Class acts: how charter schools are revamping public education in Arizona - and beyond

Reason, April, 1998 by James K. Glassman

In Arizona, Tesseract's challenge is more economic than political, though hardly less daunting: How do you stay in business given the state's relatively stingy stipend? Golle's idea is to run his charters like a movie house, profiting from the popcorn, not the film. In this case, the popcorn includes preschools that feed into the charter, post-secondary classes for adults, summer programs, and special classes in computer skills.

If Superintendent Keegan gets her way, though, charter school operators will see their margins fatten up a bit. She is now pushing for an extra $640 per student as a capital stipend. The ultimate goal, she told me, is to "strap dollars on the back of students." That's a concept that could, of course, lead to a voucher-style system, where the money accompanies students to private schools (which enroll about one in eight kids nationwide). Whether that ultimately happens, the odds look fairly good that Keegan will succeed in getting a capital stipend for charters. If and when she doeS, says Jaime Molera, the 29-year-old top assistant on education to Gov. Jane Dee Hull, "Charter schools could grow exponentially."

John Graham, a Phoenix real estate developer, concurs. He says that firms like Tesseract and Edison have asked him to build schools in his suburban subdivisions and lease them back to the charter operators for free, or at a token rental, to encourage families to buy houses there. It's nice deal for the educational firms, he says, but one that doesn't do much for the builder. "As a businessman, it doesn't make sense," says Graham. But, he points out, if a developer could pull in $600 per student, or $180,000 in annual rent from an enrollment of 300, it does.

I visited with Graham (who is, incidentally, Keegan's exhusband; Phoenix is that sort of small town) last November. A little later that same day, I toured a school in a central-city neighborhood that is worlds apart from Graham's commodious developments. The school has 359 elementary students, nearly all of them Hispanic, and is located in a former shopping center. It's run by Advantage, a typical start-up company with enthusiastic founders, high expectations, and little else. Currently, Advantage has only one other charter school, in Rocky Mount, North Carolina, and another set to go in New Jersey this fall. Advantage has received a total of $5 million in venture-capital funding from Bessemer Venture Partners and Fidelity Capital, a division of Fidelity Investments, the huge mutual fund house.

Critics accuse charters of "skimming" the best students from public systems, which is often a coded way of claiming they have predominantly wealthy, white students. But the Advantage school's large minority student body is actually pretty typical for charters. A study released last May by the U.S. Department of Education found that 48 percent of charter school students are minorities, compared with 34 percent for all public schools nationwide. In Arizona, the study found that 45 percent of charter students come from families with incomes low enough to qualify for the free or reduced-price lunch program, compared with 40 percent for all public schools in the state. Nationally, 13 percent of charter school students are in special education programs, vs. 10 percent at regular public schools.