Cautionary Lessons of Michigan's Charter Experiment

Charter school policy debates are so focused on test score comparisons of charter and traditional public schools that we lose sight of how powerfully the design and implementation of state laws shape outcomes.

The relevant question isn’t whether charter schools are good or bad, but how we can design policies that reap the potential benefits of choice while minimizing the harms. When it comes to emerging markets for schooling, different rules create different outcomes.

Michigan is now well-known for its deregulated charter school policy. The state placed a big bet on charters to improve education outcomes, but after two decades, the state’s performance on the National Assessment of Educational Progress has sunk to the lowest tier of states.

Problems Identified

Michigan’s experience in the charter school movement offers three cautionary lessons to other states.

Make authorizers publicly accountable.

State laws identify what organizations are permitted to establish charter schools and their responsibilities. Authorizers monitor charter schools’ academic performance, but they also ensure that school admissions are open and fair, expulsions follow due process, finances are transparent and governance is competent and clean. They are responsible for protecting the public’s interest in public charter schools.

State laws should establish clear guidelines for charter performance in these areas. But equally important, they must establish accountability for authorizers in monitoring and supporting their schools’ efforts to meet these standards.

Authorizer accountability is especially crucial when for-profit charter management companies play a large role, as in Michigan, where they operate more than 70 percent of charter schools. Without enforceable authorizer accountability, authorizers are vulnerable to capture by management companies. In Michigan, management companies and authorizers have jointly resisted calls for improved charter accountability in response to documented problems. At a minimum, states should subscribe to the authorizer guidelines of the National Association of Charter School Authorizers.

Eliminate perverse financial incentives.

If a state’s school finance system fails to adjust school aid for the higher costs of special needs students, schools have a strong disincentive to enroll them, harming services for special need and regular students alike.

Michigan reimburses only 28 percent of special education costs, meaning that no school has a financial incentive to enroll students with disabilities. On average, the rate of students with disabilities is double in Michigan’s districts as in charter schools. Such cost creaming lowers average costs in choice schools by simultaneously increasing average costs in district schools.

Michigan districts devote an average of $500 per total pupil from regular education funds to cover special education costs. But some districts with high concentrations of charters are devoting over $1,000 per pupil to special education costs, seriously straining district finances.

Establish coordination in cities with many charter schools.

In a growing number of urban areas, charters now enroll more students than the local school district. Without regulation and deliberate coordination, schooling in these settings becomes extraordinarily turbulent and inefficient.

Detroit is a prime example of what a poorly regulated market looks like. Schools open and close without neighborhood input or coordination among authorizers or the district, and no process exists for ensuring that low performers exit. Families lack information on schools and enrollment procedures necessary for fair access, while schools engage in cutthroat competition, offering students iPads and sneakers to enroll.

Without centralized student information, schools often lack student contact information and academic records. Little wonder that no nationally prominent, high-performing charter management organization has established schools in this chaotic education landscape.

Detroit’s civic, business and education leaders have joined state lawmakers from both parties to call for an administrative authority to coordinate school openings, student enrollment and records, and transportation for students in district and charter schools. Thus far, however, they have been blocked in the state legislature by charter interests.

With different policies, charters could represent a more positive addition to the educational system