How Are Charter Schools Funded?


In the United States, elementary or secondary schools that are funded by the public are referred to as Charter Schools. The United States Constitution has imposed some of the laws on public schools that have been withdrawn from the charter schools in the country. In exchange, the production of certain results in terms of performance is required from the schools that are considered during the creation of the charter of the school. Sometimes, traditional public schools are not able to acquire the satisfaction of the teachers or parents, which results in the foundation of charter schools by parents, teachers, and often activists of the particular area. In addition, non-governmental organizations often establish charter schools with the help of universities, which are chartered by the states, and known as state-run charter schools. (Wells, 2002)

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Some of the popular names that are involved in the promotion and development of the first charter schools and especially, its ideology are Ray Budde, Ted Kolderie, Becky Kelso, etc. During the beginning years, the ideology promoted the view of a public school autonomous in terms of financial resources, which will be operational like a privately owned business. In addition, it was envisioned that student performances would be considered for the accountability of such charter schools, rather than fulfillment of any district regulations that were imposed on other schools of the country. (Finn, 2000) Ideally, few start-up barriers will be confronted by a charter school. For instance, there will be limits on the number of organizations that can involve the process of chartering, as well as, the number of schools that can be chartered by the organizations. Moreover, charter schools will confront the challenge of satisfying the government regarding the need for a charter school in the locality. Therefore, the abovementioned founders of the charter school concept provided an insight into the confrontations that would be observed during the creation of charter schools.

In the year 1988, the United States witnessed the commencement of the charter school movement in the country, when charter schools were established by the American Federal of Teachers’ President, Albert Shanker, as he promoted the reforms of the present public schools in the country. At that time, some of the schools that had characteristics of charter schools already existed in the country; however, they were never called with the term charter school. In the beginning, the advocates of charter schools confronted heavy opposition and criticism from the opponents due to its rarely exercised process of accountability. However, the advocates were able to satisfy the United States Department of Education, and a charter school law was first passed in Minnesota in the year 1991, which was followed by the passing of the same law in a second state, California in the year 1992. Until 1996, charter school laws were passed in more than eighteen states of the country. (Finn, 2000)

Charter schools are guided by the two principles. Firstly, the role of an autonomous public school is played by the charter school, as a number of technical requirements of public schools are waived off from these schools. Secondly, an innovative educational system can be utilized by these schools. In order to allow their continuous funding and autonomy, it is necessary that non-charter schools must be superseded by the performances of charter schools. However, the poor academic performance of the students is the rare reason that has resulted in the closing of any charter school in the country according to the statistics and studies. Legislation and regulations of every state differ from each other, and therefore, every charter school is operated according to the laws of the particular state. (Wells, 2002)


A number of topics are the factors of continuous debates among the advocates of charter schools with their opponents. However, one of the most controversial topics is the funding that has resulted in a number of studies and researches regarding this issue in the United States. It is claimed by the advocates and administrators of the charter schools that less share of required funds is received by the charter schools, as compared with the receipts of the district or public schools. On the other hand, it is argued by the opponents that more funding is provided to the charter schools, as compared with them. Additionally, further complications have resulted due to the argument over the serving of similar or different students by the charter schools, as well as, the nature of expenses that are incurred by the charter schools, as compared with the non-charter ones. Therefore, a continuous and debatable topic has resulted in various controversies. In this regard, this paper will study the different perspectives of funding of charter schools, which help us in a better understanding of the reality.

Recent data of the charter schools and non-charter schools is the best resource to examine a clear image of funding of charter schools in different states of the country. In this paper, sixteen states are considered for the study, which includes Washington D.C., Minnesota, California, Texas, etc. One of the reasons for selecting these states is the number of charter schools that are running in these states. For instance, more than two thousand charter schools are running in Washington D.C., which is a good number for the study. Moreover, more than eighty percent of charter school students of the United States are enrolled in the sixteen states according to the Center for Education Reform. (Sjoquist, 2003) All types of revenues have been included in the funding data, in order to acquire a clear picture of the funding of the charter schools.

During the study, striking results have been observed from the analysis of the statistical data. In the year 2003, on average, a shortfall of approximately 1,900 dollars per pupil was confronted by the charter schools. The data showed that 8,500 dollars per student were received by a district school, as compared to the 6,700 dollars by a charter school. In this way, a difference of approximately twenty percent is observed. Much worse shortfalls were confronted in nine of the seventeen states during the study. Some of the charter schools in Missouri were receiving 3,600 dollars per pupil, as compared with the 7000 dollars by the non-charter schools in the country. California, South Carolina, and Georgia showed the most striking gaps in terms of percentage. (Zimmer, 2003) In these states, only sixty-six percent of resources provided to the non-charter schools were expected by the charter schools. In this regard, significant challenges are confronted by charter schools due to huge gaps in funding in different states of the country.

The operations of a charter school can be easily affected by a funding gap of 1,500 dollars per pupil. For instance, on annual basis, more than 450,000 dollars of the shortfall will be confronted by a 250-student charter school, which will result in the shortfall of millions of dollars after a few years. With such a shortfall, a charter school will not be able to hire quality teachers, pay the hired ones, provide a good library, or even run school programs. In this regard, the shortfall is one of the reasons that have resulted in the closing of hundreds of charter schools in the last decade. (Hughes, 2005)

Now, the paper will study the different sources of funding that are received by the charter schools, in order to understand the nature of funding that is confronted by the charter schools, as compared with the non-charter ones. It is observed that some charter schools are funded by the state authorities, whereas, some are funded by the federal government, philanthropists, non-government organizations, individuals, etc. It is clear from the analysis of comparison of charter schools and non-charter schools that the shortfall in the funding is contributed greatly by the local funds. Generally, a considerably less share of local funds is received by the charter schools, as compared with the district schools. (Sjoquist, 2003)

Often, the abovementioned problem of fewer shares is recognized and resolved by the important role of the states. A greater share of state funding is provided to the charter schools in nine of the seventeen states. For instance, approximately 3,700 dollars per pupil is provided to the district school by Arizona State. On the other hand, in order to provide a larger share of state funding, approximately 5,400 dollars per pupil were provided to the charter schools from the state funding. However, the shortfall from the local funding is only offset by the abovementioned advantage from the state funding. Ultimately, a twenty percent of the gap in the received amount is observed in the funding of charter schools in different states of the country.


Significant gaps are observed in the funding of charter schools and district schools. However, effective steps are taken by the charter schools to acquire great performances for the continuation of their schools. Often, private funding facilities are acquired by the schools; however, due to the closing risk of charter schools, banks do not refer to it as an effective option to finance. Sometimes, philanthropic support is provided to the charter schools. Furthermore, the study has shown that educational performance and funding have a weak relationship with each other. In midst of such confrontations, the effective and continuous running of charter schools is a debatable question. (Wells, 2002).

Today, high start-up costs are confronted by charter schools, and unions and school districts are pressurizing them with their opposing arguments and criticism. Millions of American children are at stake in terms of their education. High quality of education is the right of every poor or rich child in the United States. Unfortunately, this reasoning has been ignored in the case of charter schools. Reforming of the American public school system is at stake, which is supported by the administrators, teachers, parents, and students of the charter schools. Now, a positive response from policymakers is required for the prosperous future of thousands of neediest students in the United States. It is hoped that this paper will be beneficial for the students, teachers, parents, professionals, and organizations in the better understanding of different perspectives of charter schools, their history, and the issue of funding that is affecting hundreds of charter schools in different states of the country.


Amy Stuart Wells. (2002). Where Charter School Policy Fails. Teachers College Press.

Chester E. Finn. (2000). Charter Schools in Action. Princeton University Press.

David L. Sjoquist. (2003) State and Local Finances under Pressure. Edward Elgar Publishing.

Larry W. Hughes. (2005) Current Issues in School Leadership. Routledge.

Ron W. Zimmer. (2003). Charter School Operations and Performance. Rand Corporation.