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A report from Education Sector raises questions about the ability of charter schools and charter-management organizations to scale up as dramatically as their supporters might hope.

鈥淭he extraordinary demands of educating disadvantaged students to higher standards, the challenges of attracting the talent required to do that work, the burden of finding and financing facilities, and often aggressive opposition from the traditional public education system have made the trifecta of scale, quality, and financial sustainability hard to hit,鈥� concludes the report,

As hard-hitting as the findings seem to be, the report is at the center of a controversy over whether the final text鈥攔eleased by the Washington think tank on Nov. 24鈥攚as watered down.

The main author, Education Sector co-founder Thomas Toch, asked to have his name removed from the final product. It 鈥渄idn鈥檛 fully reflect my sense of the current conditions or future prospects for CMOs,鈥� he said in an interview. 鈥淐harter schools are an important addition to the public education landscape and the best CMOs have produced great results. ... But the CMO movement has created only a few hundred schools in a decade, and even with more funding it would be difficult for CMOs to expand much faster without compromising the quality of their schools.鈥�

Under copyright rules, Mr. Toch is prohibited from publishing his earlier version of the two-year study, which draws on interviews with dozens of charter-network executives, visits to a dozen schools, charter-network business plans, and other documents. But Marc Dean Millot, an education industry observer and publisher, posted a of the report online Nov. 30 in Alexander Russo鈥檚 This Week in Education blog.

Mr. Toch also discussed the research in an Oct. 28 Commentary essay for Education Week.

The indications of troubling weaknesses in the charter sector come at a key time. Charters are one of the reform strategies that stand to get a boost under U.S. Secretary of Education Arne Duncan鈥檚 plans for discretionary federal aid provided through the $787 billion American Recovery and Reinvestment Act. The competition for $4 billion in grants from the stimulus law鈥檚 Race to the Top Fund, for instance, gives priority to states based in part on how friendly their climates are to charter schools, including whether they place caps on the number of those largely independent public schools.

President Barack Obama鈥檚 proposed federal budget for the 2010 fiscal year also calls for boosting spending for charter schools by $52 million, to $268 million.

In addition, Mr. Duncan has called on charter operators to play a role in turning around some of the nation鈥檚 lowest-performing schools.

Financial Vulnerability

Begun in the 1990s, CMOs are nonprofit alternatives to education-management organizations, which are typically for-profit ventures. They operate and replicate clusters of like-minded charter schools; among the better-known are the Los Angeles-based Green Dot Public 69传媒, the San Diego-based High Tech High, and the New Haven, Conn.-based Achievement First.

Besides raising questions about future prospects for charter school expansion, both versions of the Education Sector report paint charter-management organizations as an important tool for improving schooling for disadvantaged children. They also relate the struggles, and some of the successes, that CMOs have experienced over the past decade in raising funds, finding facilities, and controlling student and teacher attrition.

They each conclude that CMOs have 鈥渆xpanded more slowly and required more resources than they had hoped.鈥�

But the final report, unlike the June version, appends a list of recommendations for nurturing the growth of charter school networks and CMOs. The suggestions, a few of which also appear in the main body of the original report, include allowing charter schools with strong track records to use public buildings; making unused public school property available to charter schools at below-market rental or sale prices; providing additional public funding for schools鈥攃harter or otherwise鈥攖hat deliver results; and giving funding priority at the federal level to states that try to provide an 鈥渆quitable fiscal playing field for charters.鈥� The earlier draft stressed that CMOs should be part of more comprehensive strategies for addressing the effects of poverty on students.

In addition, the report as released last month omits some candid quotes from industry executives about the fragile economics undergirding some charter school networks and about how the credit crisis has affected the ability of charter school networks to raise money, as well as statistics showing the difficulty some CMOs have had in reducing central-office costs.

鈥極rdinary鈥� Editing

To Mr. Millot, who until September wrote the Edbizbuzz blog for Education Week鈥檚 Web site, the changes end up diluting the impact of the final report. 鈥淭och presents a compelling indictment of the 鈥榥ew philanthropy鈥檚鈥� primary investment strategy for education reform. His arguments should be available to all and addressed on the merits,鈥� he wrote in his entry on the This Week in Education blog. 鈥淚nstead, someone at EdSector hacked away at Toch鈥檚 evidence until it fit the rhetoric of CMO advocates.鈥�

Officials at Education Sector, however, denied that they had sanitized the report, one of a succession of studies the think tank has done that examine both the problems and the promise of charter schools.

鈥淎 great deal of the report came through,鈥� said Kristen J. Amundson, the organization鈥檚 communications manager. 鈥淚t was very long. The sort of editing process it went through would not be something out of the ordinary.鈥�

Mr. Toch, who left Education Sector in July to head the Association of Independent 69传媒 of Greater Washington, said he also withdrew his name because he had not seen the final version until days before it went to press. But the think tank, in an official statement, said the lack of collaboration in the editing process stemmed from a dispute with Mr. Toch over compensation for the report.

鈥淲e stand behind this report and all of our work on charter schools,鈥� the statement added. 鈥淲e hope that this report, and our work overall, can inform the conversation about the role of educational choice in improving outcomes for American students.鈥�

Founded by Mr. Toch, a former staff member of Education Week and U.S. News & World Report, and Andrew J. Rotherham, who was a domestic-policy adviser for President Bill Clinton, Education Sector seeks to put political and ideological independence at the center of its mission. The organization has primarily produced reader-friendly research on teacher quality, undergraduate education, school choice, and accountability in K-12 education.

The group鈥檚 core financing comes from seven foundations, including the Seattle-based Bill & Melinda Gates Foundation, which has provided $136 million to the charter school movement, according to the report. (The Gates Foundation also provides support for Editorial Projects in Education, the publisher of Education Week.)

The six members of Education Sector鈥檚 board of directors represent a range of expertise. Among them is Kim Smith, the founder and senior adviser to the New69传媒 Venture Fund, a San Francisco-based group that provides startup money for CMOs. Mr. Toch contends that Ms. Smith joined with the New69传媒 Venture Fund in lobbying heavily to soften the report鈥檚 depiction of CMOs鈥� financial fragility and to remove data gathered on the 17 charter networks that New69传媒 has helped support.

Julie Peterson, the communications director for the fund, said Mr. Toch鈥檚 claim about Ms. Smith鈥檚 role in the editing process was 鈥渇actually incorrect.鈥�

鈥淜im was one of the official peer reviewers of the paper, and as such provided feedback to the paper鈥檚 editor in June,鈥� Ms. Peterson said in an e-mail message. 鈥淭hat was the extent of her involvement with the paper鈥檚 editing.鈥�

Officials at Education Sector confirmed Ms. Smith鈥檚 account, adding that she was one of a panel of experts asked by the organization to review the report. They said she did not communicate with the report鈥檚 editor, Kevin Carey, after turning in her review in June. Mr. Carey, who is Education Sector鈥檚 policy director, also said the organization chose to trim data about the charter networks supported by New69传媒 because it was proprietary information, drawn from internal reviews prepared by the San Francisco group.

鈥淭his data didn鈥檛 meet our standards for quality analysis,鈥� he added, noting that the organization relies primarily on data gathered by the federal government or by its own researchers for its analyses.

Timely Message

The changes notwithstanding, both versions of the report present evidence of the struggles that charter-management organizations have undergone since their inception to get a foothold in the nation鈥檚 education system.

Charter schools nationwide enroll some 1.5 million pupils, according to the Center for Education Reform, a Washington advocacy group. Now serving an estimated 95,000 students, the report says, CMOs educate about 1 percent of the nation鈥檚 8 million disadvantaged students.

Charter schools typically receive less public funding per pupil each year than regular public schools do, and in many states are forced to locate and pay for their own facilities. Only 10 states and the District of Columbia, the report says, give charter schools annual per-pupil funding for facilities, and only three provide them with more than $1,000 a student.

The report also documents the schools鈥� heavy reliance on philanthropies, which have provided a total of $600 million over the past decade to support the charter school movement. At some successful charter schools, such as the Amistad Academy in New Haven, Conn., foundations provide one-quarter of the annual budget. Amistad鈥檚 public per-pupil funding, on the other hand, is about 75 percent of what typical public elementary schools get in that state, the study found.

Some charter networks, such as the Knowledge Is Power Program, or KIPP, are 鈥渟traightforward about the fact that [they are] likely to require permanent philanthropic subsidies鈥� for some of their schools, according to the study.

In general, charter schools turned out to be expensive to operate, the report says, in part because of their small size and commitment to low pupil-teacher ratios. High student-attrition rates in some schools also raised per-pupil costs, as did high rates of teacher turnover, which force schools to spend more to recruit teachers.

Some schools also added to those inefficiencies, the report says, by building out their schools one grade at a time.

In an effort to maintain quality as their networks grew, several charter-management groups also moved to centralize operations, according to the study, and become more top-down enterprises. As a result, it found, the CMOs have struggled to reduce central-administration costs to the point where their organizations can be financially sustainable.

鈥溾�楾he risk right now is that we will drastically overestimate the capacity of the national charter sector to deliver new, high-quality seats for underserved families at a sustainable cost to the taxpayer,鈥欌�� the report says, quoting Ben Lindquist, an executive of the Charter School Growth Fund, a Broomfield, Colo., group that provides money and advice to help charter networks expand. 鈥溾�業f we鈥檙e not careful, we will get a large market segment that is littered with mediocrity.鈥欌��