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Charter Schools: An Alternative Option in American Schooling

Rossier School of Education, University of Southern California, Los Angeles, CA 90089-0911, USA
Authors to whom correspondence should be addressed.
Encyclopedia 2023, 3(1), 362-370;
Received: 6 January 2023 / Revised: 25 February 2023 / Accepted: 9 March 2023 / Published: 17 March 2023
(This article belongs to the Collection Encyclopedia of Social Sciences)


Charter schools are educational institutions in the United States funded through taxation but operated privately under a charter or contract with a public entity, providing alternative public education options to families. Charter schools are subject to fewer rules and regulations and have greater autonomy than traditional public schools over operations, curriculum, and instruction, although have greater stakes in school accountability.

Graphical Abstract

1. Introduction

Charter schools are an alternative to the mainstream traditional public school (TPS) in the United States and fall under the umbrella of school choice options available to families. Charter schools, like TPSs, are tuition-free, but while a TPS typically reserves enrollment for students who live within local boundaries, charter schools are open to all students regardless of residence. Additionally, while a TPS is publicly funded with taxpayer money (rather than tuition dollars, for example) and publicly operated by school districts with school boards and superintendents, who are elected by the citizenry (in some cases, superintendents are appointed by the publicly-elected school board), charter schools are publicly funded and privately operated by organizations, with appointed (rather than elected) school boards, through charters, or contracts, that outline the school’s obligations to the entity authorizing the charter (typically the local public school district, state, or another public entity) and without a superintendent. The private operation provides charter schools autonomy over instruction and administration, allowing charter schools to innovate practices. However, charter schools are held accountable for fiscal responsibility and student achievement. If charter schools do not meet the standards of the authorizer, the authorizer can revoke the charter, thereby closing the school.
Charter schools are among a number of school choice options in the U.S., providing families with education options aside from the assigned TPS, based on home location. Magnet schools were established as the first formal school choice option, offering specialized academic programs to incentivize the integration of different-race students from racially segregated residences [1]. Since magnet school implementation, the umbrella of formal and informal school choice options has expanded to include charter schools, school vouchers (which allow students to use public funding for privately funded and privately operated schools), parents’ incorporation of school decisions into residential choices, and homeschooling [2,3,4,5,6]. While formal school choice programs have historically focused on integrating students [7], nationally, they have shifted towards a focus primarily on increasing academic achievement through their varied programmatic offerings.
The growth of school choice options, including the establishment of charter schools, was imbued within the discourse of educational marketization for increased achievement amid the international rise of neoliberalism, which emphasizes the efficiency of competitive markets to produce optimal results and protect individuals from exploitation [8]. This market promise has spurred the international development of school choice options, including charter schools, which are publicly funded and privately operated institutes [9,10], where schools seek to maximize student achievement and operate as “producers” that compete for students.
In the United States, the provision of primary and secondary education is the responsibility of individual states. Due to this governance structure, charter schools are exclusively permitted in states that explicitly allow public funds to be diverted to privately operated schools through legislation. Minnesota was the first state to permit charter schools in 1991, with the nation’s first charter school opening in 1992 [11]. Over the following three decades, legislation permitting charter schools has expanded to 45 of 50 states in the U.S. [12]. There are now 7800 charter schools, serving 3.7 million students throughout the country [13].

2. Theory

The rationale for the creation and expansion of charter schools is grounded in economics, the study of how limited resources are allocated to maximize efficiency, balancing consumer benefit and producer cost [14,15]. The consumers and producers interact in a “market,” a mechanism for exchanging goods and services [16]. In the education market, consumers refer to families and students who seek education services to develop knowledge and skills, and producers refer to the institutions that provide these demanded education services. In a traditional market, there is competition—for example, in the housing market, there is a multitude of housing options from which to choose. However, the traditional public education system in the U.S. has minimal competition and can be viewed as a strong monopoly funded by public tax dollars [17]. While not necessarily the only provider of education, the government is the dominant provider of education that prevents other education providers (i.e., private schools) from becoming significant challengers to its services. The government achieves prominence and acts as the gatekeeper for primary and secondary education services as it charges no direct costs to its consumers, only through public tax revenue, making other education providers, who must charge consumers directly for operation costs, less competitive [18].
Early economic theorization of school choice [19] argued that separating the entities that control educational funding and provision could better serve the needs of the students and the public, improving the efficiency of the education market and, thus, student outcomes through two main mechanisms: (1) a larger supply of better schools as a result of competition, and (2) an improved student–school match [20]. First, prior to school choice, a TPS was the only public education option for students. Therefore, the only way dissatisfied families could opt out of attending their locally-assigned public school was to either move residences, a substantial decision with wide-reaching consequences beyond school satisfaction, or pay private school tuition while continuing to pay local taxes for local public schools [20]. The advent of other public school choice options, however, introduces competition to the education market, diminishing the monopoly power of traditional public schools, as dissatisfied families may choose to leave traditional public schools in favor of, other, more attractive schools. Tax revenue for public schools would then follow enrollment, pressuring under-enrolled schools to innovate and improve services to maintain and attract new families, or else close due to decreased enrollment and, as a result, insufficient funds to continue operating [20,21,22]. Assuming that families preferred high-quality and high-performing schools, over time, the lowest-performing schools would close, leaving only high-quality schools and, therefore, optimizing student outcomes.
The second mechanism focuses on how families can choose schools for their kids to allow for better matches between schools and students [20]. With more school choice options, schools must differentiate from one another to effectively attract families. For example, charter schools may choose to offer specialized academic programming (e.g., the Arts, STEM, college preparation, and work-based learning) and/or different school structures (e.g., longer or shorter school days or years, one-to-one laptops, and online learning). With a greater diversity of school options, families can better identify the most effective option for their children, selecting the best-matched school, resulting in optimal student outcomes. However, better student–school matches may not always result in improved observable student outcomes. Families may define school effectiveness and quality in different and unique ways. For example, a family may choose a school for a particular extracurricular activity it offers, and students can benefit from participating in this activity in ways that are not reflected in the form of measured and observable student outcomes.
The two mechanisms through which school choices affect student outcomes are theoretically and empirically difficult to separate. As DeAngelis and Erickson [20] discuss, when the quality of school choices increases, the likelihood of better student–school matches also increases, even when the number of choices stays the same. Moreover, when school quality and student outcomes are both measured by test scores, which are traditionally done in the United States, school quality on record will also increase with student outcome gains as a result of better student–school matches. The challenge to separate the two mechanisms does not only exist in theory but also in the lack of empirical evidence.

3. Development/Evolution

Despite ambiguity on the specific impact of better student–school matches, the diversity of academic choices that arise from charter school expansion is largely celebrated. Due to the need for charter schools to compete for student enrollment, school operators implement unique mission statements and pedagogical practices to distinguish themselves from other TPS and charter school options. The mission statements adopted by charter schools are diverse and include foci in specialized academic concentrations (e.g., the Arts, STEM, college preparation, and work-based learning) and the service of target populations [23,24,25]. Over time, the diversity of specialist mission statements has increased both nationally and locally [26,27]. However, evidence has found that when legislation that promotes charter school expansion is implemented, the percentage of charter schools with specialist mission statements decreases [26,27]. While most charter schools currently mirror their TPS counterparts, charter schools consistently distinguish themselves from TPS options by their lack of tenure for teachers [28].
The decoupling of education and public bureaucracy is intended to spur innovative pedagogical practices and resultant academic achievement [9,29]. In the absence of stringent restrictions from school districts and teacher unions, for instance, private actors have the opportunity to integrate what might be more effective practices into charter schools. For example, some charter schools have implemented “no excuses” practices, originating from the KIPP network of charter schools, since its founding in Houston in 1994 [30,31], which combine high academic expectations with strict behavioral rules for students [32], with evidence of overall improved student achievement [33]. Despite the promised efficacy of innovation, some argue that the integration of such practices depletes the students’ education of creativity, perhaps at the expense of academic achievement, predominantly for disadvantaged children [29].
In alignment with the diversity of missions and innovative practices that charter schools adopt, both the establishment processes and the actors that operate charter schools also vary widely. Depending on the state, charters can be authorized by public and/or private entities, such as local school boards, state charter boards, universities, state boards of education, nonprofit organizations, and school districts [34]. The type and capacity of these authorizing bodies can influence the degree of regulation enforced on charter schools [35,36]. For instance, a national survey study found that authorizers that oversee a larger amount of charter schools report a more prominent use of probation [35], and reviews across nine different U.S states suggested that university-based authorizers may place less emphasis on student diversity and produce lower student achievement outcomes [34,37,38].
The establishment of charter schools under the umbrella of possible authorizers was originally undertaken through the creation of a new school and, thus, started afresh with no assigned students and the need to recruit students to the newly established charter school. However, this has evolved to also include the establishment through conversion of a failing TPS to a charter school, whereby students previously enrolled in the TPS continue as the beginning student body of the new charter school. Under either path of establishment, charter schools can be individually operated by community organizations or collectively by either non-profit charter school management organizations (CMOs) or for-profit education management organizations (EMOs) [39]. CMOs and EMOs uniquely seek to identify efficient practices that can be implemented across a collection of schools, which then allows these organizations to grow at substantially higher rates than their independent counterparts [40]. As of the 2016–17 school year, CMO charter schools accounted for 24% of charter school enrollment and EMO charter schools accounted for 18% in the U.S. [39]. The remaining charter school students attended independently operated schools, which provide an outlet for individualized innovation of charter schools localized to each school site.
Charter schools have experienced immense expansion across the United States since their introduction in 1991. The promise of increased academic achievement from marketization has directly fueled the investment in charter schools during a period of reliance on high-stakes assessment-based accountability in the U.S. [41,42], contributing to nearly 40% of states establishing charter schools within four years of its inception [43]. State commitment to charter schools was further promoted by legislation from the federal government throughout the early 21st century by portraying low-performing public schools, defined by student performance on standardized assessments, as failing and expanding the use of charter schools to provide more alternative options to these failing schools and even replacing the management of low-performing schools with charter operators [44]. By 2003, 80% of U.S. states had legislation for charter schools [43]. As of 2021, over 7% of all public school students, approximately 3.7 million students, were enrolled in 7800 charter schools throughout the U.S. [13].

4. Diversity

The corporate governance structure of charter schools is applied to a student population that predominantly identifies with minoritized racial backgrounds in the U.S. While several state charter school laws dictate that schools must comply with laws specifying enrollment of a student population with a racial distribution representative of the community, these laws are frequently not enforced [45]. Compared to TPSs situated in the same area, charter schools enroll a greater proportion of Black and Latinx students. For instance, in the state of Ohio, nearly 70% of charter elementary and middle school students were Black or Latinx, while only 16% of traditional public elementary and middle school students were [46]. In other regions, this difference is not as stark, though still present. In one study in New York City, charter school applicants were nearly exclusively Black and Latinx, although such students only made up 85% of the city’s traditional public schools [47]. Nationally, 56–58% of charter school students are Black or Latinx, far greater than the 39–40% of TPS students who fall into one of those two racial groups [48,49], and Latinx students’ share of the charter school population has increased over time, relative to other racial groups [50].
Students from low socioeconomic backgrounds are also more prevalent in charter schools than in TPSs. Similarly, with a sharp division, 81% of Ohio’s charter elementary and middle school students and 75% of charter high school students were from low socioeconomic backgrounds statewide, compared to just 43% of traditional public elementary and middle students and 35% of traditional public high school students [46]. In New York City, 91% of charter school enrollees came from low socioeconomic backgrounds, much greater than 72% of TPS enrollees [47]. Nationally, approximately 63% of charter school students nationwide are from low socioeconomic backgrounds, well above the 48% of TPS students [48], and a third of charter schools are enrolled with at least 75% of students from low socioeconomic backgrounds, compared to a quarter of TPSs [49], and the proportion of charter school students from low socioeconomic backgrounds has continued to increase over time [50]. The reason minoritized and low socioeconomic students are concentrated at charter schools can potentially be attributed to the fact that charter schools are often established in areas where schools are low-performing, sometimes through converting failing TPSs into charter schools, and these areas are predominantly low-income and/or communities of color.
Given the concentration of students in charter schools, researchers have questioned the role of charter schools in public school racial segregation, stratification, and integration, finding mixed results [51,52,53,54]. In Chicago, researchers found that students moving from a TPS to a charter enrolled at schools with a lower proportion of students matching the moving student’s race [51]. Similarly, in Little Rock, Arkansas, students who left TPSs for charter schools tended to leave a racially homogenous TPS for more diverse charter schools, increasing diversity at both the public school they were leaving and the charter school in which they were enrolling [52]. In contrast, students in Indianapolis were more likely to transfer to a charter school with a higher proportion of students of their same race [53], and in a comprehensive review of local and national studies, Zimmer and colleagues [54] found that the majority of research showed that the presence of charter schools typically resulted in increased racial segregation. This was most prevalent for Black students, who disproportionately transferred from more diverse public schools to charter schools with higher concentrations of Black students.

5. Impact

As previously discussed, charter schools were introduced with the intention of improving student achievement, both by creating high-quality schools for students to transfer to and by incentivizing public schools to improve their performance to maintain an adequate student population. This section reviewed whether this increased competition from the charter market had its intended effect.

5.1. Student-Level Outcomes

There is great variation in the research assessing charter school performance relative to that of a TPS, with the majority of studies exploring charter schools’ impact on student reading and math standardized assessment performance. While some research has found overall improved student outcomes in charter schools [55,56,57,58,59], other studies have found no significant difference in performance between charter and TPS students [49,54,55,56,60,61]. Despite these positive and neutral findings, others have found that charter enrollment may lead to lower student performance [56,62,63]. These disparate findings may be explained by the research method, as lottery-based studies often find positive effects of charter schools, while results from studies that employ non-experimental methods remain less conclusive [64]. Lottery-based studies necessarily require charter schools that are oversubscribed—there is greater student and family interest than what the charter school’s capacity allows. This oversubscription is predictably indicative of its academic success. Research has also typically treated charter schools as a single policy even though there is great heterogeneity in charter schools’ missions, including schools that may not choose to focus on reading and math performance (or other outcomes), as measured by researchers [64].
A number of studies agree that effective charters might primarily work by improving the performance of low-socioeconomic, racially minoritized, and low-performing students. For instance, one study found that urban charter schools boosted performance for students of color and low-performing students in the state of Massachusetts [55], and another showed improved performance for students from low socioeconomic backgrounds across 13 different states [65]. These differential outcomes may be at least partially attributed to a “no excuses” style curriculum, as both Angrist and colleagues [55] and Baude [66] noted the curricula as being a driving factor of the charter school’s success.
While most charter school impact studies have focused on test score outcomes, some research demonstrates positive impacts on other student outcomes, such as health, behavior, and postsecondary outcomes. In Chicago and Florida, charter schools improved their students’ high school graduation and college entry rates [67,68]. Similarly, a national study found that charter high school students who also attended charter middle schools had increased graduation and college entry rates, as well as slightly higher ACT scores [51]. Focusing on non-academic factors, charter magnet programs with lottery admissions in an unspecified urban school district had better behavioral outcomes, such as decreased tardiness and increased attendance [69]; a study in Harlem, New York found that female charter school students had lower pregnancy rates, and male students had lower incarceration rates [57]; charter school students in North Carolina experienced reduced absenteeism, reduced suspension rates, reduced crime rates, and increased civic engagement [70].

5.2. School-Level Outcomes

While the literature is mixed on the impact of charter schools on student-level assessment scores, most school-level studies agree that charter schools tend to struggle in their first year yet improve to match or even exceed traditional public school performance within a few years [51,58,59,68]. In Chicago, charter schools struggled in student performance in the first year of operation, although after the first year, performed comparably to any surrounding TPS [67]; this trend was also confirmed in a more encompassing nationwide literature review [68]. In Florida, however, within five years, charter schools exceeded their traditional public school counterparts in math and reading assessment scores [59].
Overall, charter schools have collectively improved their performance over time. Baude and colleagues [66] reported that Texas charter school growth had outpaced their public school peers, partially due to attrition of the worst-performing charters—lower-performing charter schools close, making the average charter school better by subtraction, while those that remained open show modest but continual improvement. A study of Arizona charter schools found identical patterns, with poor-performing charters tending to close and higher-performing charters tending to remain open and improve over time [60].
As discussed earlier, the introduction of charter schools to the education market was also intended to create competition in public school options, incentivizing existing TPSs to improve their performance to remain desirable options for families in the presence of other options. While this topic has been studied less frequently, the studies that exist generally report positive effects of increased charter competition on TPSs and their students. An investigation of New York City charters revealed that public school students improved their math and English test scores slightly in the presence of pressure from charter schools in the region [71], and the opening of charter schools in Florida led to higher math performance for students in traditional public schools [59]. Bifulco and Ladd [62] attribute change in public and charter school performance in North Carolina upon charter opening to selection effects. They argue that lower-performing students may exit public schools and enroll in charters instead, increasing public school performance. This effect appeared in New York City [72], as lower achieving students were disproportionately likely to transfer from public to charter, compared to those that initially enrolled in either public or charter.

6. Conclusions and Prospects

Charter schools emerged as an alternative school choice option to TPSs in the United States as a solution to educational issues on the grounds of economic theory, with the hope that charter schools, with greater school-level autonomy, would not only be more innovative and effective in educating students but also incite competition in the existing education market to incentivize improvements among TPSs. Over the last three decades, charter schools have increased their share of the public school market, evolving and diversifying in both their establishment processes and pedagogical practices. While charter schools may offer different programs and specialized curricula, many charter schools mirror their TPS counterparts by focusing on academics. Existing research suggests that charter schools serve a higher proportion of racially minoritized students and students from low-socioeconomic backgrounds, while evidence on the role of charter schools on system-level racial segregation, stratification, and integration remains mixed. While studies have demonstrated that charter schools, as a whole, improved their performance over time, evidence on charter schools’ school- and student-level performances, when compared to TPSs, again remains inconclusive. Nevertheless, charter schools continue to grow and increase in number throughout the U.S., including most recently, the emergence and rapid growth of virtual charter schools. Future research needs not only to continue the evaluation of the academic and non-academic effectiveness of charter schools but also how various elements of charter schools (i.e., school structures, modality, curriculums, teachers, and leaders) contribute to the impact on student outcomes.

Author Contributions

Multiple authors contributed to this article. Individual contributions were provided as follows: Conceptualization, T.T. and A.K.; writing—original draft preparation, T.T., S.L.S. and M.F.; writing—review and editing, T.T., S.L.S. and A.K; supervision, A.K.; project administration, T.T. All authors have read and agreed to the published version of the manuscript.


This research received no external funding.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

Not applicable.

Conflicts of Interest

The authors declare no conflict of interest.


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Tong, T.; Smith, S.L.; Fienberg, M.; Kho, A. Charter Schools: An Alternative Option in American Schooling. Encyclopedia 2023, 3, 362-370.

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Tong T, Smith SL, Fienberg M, Kho A. Charter Schools: An Alternative Option in American Schooling. Encyclopedia. 2023; 3(1):362-370.

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Tong, Tong, Shelby Leigh Smith, Michael Fienberg, and Adam Kho. 2023. "Charter Schools: An Alternative Option in American Schooling" Encyclopedia 3, no. 1: 362-370.

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