Charter schools are part of the public education system. They are not allowed to charge tuition. They provide an alternative to other public schools. When enrollment in a charter school is over subscribed, admission is frequently allocated by lottery-based admissions. Charter schools can be primary or secondary schools and receive public money. Charter school funding is dictated by the state. In many states, charter schools are funded by transferring per-pupil state aid from the school district where the charter school student resides. The Federal Elementary and Secondary Education Act, Part B, Sections 502–511 also authorize funding grants for charter schools. Additionally, charter schools, like other public schools, may receive funding from private donors or foundations. A charter school funding study (2008) in all 40 charter states and the District of Columbia found that charter students are funded on average at 61 cents compared to every dollar for their district peers, with charter funding averaging $6,585 per pupil compared to $10,771 per pupil at conventional district public schools. While some proponents believe this funding difference is mitigated through efficient budgeting and accountability, lower teacher and administrative salaries at charter schools compared to conventional district public schools are usually evident.
In exchange for additional accountability for producing academic results, as established by each school's charter, a charter school is not subject to some of the rules, regulations, and statutes that apply to other public schools. Two principles guide charter schools:
First, through waivers from many of the procedural requirements of district public schools, a charter school will operate as autonomous public schools. Autonomy can be critically important for creating a school culture that maximizes student motivation by emphasizing high expectations, academic rigor, discipline, and relationships with caring adults.
Second, charter schools must be accountable for student achievement. To date, of the over 5000 charter schools founded in the United States, 12.5% have closed due to academic, financial, managerial problems, consolidation, or district interference.
The rules and structure of charter schools depend on each state's authorizing legislation and differ from state to state. A charter school is authorized to function once it has received a charter. The school's charter is a statutorily defined performance contract detailing the school's mission, program, goals, students served, methods of assessment, and explicates how success is measured. The length of time whereby charters are granted may vary by state but most are granted for 3–5 years. Charter schools are held accountable to their "sponsor." A sponsor may be either a local school board, state education agency, university, corporation, or other entity. The accountability is intended to produce and prove positive academic results while adhering to the charter (contract).
While stronger accountability is one of the key arguments in favor of charters, initial research by the United States Department of Education (1997) suggests that, in practice, charter schools were not held to higher standards of accountability compared to traditional public schools. However, by comparison, "underperforming public schools" closed due to students' poor academic results are much less compared to charter schools and are often allowed to remain open, perhaps with new leadership or restructuring, or perhaps with no change at all. Proponents of charter schools assert that charter schools are not given the opportunities to restructure often and are simply closed down when students perform poorly on academic assessments.
On June 8, 2010; U.S. Secretary of Education Arne Duncan emphasized the need for additional effective education entrepreneurs to join the work of reforming America's lowest performing public schools, noting states must be open to charter schools. Each state's pursuit of federal "Race to the Top" funds are clearly linked to its openess toward charter schools. The stakes are too high for states financially and for students academically to restrict choice and innovation.
"States that do not have public charter laws or put artificial caps on the
growth of charter schools will jeopardize their applications under the Race
to the Top Fund... To be clear, this administration is not looking to open
unregulated and unaccountable schools. We want real autonomy for charters
combined with a rigorous authorization process and high performance
standards...I am advocating for using whatever models work for students, and
particularly where improvements have stagnated for years... We cannot
continue to do that same thing and expect different results. We cannot let
another generation of children be deprived of their civil right to a quality
education." (Duncan, 2010)