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The charter education movement had its beginning in a number of reform ideas, including alternative schools, site-based management, magnet schools, public school choice, privatization, and community-parental empowerment. The term charter originated in the 1970s with the idea that small groups of teachers be given contracts, or charters, by their local school boards to explore new approaches. The idea was publicized, suggesting that local boards could charter an entire school with union and teacher approval.

Charter schools were founded on the premise that innovative educators, free from the mandates of traditional public schools, could continuously adapt to meet their students' needs. The following were the aims of charter education.

  • Increase opportunities for learning and access to quality education for all students.
  • Create choice for parents and students within the public school system.
  • Provide a system of accountability for results in public education.
  • Encourage innovative teaching practices.
  • Create new professional opportunities for teachers.
  • Encourage community and parent involvement in public education.
  • Leverage improved public education broadly.

Although charter education provides an alternative to other public schools, they are part of the public education system and are not allowed to charge tuition. Some charter schools provide a curriculum that specializes in a certain field, such as the arts or mathematics. Others simply seek to provide a better and more efficient general education than nearby public schools.

In the late 1980s a number of charter schools were started in Philadelphia. Some of them were schools of choice. The idea was further refined in Minnesota where charter schools were developed according to three basic values: opportunity, choice, and responsibility for results.

In 1991, Minnesota passed the first charter school law, with California following suit in 1992. By 1995, 19 states had signed laws allowing for the creation of charter schools, and by 2003 that number had increased to 40 states, as well as Puerto Rico and the District of Columbia. Charter schools are one of the fastest growing innovations in education policy. These schools embraced broad bipartisan support from governors, state legislators, and past and present secretaries of education.

The charter establishing each school is a performance contract detailing the school's mission, program, goals, students served, methods of assessment, and ways to measure success. The length of time for which charters are granted varies, but most are granted for 3 to 5 years. At the end of the term, the entity granting the charter may renew the school's contract. Charter schools are accountable to their sponsor—usually a state or local school board—to produce positive academic results and adhere to the charter contract. The basic concept of charter schools is that they exercise increased autonomy in return for accountability. They are accountable for both academic results and fiscal practices to several groups, including the sponsor that grants them, the parents who choose them, and the public that funds them.

The founders of charter schools generally fall into three groups: (1) grassroots organizations of parents, teachers, and community members; (2) entrepreneurs; or (3) existing schools converting to charter status. According to the first-year report of the National Study of Charter Schools, the following were the three reasons most often cited to create a charter

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