School Choice & Charters

Federal Funding and Charter School Closures: What the Latest Government Data Show

By Libby Stanford — October 13, 2022 2 min read
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A new report from the Government Accountability Office mirrors data on the closure rates of federally funded charter schools that the Biden administration cited in its controversial push for more oversight when it comes to charter school funding.

But it also finds that, overall, charters that received federal money were less likely to close within five years than those that did not.

The report focused on the U.S. Department of Education’s Charter School Program, the largest federal grant program for charter schools, which helps fund schools in their first three years of operation. Of the 6,000 schools that received funding for the program from fiscal year 2006 through 2020, 14 percent either never opened or closed, according to the report.

The grants awarded in that time period totaled $2.5 billion, according to the GAO. In 2020, the federal government allocated $440 million to the grant program, which is designed to help create and replicate high-quality charter schools; disseminate best practices to charters; and expand opportunities for underserved students to attend them.

The grants have been a point of contention in Washington. In March, the Education Department released proposed changes to the program that drew 25,000 public comments and the ire of charter school advocates who said the changes would add unnecessary red tape to the charter school funding process and discourage incoming charter schools from seeking funds. The finalized rules ultimately required incoming charters to prove they aren’t managed by for-profit companies and gather community input during the application process.

At the time, Education Department officials said that the department’s own analysis of the data shows 15 percent of schools that received the grants either never opened or closed, using the data as justification for its revisions to the grant program’s rules. The new GAO report found similar data with 636, or 14 percent, of schools that received the funds either never opening or closing from 2006 to 2020. Those schools received a total of $152 million through the grant program, according to the report.

Kansas, Pennsylvania, Illinois, South Carolina, Massachusetts, and Florida had the highest rates of charter schools that closed or never opened, according to the report. The closure rates went as high as 30 percent in Kansas and 60 percent in Pennsylvania.

However, the report also found that schools that received a grant between 2006 and 2020 were 1.5 times less likely to close within five years than schools that did not. Specifically, 2.3 percent of schools that did not receive a grant closed compared to the 1.4 percent of schools that did receive grants and closed within five years.

Probability of Charter Schools Closing

Chart image.

SOURCE: U.S. Government Accountability Office

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