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Charter schools are publicly funded schools that operate under a legally binding agreement or “charter” between an independent stakeholder (charter operator) and an authorizing agency (charter sponsor). Stakeholders may be, among others, a group of parents, a team of educators, a community organization, a university, or a private nonprofit or for-profit corporation. On the other hand, the charter authorizing agency is usually a public entity such as a state department of education or local school district. The charter, usually lasting 3 to 5 years, exempts a school from various rules and regulations that normally apply to district-operated public schools. In this way, a charter school receives increased control over school governance and management in areas such as budget, internal organization, staffing, scheduling, curriculum, and instruction. In exchange for this increased autonomy, however, the school must comply with the stipulations outlined in the charter document, including goals related to student academic achievement.

Minnesota lays claim to opening the first charter school in 1992. Since then, the number of charter schools has steadily increased. According to the Center for Educational Reform, as of September 2006, about 4,000 charter schools were serving more than 1 million students in 40 states and the District of Columbia. Nonetheless, charter school legislation varies widely from state to state, affecting the number, characteristics, and level of autonomy of charter schools in each state.

A charter school may be established for numerous reasons. Nonetheless, realizing an alternative vision of schooling, serving a specific population, and gaining greater autonomy have been among the most common reasons cited for starting a new charter school or converting a preexisting public or private school into a charter school. Seeking to support the growth and development of the charter school movement, the U.S. Department of Education created the Public Charter Schools Program in 1995 to help schools deal with costs associated with planning, start-up, and early operation—stages at which charter schools seem to face their most difficult challenges.

In practice, charter schools implement a hybrid design that combines elements traditionally associated with either public or private schools. As public schools, charter schools are nonsectarian and tuition free. These schools have no mandatory assignments of students; instead, parents or guardians voluntarily choose them to enroll their children. Also, charter schools tend to be much smaller and have greater control over internal educational philosophies and practices than district-operated public schools. Because charter school legislation frequently allows flexibility in hiring and other personnel decisions, charter school teachers are also less likely than their counterparts in district-run schools to meet state certification requirements and to have membership in a labor union. Furthermore, some charter schools may tailor their programs to emphasize a particular learning approach (e.g., back-to-basics, culturally relevant curriculum) or to serve a specific population (e.g., special education students). In addition, charter schools often contract out services with educational management organizations (EMOs). An EMO may be nonprofit or for-profit, and contracted services may range from the management of one to all of a school's operations.

For supporters, charter schools, by expanding the options currently available in public education, foster healthy competition and thereby encourage innovation, efficiency, and greater response to “consumer” preferences. In this form, accountability is not only to a public body granting the charter but also to parents and students who, by choosing enrollment, ultimately decide a school's survival. Opponents, however, contend that charter schools represent a stepping-stone toward full privatization and see the introduction of market dynamics in the education system as a threat to democratic values endorsing universality and equal access to educational opportunity. Furthermore, as the market dictates the range and quality of educational services, some critics fear that charter schools may add layers of stratification and exacerbate class and racial isolation.

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