A new report from the Network for Public Education details how badly the charter school industry has been failing that taxpayers who fund it.
The Network for Public Education was founded by educator Anthony Cody and noted education historian Diane Ravitch. The group seeks to “preserve, promote, improve and strengthen public schools for both current and future generations of students.” The group has produced numerous reports about public schools, charter schools and voucher programs.
Issued in November 2024, the new NPE report “Doomed to Fail” looks at charter school closures, studying charter school stability going back to 1998.
Charter schools are privately owned and operated, but funded with taxpayer dollars. Because they often come with the word “public” attached, charter schools raise the expectation that they will have the same sort of stability and reliability that public schools demonstrate. But that’s not always the case. As the study notes:
Charter schools close at far higher rates than public schools. And, unlike public school districts where infrequent closures are orderly with the district finding a new school for the child, charter school closures are often chaotic and abrupt, taking parents by surprise.
Now that charter schools have been allowed in many states for over 20 years, NPE is able to study the closure rate for cohorts of charters. What they have found is that by the time a cohort of charter schools has reached the five year mark, one in four have closed.
By year 10, four in 10 charters have closed. At the end of 15 years, nearly half of charter schools have closed.
The theoretical model for charters, the one touted by charter advocates, is that charter schools are granted a charter by an authorizer. Charters would trade autonomy for accountability. That charter constitutes an agreement—the school promises it will meet certain goals, and if it fails, the authorizer will close it down.
But in practice, it turns out that charters close down for several other reasons. The leading reason for charter closures is low enrollment. The school may never reach its necessary enrollment, it may suffer a precipitous drop, or it may experience a slow decline. Whatever the case, at a certain point, since charters are funded on a per pupil basis, and without enough students, a charter will not have enough funding to exist.
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The second common cause for charter closure is fraud and mismanagement. Over 20 percent of charter closures are related to some kind of deliberate misbehavior or amateur-level errors. 14 percent are closed for academic failure, and 10 percent close for financial failure.
Many urban areas see all these issues exacerbated by authorizers who allow too many charters to open. This is increasingly a problem as we enter a baby bust in the US, with the under-18 population shrinking. Competition for students is heating up, not just between charters and public schools, but between charters.
In Pennsylvania, we are better insulated because our charter schools are authorized by local school boards, elected to serve the taxpayer’s interests; that’s why every once in a while, a charter-loving legislator proposes letting other organizations like universities, also authorize charter schools.
But non-district authorizers can be part of the problem. Michigan has long suffered from a system that allows charter schools to go authorizer shopping for a willing authorizer anywhere in the state, while authorizers collect a percentage of the charter school’s funding. Tiny Bay Mills Community College is located in the almost-Canada part of Michigan, but they were authorizing charter schools throughout the state, including Detroit, and depending on their authorizer income to meet their budget. In such a system, authorizers have financial incentive not to shut down their client charter schools.
Sometimes the impact of a charter school closure is softened. When The Premiere Arts and Science Charter School in Harrisburg was shut down by its authorizer, the Harrisburg School District, in June, it used a team to help its families transition to a new school for the fall.
But not all shutdowns are so carefully managed. In San Antonio, Texas, Jubilee Academies Highland Park started its school year on August 14, 2023. Two weeks later, parents were informed that the school would close by mid-September. In January of 2018, students and faculty of the Goodyear Charter School arrived to find the school closed and the doors locked. These kinds of closures, where students and families get little or no notice and little or no help, are far too common.
The report found that one in five charter closures between 2022 and 2024 were the result of fraud and mismanagement. Charter fraud is not a new phenomenon. Pennsylvania Cyber Charter School founder Nick Trombetta famously went to federal prison for fraud related to the business. ECOT, Ohio’s cyber charter school, was found to have defrauded the taxpayers for over a $100 million. In states with loose oversight and wide-open rules, running a charter school can be attractive not as a means of educational pioneering, but as a means of making a pile of money.
A charter can suffer from all of these issues at once. The Erie Rise charter had academic troubles and tried to renegotiate its target with its authorizer, the Erie School District, for years before the district finally pulled the plug in 2023. But they also went three years without a permanent CEO to run the place, failed to properly meet the needs of its students with special needs, and were under investigation by the US Department of Education. The collapse of the school does illustrate one advantage of the Pennsylvania system; as the Erie School District shut the charter down, they also enrolled all of its students into their public district. Families could keep looking for other options if they wished, but nobody was left high and dry, as was the case in some other states.
The report found that voluntary closures (closures by the board of the school itself) are more likely to be abrupt. The causes behind them may come on gradually, but charters are often inclined to keep their troubles under wraps for fear of accelerating family departures.
The report offers some recommendations.
Have a hard cap on charter growth. Opening too many charters is like opening too many fast food restaurants on the same stretch of road — eventually you will have more than the market can bear, and some will go out of business. The difference, of course, is that nobody’s life is seriously disrupted when their favorite burger store closes.
The market for charter schools is shrinking. The report notes that no state with a strong charter cap has a charter failure rate of over 30 percent. Pennsylvania fits into that group not because we have some official state cap on charter numbers, but because local districts have the final say on opening a charter, which means that elected representatives have a chance to look out for local taxpayer interests. You can see the proof in Philadelphia, where a different charter authorization system has been in place, and in our cyber charter system, where the authorizer is the state. You can also see it in districts where charter fans try to win school board seats.
Authorizers and policy makers should be examining charter failures to see what factors are responsible, and watching for those factors when new requests for authorization come around.
Under Joe Biden, new federal charter rules were proposed that would have included community responsiveness, requiring charters to show how they would impact and fit in with the community in which they planed to open. Charter supporters hated this idea, but proponents of the reform argue that making sure the charter meets community needs and does not merely stretch an already-saturated market saves the public the stress and expense of one more closure.
NPE now goes beyond that level of reform for the federal Charter School Program that helps fund charter schools with federal tax dollars. Instead, they argue, simply end that program.
Because applications are not fact-checked nor properly vetted, this program has led to enormous waste, including a billion dollars being given to schools that never open or that close. The funding of charter schools should be left to the state.
Supporters of free market education would argue that the closing of many charter schools is a feature, not a bug, and that it shows that the system is working by letting the invisible hand of the market eliminate those charter businesses that lack quality. Betsy DeVos was fond of using businesses like food trucks as an analogy for the marketplace she envisioned.
However, when a food truck goes out of business, the inconvenience to its customers is minor. When a school closes, the disruption to students, their academic achievement, their social connections, and their families is huge. Research has shown that the effects of a school closure can last a lifetime. On top of that, while the marketplace is deciding that a school isn’t very good, students are wasting precious, irretrievable time.
Real oversight and accountability, not a faith in market forces, are needed for an education system. The NPE report underlines how lax oversight has disrupted the lives of over 1 million students. The failure rate of charter schools varies from state to state, and states that leave their charter sector wide open, like Arizona, Florida, and Ohio, have charter closure rates of 45 percent or higher. Here in Pennsylvania, where we have some restraints on charter growth, our failure rate is under 30 percent.
That lower failure rate is because Pennsylvania’s charter sector is, however imperfectly, more regulated than that of other states. Ohio’s taxpayers and students pay a price for their “wild west” approach to school choice, and Pennsylvanians should remember that the next time one of our legislators wants to make it “easier” to launch a charter school in the Keystone State.
