The Charter School ‘Advantage’

Article Published in the Investor’s Business Daily

Charter schools continue to experience explosive growth, with over 1,700 currently in operation across the United States. While their impact can be felt throughout American education, it is in our cities where it can be expected to ultimately prove greatest.

Charter schools are public schools which have been granted special autonomy, allowing them to avoid bureaucratic rules and contractual agreements in exchange for greater accountability for their performance. They are governed by state charter laws that vary greatly with regard to the degree of their autonomy and to whom they are responsible – local school boards, independent state charter school boards, etc. It has also become evident that charter schools’ small size, innovative approaches and ability to create safe, stable and even attractive learning facilities with minimal tax dollars make them ideally suited for urban environments.

Even with recent increases in federal funding available to charter schools, to $145 million in FY 2000, financing remains the greatest challenge to the nation’s charter school leaders. Entrepreneurial by nature and necessity, they have turned to newer and more innovative funding sources, and increasingly to private sector investors.

This future is clearly in view at the 16 urban charter schools around the country operated by Advantage Schools, a for-profit charter school company based in Boston. Advantage opened its first two charter schools in 1997 in Rocky Mount, North Carolina and Phoenix, Arizona. Now, working in partnership with local school founders, Advantage operates schools in 9 states and the District of Columbia, serving nearly 8,000 students from primarily low-income families. Locations currently include Chicago, Dallas, Philadelphia, San Antonio, Worcester, Massachusetts and Jersey City, New Jersey.

It is clear from first sight that these are not normal schools. Modern facilities are central to the Advantage model and the company places strong importance on providing not only safe and stable learning environments that are in appealing, striking contrast to otherwise bleak urban surroundings. The Rocky Mount, North Carolina facility was converted from a former J.C. Penney department store and now features bright colors and wall-to-wall carpeting. The school in Worcester, Massachusetts was converted from an historic former mill building, retaining its characteristic brick walls and high ceilings.

For all of their innovations, Advantage schools avoid trendy teaching fads in favor of traditional, back-to-basics learning with an emphasis on maximizing one-on-one interaction with teachers. Schools are in session for both a longer school day (8:00 AM – 3:30 PM) and school year (200 days). Many require school uniforms. Students participate in a specially-designed character education program, studying historical figures in terms of basic virtues. They are expected to achieve and develop competency in each of the standards recommended by the President’s Council on Physical Fitness. Keeping up high levels of parental involvement is an organizational priority.

The reading curriculum is based on phonics and incorporates a step-by-step learning approach. Older children read with a focus on classics and learn writing with extensive attention to mechanics and rules. The math curriculum is based on mastery of basic facts and relationships, beginning with counting, addition, subtraction, multiplication and other fundamentals. At one school, the Abby Kelly Foster Regional Charter School in Worcester, Massachusetts, students are even learning Latin.

Results have been impressive. The ability to show solid student performance is critical for all charter schools, because in contrast to chronically underperforming urban public schools, their enrollment and future livelihood depends on them. In their first full year in operation, Advantage’s two Massachusetts charters produced convincing growth, especially among younger students, based on the Iowa Test of Basic Skills. Kindergartners at the two schools scored in the 96th and 93rd percentile in reading, and first graders at one improved language scores from the 43rd to the 81st percentile. Students at the Rocky Mount Charter School in North Carolina scored remarkably on the North Carolina Writing Assessment test, with over 60 percent of students scoring on the test’s highest category, compared with 36 percent of students statewide.

At San Antonio’s New Frontiers Charter School kindergartners scored in the 94th percentile for their first year. “The ITBS results provide solid proof of the phenomenal progress we witnessed over the school’s first year,” said Dr. Cynthia Castillo, school director. “They illustrate all that is possible in urban education when you combine proven curricula, a safe and orderly learning environment, and highly skilled and motivated teachers.”

Investors, too, have begun to realize these schools’ potential. In March,1999, Advantage announced that it had raised $25 million in new equity capital, adding to $10 million in financing received a year earlier. Financial performance, not just sound schooling, has attracted investors to Advantage Schools. So far, these include Chase Capital Investors; Nassau Capital of Princeton, New Jersey; Kleiner Perkins Caufield & Byers of Menlo Park, California; Bessemer Venture Partners of Wellesley, Massachusetts and Fidelity Ventures of Boston. “We were impressed by the strength of the Advantage management team and its record of successful execution,” said Chase Capital Partners’ Stephen P. Murray. “Advantage is emerging as the premier charter school operator with significant additional growth potential.”

As for-profit companies like Advantage demonstrate the potential effectiveness of private-sector leadership in this critical education area, doubtless the sector will mature allowing market dynamics to take hold. Likewise, state charter school laws will need to adapt to take full advantage of this crucial new financing stream, as Arizona’s already have. But for now these leaders are bringing new choices to investors as well as to low-income urban children and their families.