Supplementary Materials

I. Improve Quality

Improve quality in mediocre charter schools, and learn from high performers: Improving charter school quality is not simply the job of policymakers and authorizers. The groups that advocate for and support charter schools also have an obligation to ensure that the schools they support are high-quality schools. Rather than defending low-performing schools, charter school supporters must be forthright about quality problems. Charter school associations in many states offer technical assistance and resources to help schools improve their performance, but MAPSA has focused more on advocacy. The Michigan Council of Charter School Authorizers is launching a quality initiative, however, and MAPSA is also increasing its quality-related activities. These groups can also support quality by providing political cover for authorizers when they close low-performing schools. And high-performing charter schools can help other schools—both charter and district—learn from their successful practices.

Identify and close low-performing schools: Authorizers must be fearless about closing charter schools that do not meet performance and other expectations, because every low-performing school that remains open blocks a potentially better school from opening. There is a long list of applicants waiting to receive the limited number of university-authorized charters that have resulted from school closures.

The Michigan Legislature should enact legislation to address the issues raised in the dissolution of charter schools, including the disposition of charter school assets, maintenance of student records, and the responsibilities of charter school authorizers and charter school board members upon closure. The Michigan Department of Education recommended that the legislature enact such statutory changes in its 2003–04 report to the legislature, but no action has been taken on that recommendation.

II. Collect and Report Better Data

Measure quality better: The Michigan Department of Education is working on a growth measure based on MEAP data. Michigan's charter school authorizers should work with MDE to support the development of a high-quality growth model that can be used to compare student gains across public education sectors. Long-term, Michigan legislators and charter school supporters should work towards a longitudinal student data system that would allow calculations of student growth over time, regardless of what school a student attended.

Charter school authorizers are at the forefront of looking at school accountability in a way that is more holistic than just looking at test scores and should make more of the information they collect available to the public. Authorizers collect extensive non-test data about charter school quality, from financial performance to more subjective information about school climate and culture, but much of it is not available to parents and the public in a transparent, accessible way. Some of this information could be very helpful to policymakers trying to judge charter school performance and parents trying to choose a school for their child.

Improve state-level data collection and oversight: The legislature needs to more clearly define the expectations and responsibilities of the MDE with regard to charter schools and ensure they have the legal authority and resources to fulfill those roles. MDE should also continue to beef up its collection of data on charter schools and more aggressively make those data publicly available, not waiting to publish them in the annual report to the legislature.

The Michigan Department of Education collects substantial data about Michigan charter schools, and it is doing a better job of fulfilling its charter school responsibilities than it did in the late 1990s, but it is hampered because of a lack of staff and legal authority to hold authorizers accountable. While the Michigan Department of Education can bar an authorizer that has problems from authorizing additional schools, the cap on university authorizers makes this largely an empty threat.

III. Foster Growth Within the Cap

Consider ways to exempt high-performing schools from the cap: Efforts to raise the cap on university-authorized charters are unlikely to be successful in the near term. Because parent demand continues to exceed supply, Michigan's charter sector must also find ways to foster growth within the context of the cap. Michigan's charter sector could benefit in both growth and quality from statutory changes that would allow high-performing charter schools to replicate and create additional campuses that serve more students under the same board and charter. Such legislation could also help create a more balanced mix of EMO and locally-generated charter schools by encouraging non-profit and self-managed schools to replicate.

Amend the “single-site” rule to allow high-quality charter schools to replicate: Michigan's charter school law prohibits charter schools from running more than one campus serving students in the same grade. There are good reasons for the single-site rule: It prevents creation of online charter schools, which have caused significant quality and political problems in Ohio, and it prevents unchecked EMO growth.

But it also has significant drawbacks. It prevents replication of high-performing charter schools and contributes to the lack of high-quality charter high school options. There are a substantial number of K–12 charter schools in Michigan, but many of them have trouble maintaining high school students, because their small size means they cannot offer the curricular options and extracurricular activities available in larger district and private schools. Allowing a K–12 charter school network to operate multiple K–8 feeder schools leading into a single high school would make non-alternative charter high schools more economically viable.

Legislators can amend the charter school law to allow replication of high-quality schools and the creation of multiple feeder schools in a single K–12 charter school system without undermining the protections the single site rule was designed to provide. For example, they could allow schools that meet certain performance requirements, have evidence of unmet parent demand, and are not already part of an existing charter school network or EMO operating more than a certain number of schools to replicate in a limited number of additional sites under the same board and charter. They could also amend the law to allow a charter school that serves students in at least grades 9–12 to operate multiple “feeder” elementary and/or middle schools, so long as the total number of students served in each grade did not exceed a particular number. Both of these options could be exercised in a way that allowed charter schools to expand in the state while maintaining strict quality requirements.

Allow Wayne County Community College to authorize charter schools: The charter school law should be amended to allow Wayne County Community College to authorize charter schools in Detroit. The law currently prevents community colleges from authorizing charter schools “in a school district of the first class,” which means Detroit, effectively prohibiting Wayne County Community College, the community college serving Detroit, from authorizing charter schools.

Create partnerships between “professional” authorizers and smaller authorizers: Charter school supporters and policymakers should encourage school districts and community colleges to become authorizers but contract with university authorizers who have greater expertise and capacity for key authorizing functions and services. Michigan's university authorizers have competencies and economies of scale that smaller authorizers, such as local and intermediate school districts or most community colleges, do not. And while the number of schools that may be authorized by universities is capped, the number that can be authorized by these other entities is not.

So far, Michigan's school districts and community colleges have authorized relatively few schools, but this may change as the No Child Left Behind Act's accountability provisions mean more Michigan schools have been in restructuring for multiple years.

Allow limited cap waivers for high-quality authorizers: Allow the Michigan Department of Education to issue a limited number of single-year “cap waivers” to allow university authorizers that can demonstrate high quality in their authorizing practices, processes and systems and show that their schools are performing at satisfactory levels. This would create an incentive for authorizers to focus on improving the performance of their schools, and it would also strengthen the ability of MDE to hold authorizers accountable for their performance.

Long-term, Michigan's charter school community should keep their sights on raising the cap on university-authorized charter schools, but must first improve school quality and performance.

IV.Address Funding Issues

Require school districts to provide transportation to charter school pupils—and pay them for it: The political climate in the state is probably not amenable to correcting funding inequities, but Michigan legislators could make charter schools more accessible to disadvantaged parents, mitigate inequities in charter school funding, and provide additional funding to school districts by requiring the districts to provide transportation for students who live within their boundaries and reimbursing them for doing so on a per-pupil basis.

The vast majority of Michigan's charter schools do not offer transportation to their students, but rely on parents to transport children to and from school. This can make it difficult for parents—particularly disadvantaged parents, who may work irregular hours or do not have cars—to send their children to charter schools. Michigan school districts must provide transportation to private and parochial students who live in the district, but not to charter school students. Districts say that charter schools receive money for transportation, but charter schools receive less funding per pupil than school districts, and districts also have economies of scale in providing transportation that many charter schools don't.

Identify charter efficiencies to help school districts cope with budget cuts: Many Michigan charter schools have developed innovative ways to provide a high-quality education at lower cost than traditional schools. While some of these innovations don't translate easily between sectors, others could be used by traditional school districts to lower costs. Such strategies could be particularly helpful to school districts that have faced consecutive years of state budget cuts and are struggling to find ways to serve their students well with fewer resources. Helping district administrators learn about ways that charter schools save money and from which they could also benefit could also help dispel the common perception within the district public school sector that charter schools have unfair advantages over traditional public schools.

Adjust the state funding formula to better reflect the costs of educating different types of students: Michigan policymakers should adjust the “foundation grant” system to reflect the costs of educating students of different ages. Michigan's public schools—district or charter—receive the same state “foundation grant” for every child they serve, regardless of grade, even though educators widely acknowledge that children in some grades are more costly to educate than in others. This is one reason that Michigan's charter schools disproportionately serve elementary school students and there are fewer high school charter options in the state. Adjusting the foundation grant system to reflect the costs of educating students of different ages would encourage the creation of more high school charters.

Michigan would also benefit from shifting toward a “weighted pupil formula” funding system that includes adjustments for students who are more costly to educate, such as those who are economically disadvantaged or are still learning English. Michigan does provide school districts and charter schools with additional funds to educate students with special educational needs, but it does so through categorical funds rather than the foundation grant amount that accompanies each child.

Address teacher pensions: Policymakers should consider ways to modernize the retirement scheme for public employees, including teachers. Michigan's auto industry has offered a case study in the problems that can emerge when defined-benefit pensions are combined with an aging population. The issue is also emerging as a challenge for public employee defined benefit retirement systems. The high cost of participating in Michigan's defined-benefit teacher retirement program is one reason for the dominance of EMOs in the state's charter sector. Because the defined benefit retirement system is not portable, it locks teachers in and makes recruitment difficult for charter schools that do not participate in the state retirement system. Long-time charter or private school teachers may also be reluctant to move to positions in traditional public schools because they will be compelled to make contributions to a retirement system in which they may not be able to be vested. As the public education sector in states like Michigan becomes more diverse, it is inefficient to maintain retirement policies that trap teachers in the charter or district sector. The current system also assumes that teachers will remain in teaching throughout their professional lives, something that is increasingly unrealistic in today's more transient economy. This doesn't mean legislators should abandon the benefits of the state's defined benefit system, but they should consider introducing defined contribution elements that make benefits more portable and appealing to younger professionals.

Ensure authorizer fees are used to support authorizer operations or are passed on to schools: State policymakers should mandate that authorizers use authorizing revenue to support school oversight, rebate it to schools they serve, or transfer it to other organizations to support charter school quality. Michigan's charter school law allows charter school authorizers to withhold 3 percent of state funding for the schools they charter to support oversight operations. Some authorizers use all of these funds for authorizing activities, and some return a portion of them to schools (Grand Valley, for example, pays schools it charters a per-pupil performance bonus if they meet all their compliance requirements on time). But some authorizing entities transfer some of their authorizing proceeds to other parts of the organization to cover unrelated expenses or compensate for state higher education budget cuts. The increased revenues authorizers could receive if the cap on university authorizers were raised could exceed the costs they incurred and authorizing could potentially become a cash cow for universities because of economies of scale.

V. Hold EMOs Publicly Accountable

Ensure EMOs are transparent: Michigan's charter schools are public entities that must file extensive financial documentation making their expenditures transparent to the public. But EMOs, which often receive the bulk of a charter school's funding, are private companies that need not disclose that same information. This is particularly troubling when a full-service EMO has a contract to provide facilities, staff, materials and other services to a school that is the vast majority of a school's budget because the public has no information on how most of a public school's funds are really being spent. The legislature should amend the school code to require full-service EMOs to disclose more information about how they spend funds received from a contract with a charter school board.

Ensure charter school board independence and community representation: Under Michigan law, authorizers appoint the members of a charter school's board. It is the authorizer's job to ensure the school board's independence. But when an EMO originates the charter application, it usually nominates the board members who the authorizer appoints. Charter school authorizers vet school board members for conflicts of interest, but the 2002 Auditor General's report suggests they do not catch all conflicts. Michigan's charter school authorizers must embrace high and uniform standards for board independence. They should also ensure that every charter school board includes representatives of the local community, including parents, and that individuals do not serve on the boards of multiple schools operated by the same EMO.

Use authorizer knowledge to weed out corrupt EMOs: Michigan's authorizers do not contract with EMOs directly, but they know a great deal about the quality of different management companies through their work with schools. Authorizers should share that information with one another. The Michigan Council of Charter School Authorizers should create a formalized system for collecting and sharing information about EMO performance and problems, and disseminate this information to all authorizers. This information should also be available to policymakers and charter school boards considering hiring a new EMO. Authorizers should also refuse to authorize schools run by EMOs with checkered histories. The Michigan Legislature should ensure that authorizers do not need to fear lawsuits when they hold EMOs accountable in these ways.

VI. Foster Diversity and Innovation

Provide charter school start-up funding: Providing more state start-up funds for charter schools would help create a more level playing field for community-based schools, spur innovation and diversity, and would be relatively inexpensive to the state right now because of caps that limit charter school growth. Michigan provides no start-up funding for new charter schools, and although Michigan charter schools are eligible to receive federal start-up funds through the federal charter school grant program, the amount is not always enough to cover costs. Nawal Hamadeh, who founded Star International Academy and two other Michigan charter schools, estimates it costs at least $300,000 to start a charter school.

EMOs, which are able to provide start-up capital, have a clear advantage over stand-alone or community-based schools, particularly in low-income communities where there is little access to capital from the community.

Expand technical assistance and support: In many states there are technical assistance or resource centers that offer charter school founders help with issues from writing the application, to curriculum, to legal issues and compliance. But Michigan has no such entity, largely because the EMOs who have driven much of the state's charter school growth don't need that type of assistance. The National Charter Schools Institute, located at Central Michigan University, and MAPSA provide some assistance, but not enough to support and develop stand-alone or community-based charter applicants. In addition, stand-alone charter schools could benefit from more access to education service providers that provide payroll, benefits, IT, and other “back office” services. Although some of Michigan's EMOs do offer such services, the trend has been for them to move in the direction of becoming full-service EMOs. Maintaining a la carte education service providers would benefit stand alone charter schools.

Michigan's university authorizers are more favorable to EMOs at least in part because they know these companies bring to the table competencies and resources needed to open and run a school, and that EMO charters won't need a lot of start-up support and technical assistance from the authorizer. Expanding alternative sources of technical assistance could make university authorizers more willing to take a chance with stand-alone schools.

Recruit outstanding national networks: The national charter school movement is increasingly looking to nonprofit charter school networks, or CMOs, such as Achievement First or KIPP, to drive high-quality growth. CMOs combine the benefits of EMOs—access to capital, economies of scale, and the ability to create systems that serve significant numbers of students—with the capacity for diversity and innovation found in stand-alone charter schools. Michigan's policymakers, charter school leaders and philanthropic organizations should work to recruit nationally successful CMOs to Michigan, particularly Detroit and other high need urban areas.

CMOs tend to be based on proven models that often started out as stand-alone or community-based charter schools, are able to tap into philanthropic resources, and are less politically contentious than EMOs. Yet while the national charter movement is increasingly placing its hope in these models, they are virtually absent in Michigan.

Work with traditional public schools to reduce paperwork and bureaucratic requirements: Charter schools should work with school districts to identify particularly burdensome requirements or regulations that block innovation and work together to create greater flexibility and room for innovation in the state's school code. Unlike many states in which charter schools automatically receive a waiver from large portions of the state school code, Michigan's charters are subject to it in entirety unless they apply for and receive specific waivers. The state's charter schools would certainly benefit from broader regulatory waivers. But the regulations and paperwork requirements that hinder innovation and burden administrators in charter schools have some similar effects on school districts.