How Funding for Charter Schools has Evolved Over Time


School choice is a hot topic in the education world, especially lately. With the change in presidential administration, there have been many promises regarding how charters schools may be a mechanism for education reform. This conversation really began back in the late 1980s, when Albert Shanker rocked the educational world with his speech on school choice, and a subsequent New York Times article that became widely circulated.

The first charter school, which is still operating today, was opened in Minnesota in 1992. It continues to educate today. Shanker envisioned charter schools as a way for teachers to operate with less bureaucratic regulation, which, in his view, prevented them from educating as they saw fit.

But many wondered how these new types of schools would be paid for. In each state that now has charter schools (there are 43, plus the District of Columbia), charter laws needed to be passed in order for any of the schools to receive funding. These schools were then eligible for funding at the same level as traditional public schools. And like public schools, charter schools receive funds based on average daily attendance (ADA). It has taken some time for charter schools to get to this point, however.

Before the reauthorization of the Elementary and Secondary Education Act (ESEA) by the Improving America’s Schools Act (IASA) in 1994 by President Bill Clinton, charter schools were difficult to fund, as they were a relatively new idea and hadn’t yet gained traction beyond the state of Minnesota. However, the 1994 reauthorization of ESEA helped the number of charter schools to grow exponentially from fewer than 100 to almost 2,000.

Impact of No Child Left Behind Act

After the reauthorization of ESEA by the No Child Left Behind (NCLB) Act in 2001, there were more regulations on charter schools, and more requirements for accountability. This did nothing to slow the growth of charter schools, however, as their numbers more than doubled during the George W. Bush administration. But NCLB did preserve the funding model of charter schools, still largely leaving it up to states to decide.

That is where charter schools remain today, even with the reauthorization of ESEA, now known as the Every Child Succeeds Act (ESSA). They must frequently find other sources of funding beyond their state education grants, and they often turn to their communities for supplemental funding.

The fight for charter school funding is far from over. Many charter school administrators report receiving a far smaller amount of funding per pupil than their traditional public school counterparts. Additionally, as with many different types of legislation, each state has the final say in the way its charter schools are funded, which means that the quality of education provided by a charter school will vary from state to state.

To learn more about charter school funding, performance, and history, download our ebook, ESSA and Charter Schools: An Introduction.

Alyssa Thornley

About The Author

Alyssa Thornley has spent her career working to support schools and communities in providing opportunity to all students. In positions as a teacher, professional development coordinator, and as a volunteer, she has focused on the community’s role in education, and in designing efficient programs that work for diverse needs. Alyssa leads TransACT’s customer engagement and market strategy efforts, and works to ensure innovative programs, guidance, and thought leadership from across the country’s districts are being shared and spread.