January 19, 2011

Report: Charter school management organizations need efficiency, technology to thrive in lean times

News and Information

Charter management organizations, or CMOs, must find new ways to help schools operate more efficiently, innovate with new technologies, and adapt to leaner times, according to a new report from the UWs Center on Reinventing Public Education.

Given the weakened economy and the expectation that such organizations will be able to scale up the number of charter schools they manage, issues of financial sustainability are of crucial importance to the success of the charter school movement. Paying for Scale: Results of a Symposium on CMO Finance summarizes the debate and discussion of these issues among a panel of researchers, CMO operators, funders, and financial analysts convened in April 2010 by the center and the Bill & Melinda Gates Foundation.

For most charter organizations financial self-sustainability remains out of reach, with philanthropic groups providing needed funding for growth. CMOs had hoped to achieve financial self-sustainability through revenue from existing charter schools.

“The nirvana is that you are able to throw off enough cash from each school to be able to fund your own growth,” said panelist Kevin Hall, from the Charter School Growth Fund. But inadequate public funding for per-pupil costs and for capital and facilities expenses present enormous challenges.

The panel agreed that innovative use of technology could help CMOs achieve needed efficiencies. For example, Rocketship Education, a CMO that currently runs two charter schools at a surplus, combines teacher-led classes with online instruction. Students spend about one-quarter of their school time on computer-based curriculum, mostly to practice basic skills. Online instruction allows Rocketship to save 25 percent of teacher salary costs — or $500,000 per year. Other CMOs are experimenting with different cost and service delivery models.

The discussion exposed the need for more evidence to replace speculation on charter management organization finances. The group pointed to a number of avenues of research that could help these organizations live up to the promise of expanding charter schools.

The full report on the panels discussion is available at the CRPE website.