Explained: What Is the Federal Charter Schools Program?

In 1993, when charter schools were a new, bipartisan idea, President Bill Clinton proposed supporting them with federal funds. Two years later, Congress made it happen by putting $6 million into competitive grants to states. The winning states sent the money on to new operators to get charter schools off the ground. 

Why Does the Federal Government Fund Charter Schools?

Today, the federal government gives $440 million to charter schools every year, competitively distributed to both states and directly to charter school operators. Since its inception 27 years ago, the Charter Schools Program has provided more than $6 billion to charters. 

The money covers essential, hard-to-fund expenses, like facilities and start-up costs that must be paid before the first students even walk through the doors. A small subset of the money goes to replicating schools that have shown a track record of success with their students.

The money has been crucial to charter school expansion. According to the most recent available data, 45% of existing charter schools have received funds through the program. (That number is likely to be higher since the data was from the 2016-17 school year.) 

It’s also important to keep the growth of charter schools in context. Though they have grown rapidly since the ’90s, they now serve only about 7% percent of the nation’s public school students. 

Similarly, that $6 billion for charter schools may sound like big bucks, but in reality, it is chump change compared to funds for Title I, the main federal support for schools serving low-income families. That $6 billion over 28 years is just 2% percent of what the feds invested in Title I over the same time period. As of this writing, President Biden has yet to persuade Congress to back his campaign promise to triple Title I money, but despite that, Title I received $17.5 billion last year alone.

What Is the Future of the Charter Schools Program?

Since Biden took office, funding for the Charter Schools Program has held steady at the $440 million mark. This reflects political reality: Though a supporter of quality charter schools, Biden has close ties to teachers unions—who strongly oppose charters because they shift money out of traditional school districts, which threatens their jobs and salaries. This limits Biden’s support.

In early spring 2022, the Charter Schools Program has become a political football. The Biden administration has proposed new regulations on the money that would make it harder for charter schools to qualify for the funds.

In short, the new rules:

• Eliminate federal funds for for-profit charter schools
• Encourage charters to prove they can help desegregate children’s school experience
• Require new charters to show “unmet demand,” preferably by submitting data to show that traditional public schools in the area to be served are overcrowded.

While good reasons exist to put tighter restrictions on for-profit charter schools, the other new rules stand on shakier ground. The insistence that new charter schools help desegregate education for students sounds good in theory, but in practice, schools can’t overcome segregated housing patterns on their own.

The most concerning new rules require charter applicants to show evidence of demand, preferably by showing that existing traditional public schools are overcrowded. What happens when a new charter is wanted in a community where existing schools are not performing well, and overall enrollment is declining? That’s the situation for most urban charters.

This scenario cuts to the heart of key questions about the economics and purpose of charter schools. Are they simply a frill that can’t be afforded when a locale has declining enrollment? Or are they a tool to develop innovation and excellence when traditional public schools aren’t meeting the needs of a community?

Research from CREDO shows that hundreds of charter schools pivoted faster and more successfully to remote learning than did district-operated schools. They continue to satisfy parents and, at their best, provide students with a springboard to academic excellence. 

updated February 2024