Senator Tim Scott of South Carolina offered a resolution to overturn the Biden administration’s new regulations on federal funding of charter schools. The vote was 49-49, strictly on party lines. Even charter school supporters like Senator Cory Booker of New Jersey and Senator Michael Bennett of Colorado voted to sustain the new rules.

Every Republican voted to reject the rules. The charter lobby was not at all pleased.

The Network for Public Education has worked very hard to persuade the Department of Education and Congress to regulate the federal Charter Schools Program. When Betsy DeVos was Secretary of Education, there was no chance that the Department would try to regulate the $440 million handed out to new charter schools every year. The federal government was the single biggest contributor to new charter schools.

NPE published reports about the large number of charter schools that closed or never opened. It wrote about for-profit charters that were enjoying federal largesse. It drew attention to charter school scandals, including white flight academies subsidized by federal funds.

Not until the Biden administration took office did anyone in the Department take seriously its responsibility to oversee federal funding of charters.

What do the new regulations require? What did every single Republican Senator try to block? We’re they upset about the limits on for-profit operators? Or did they object to transparency and accountability for federally funded charters?

NPE executive director Carol Burris explained in this article published at Valerie Strauss’s Answer Sheet blog:

For those who have long advocated for overhauling the CSP program, here are the significant gains.

Schools managed by for-profits will have a difficult time securing CSP grants and, in some cases, will be excluded from funding.

If an applicant has or will have a contract with a for-profit management company (or a “nonprofit management organization operated by or on behalf of a for-profit entity”), they must provide extensive information, including a copy or description of the contract, comprehensive leadership personnel reporting and the identification of possible related party transactions. Real estate contracts must be reported, and “evergreen contracts” in which there is automatic contract renewal are prohibited.

The school cannot share legal, accounting or auditing services with the for-profit. The state entity that awards the grant must publish the for-profit management contract between the awardee and the school.
The final regulations also include the reporting and exposure of the for-profit’s related entities. The Network for Public Education recommended the addition of “related entities” in its comments to the department. Our report, “Chartered for Profit,” explains how for-profit owners create separate corporations with different names to mask the complete control of the for-profit over operations of the school.

Finally, the applicant must assure that “the [for-profit] management company does not exercise full or substantial control over the charter school,” thereby barring any charter school operated by a for-profit with a “sweeps contract” from obtaining CSP funds.

There will be greater transparency and accountability for charter schools, State Entities, and CMOs that apply for grants.

This is probably the most underreported win for those who support charter school reform.

Transparency gains include:

• An assurance that the grantee holds a public hearing on the proposed or expanded charter school. These hearings must be well advertised and include information on how the school will increase diversity and not promote segregation. Schools are obligated to reach out to the community to encourage attendance and then provide a summary of the hearing as part of the application. These public hearings are required of direct grantees and subgrantees — both SE and CMO.
• The publication of for-profit management contracts.
• The publication of the names of awardee schools and their peer-reviewed applications by states and CMOs.
• A requirement that the school publish information for prospective parents, including fees, uniform requirements, disciplinary practices, transportation plans, and whether the school participates in the national free or reduced-price lunch program.

Accountability gains include:

• More substantial supervision by state entities of the schools that are awarded grants, including in-depth descriptions of how they will review applications, the peer review process they will use, and how they will select grantees for in-depth monitoring.
• Restrictions regarding the spending of grants by unauthorized schools. Charter schools not yet approved by an authorizer will be eligible to use planning grant funds; however, they cannot dip into any implementation funds until they are approved and have secured a facility. This new regulation will limit, though not prevent, all funding that goes to charter schools that never open.

Regulations to stop White-flight charters from receiving CSP funding and ensure the charter is needed in the community.

The final regulations are good, but not as strong as initially proposed.
One of the more controversial aspects of the new regulations was the need for the school to conduct a community impact analysis. The charter lobby focused on one example by which a school could show need (district over-enrollment) and used it as a rallying cry to garner opposition to the regulations. In the new regulations, the department clarifies that there are other ways to demonstrate need, including wait lists and offering a unique program. It also eliminated the need for the applicant to provide a district enrollment projection.

The community impact analysis is now called a needs analysis. That analysis must include evidence of community desire for the school; documentation of the school’s enrollment projection and how it was derived; a comparison of the demographics of the school with the area where the students are likely to be drawn; the projected impact of the school on racial and socio-economic district diversity; and an assurance that the school would not “hamper, delay or negatively affect” district desegregation efforts. Applicants would also have to submit their plan to ensure that the charter school does not increase racial segregation and isolation in the school district from which the charter would draw its students.

The department went to great pains to reassure applicants that schools in racially isolated districts would not need to show diversity (this straw man argument had been used by the charter lobby and even some editorial boards to fight the regulations, although the original rules had made that clear). Those schools that are unlikely to be diverse due to the school’s special mission would also have to submit an explanation.
Still, there are some concerns about unintended consequences of the regulations.

With the additional caveat regarding “special mission,” the department is trying to preserve grants to schools that are themed to promote, for example, Native American culture in an area where Native American students are a minority population in the district. That is understandable.
However, White-flight charter schools could skirt the regulation by arguing that their mission is to provide a Eurocentric, classical curriculum.

For example, charter schools opened by Hillsdale College — a small Christian college in Michigan that promotes a “classical” curriculum — are disproportionately White. These schools could claim that their mission appeals to students with European backgrounds and that the strong “anti-CRT” message in their “1776 curriculum” does not appeal to Black families. Although Hillsdale College does not take federal funds, Hillsdale charter schools do. We have identified nearly $7 million awarded to Hillsdale member charter schools up to April 2021. Newer schools have likely secured CSP grants as well.

Priority 2 — which encouraged charter/public school cooperation — was retained but categorized as “invitational” for the 2022 cycle.
The second straw man argument the National Alliance for Public Charters used to fuel their #backoff campaign on the regulations was the claim that charter/public school district cooperative projects were required. They were not. They were a priority, and priorities can be mandated, competitive (assigned a few points), or invitational (looked up favorably but no point value).

As I explained here, it is rare for a priority to be mandated. For example, of the six priorities for the 2022 State Entities grants, only one is required, which is that authorizers use best practices. The department now makes it clear that it is unlikely that charter/district cooperative activity will ever be a mandated priority while leaving the door open to it becoming a competitive priority after the 2022 award cycle.

All regulations, priorities and assurances go into effect for this 2022 grant cycle with one exception: Developer grant applicants, a small program in which individual schools apply, do not have to submit a needs analysis in 2022 only. That is because applications are due shortly.

Summary

Since 2019 when the Network for Public Education issued its reports on the federal Charter School Program, the program has come under increased congressional scrutiny. We have followed up by submitting letters to the department, often co-signed by other groups, demanding reform and exposing abuses of the program.

These new regulations are an essential first step in making sure that fewer tax dollars go to schools that never open, schools that quickly close, and for-profit operators. Unscrupulous individuals who used the program for their enrichment will find it more difficult to do so. State Entities that have pushed money out the door will now be forced to provide more oversight and supervision. And so they should. State Entities get 10 percent of every grant, representing millions of federal dollars, to use for such supervision.

We do not doubt that some applicants will still provide false information, as we found time and time again, but now as all peer-reviewed applications go online, groups such as ours will serve as watchdogs and report falsehoods and misrepresentations to the Office of the Inspector General.

And for all of the charter schools that are fronts for for-profit organizations, the Education Department just put a big sign on the door that says “you need not apply.”