a merger can increase financial strength by achieving a larger or more stable revenue base (via combined student enrollment) and by enabling some economies of scale, in practice the additional revenue is often used to support a high-quality school model, via investments to support rigorous and consistent instruction for the merged institution. As a result, a merger should not be thought of as a strategy for “saving money” per se, but instead as a way to combine resources to provide a high-quality education to more students, with the stronger financial footing that comes with that.   

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The Accountability Wars Are About to Begin

Last week, U.S. Secretary of Education Betsy DeVos told states not to expect a waiver on state assessments this year. Some in education will surely push back with the argument that COVID-19 upended metrics historically used to hold schools accountable — student performance and engagement in particular — and, as a result, schools can’t be held accountable at all.

But the question of assessing students shouldn’t be if testing should happen (and yes, states should give assessments this school year), but rather how should we assess teaching and learning in COVID-19 and beyond. 

For charter schools, authorizers can and must continue to hold schools to high standards, especially in this time of uncertainty, by assessing school performance using new metrics and existing metrics defined in new ways; and by rethinking the authorizer role in helping schools meet the needs of students and families.

Assess school performance using new metrics and existing metrics defined in new ways

Authorizers historically measured school performance using proficiency and growth on state-level annual assessments. But real questions exist on what a missing year of data nationwide means for comparing data from previous years. Similarly, past student engagement metrics, previously measured through attendance, or student’s physical presence in the classroom, aren’t possible in a virtual environment.

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Why Is Charter School Growth Slowing? New NACSA Research Offers Insights — But No Easy Answers.

 After growing rapidly for the past decade, the pace of charter school growth has slowed in recent years, provoking consternation among some charter school supporters — as well as debate about causes and responses. As my Bellwether colleagues noted in a recent report on the state of the charter sector, there are multiple potential factors influencing this shift, and it can be difficult to know which are at play because recent trends and the different factors influencing them vary considerably across states and geographies.

Ultimately, however, the pace of charter school growth is a function of just a few factors:

  • How many individuals, organizations, and groups apply to establish new schools?
  • What percentage of those applications are approved?
  • Are existing schools growing, and by how much?
  • What percentage of charter schools are closed?

Charter school authorizers (which I was one of when I served on the DC Public Charter School Board) are the entities entrusted in state law to approve and oversee charter schools. These bodies are uniquely positioned to shed light on the first two questions.

Reinvigorating the Pipeline,” a new report from the National Association of Charter School Authorizers (NACSA), explores what authorizer data can tell us. NACSA (on whose board I now serve) reviewed nearly 3,000 charter applications to authorizers in 20 states who oversee more than two-thirds of charter schools nationally. The report surfaces some interesting insights:

  • There is wide variation in the types of schools that charter applicants propose to create, including classical, “no excuses,” inquiry-based or child-centered, vocational, alternative/credit recovery, blended/hybrid, STEM, and arts schools.
  • Applications for some types of schools are much more common than others, and approval rates also vary widely across types of schools created. Schools proposing to implement classical or “no excuses” models are more than twice as likely to be approved than those proposing arts-focused, gifted-education, and single-sex models.
  • The percentage of charter applications for schools using “no excuses” models declined considerably in the past five years, as did the percentage of “no excuses” schools approved.
  • The majority of charter applicants are for stand-alone schools not affiliated with a charter network or management organization. Indeed, despite common perceptions that networks dominate the charter sector, the percentage of applications for free-standing schools is at a five-year high. Schools affiliated with nonprofit charter management organizations (CMOs) are more likely to be approved than free-standing schools, but, because there are more applications from free-standing schools, CMO-run and free-standing schools each account for about 40% of approved applications. Schools run by for-profit education management organizations, which have attracted considerable criticism in recent years, account for only about 20% of approved schools, and applications for EMO-run schools have declined dramatically.
  • The types of schools that applicants propose to create vary widely across states. Applications for blended or hybrid models, for example, account for more than a quarter of proposals in Arizona, D.C., and Illinois, while authorizers in Connecticut and Minnesota received no applications for this type of model. Conversely, proposals for child-centered models such as Waldorf or Montessori accounted for a much larger share of applications in some states (e.g., Minnesota and Georgia) than others. And groups associated with EMOs accounted for a meaningful percentage of applicants in only a few states but were a big percentage in Florida, Ohio, and Arizona. All of this suggests that what the “charter sector” looks like varies widely across states and communities, a factor that bears remembering in national dialogue about charters.

In some ways, the report raises more questions than it answers. It can’t tell us, for example, why some types of charter applications are much more common than others, or why authorizers are more likely to approve certain types of schools. Further, it’s not easy to tell whether trends in the number of applications for different types of schools reflect intrinsic demand and interest of prospective founders and their communities, or whether perceptions of political and other barriers (such as lack of access to facilities), authorizers’ openness to certain types of models or to approving new charter applications at all, and other political and policy factors are influencing the pipeline of applications that authorizers receive.

These are questions that deserve further inquiry. And given the high level of state and local variation in charter growth and pipelines, many of these questions need to be explored at the state and local level, not just nationally.

But by bringing this data to bear, NACSA is helping to shed empirical light on key questions facing the charter movement — and also countering some common misperceptions about the charter sector. I hope that this work provokes further dialogue and inquiry for the field.