Fordham's charter school sponsorship contract 2.0

Next school year marks the Fordham Foundation’s fifth year as a charter school sponsor in Ohio. We currently have four schools up for renewal of their original sponsorship agreements (aka, charters). Their renewal presents us with an opportunity to update the universal sponsorship contract that we use with all schools that we sponsor, and to share our thoughts on what constitutes a quality contract. 

We’ve learned a lot in the last five years (some lessons tougher than others), and have watched many charter schools -- including some of our own -- struggle to deliver students the excellent education they deserve. With 58 percent of charter students in Ohio’s Big 8 cities proficient in reading last year, and only 49 percent proficient in math, improving the academic performance of charters (as well fostering sound operational/financial management that enables academic improvement) is critical. As a sponsor, we’ve come to appreciate the important role that sponsorship contracts play in holding charter schools accountable. While it certainly hasn’t been easy to take action when schools don’t meet performance or operational standards, it’s necessary. So what are the key components of a sound sponsorship agreement?

As was the case in 2004, when we drafted our initial sponsorship contract, Fordham still firmly believes in allowing schools maximum operational freedoms. We stay out of the day-to-day operations of the schools we sponsor. In exchange, those schools are accountable to us, and ultimately to the public, for results. Specifically, the school must perform well academically on state assessments; be fiscally viable and operationally sound; and demonstrate strong, effective, and transparent governance.

Our new sponsorship agreement retains the freedom for accountability principle (indeed, schools approved for sponsorship by the Fordham Foundation are free to educate their students according to their own unique education plans), yet also contains checks and balances essential to making the autonomy-for-accountability principle work for school and sponsor alike. We also want incentives in the contract that encourage and reward performance.

Key provisions of our new contract include:

High-performance rebate. A school may get a rebate of $2,500 to $10,000 off its annual sponsorship fee -- depending on performance and enrollment -- if, in addition to the school’s rating, it met AYP requirements, did not have findings for recovery in its most recent audits, and was 80 percent or more compliant in terms of documentation and site visits. Thus, it’s not okay to have good academics but weak finances, governance, or operations -- a school must be strong in all of these areas.

Nepotism. No voting board member may be related in any manner to any employee of the school, management organization, or vendor that services the school. Services are defined as any work that relates to the education mission, operations, or governance of the school. This provision seeks to eliminate the conflict of interest that is inherent when school boards approve the employment of relatives. While state statute speaks partially to nepotism, it is narrow and only prohibits employment of governing authority members and their relatives with non-profit or for-profit operators of schools (e.g., management companies). If a school doesn’t have an operator, the statute doesn’t apply. The Fordham Foundation believes schools must always remain objective when it comes to issues regarding employees -- we’ve seen what can happen when this is not the case.

Unauditable designation. If Fordham learns that a school may receive an unauditable designation from the auditor, the school shall be subject to probation, suspension, termination, or non-renewal. To even begin to go down the path of receiving an unauditable designation, a school likely has substantial problems. Our goal with this provision is to be proactive and not allow a school to get to the point that it may be designated unauditable.

Streamlined accountability plan. We continue to have four main goals for our schools: 1) make Adequate Yearly Progress (there are four ways to accomplish this in Ohio), 2) be rated at least the state’s mid-level rating of Continuous Improvement, 3) outperform comparable schools (i.e., local district schools and charters statewide), and 4) make more than a year of growth on the reading and math components of Ohio’s value-added growth measure (which is appropriate as our schools serve the state’s neediest children). We also encourage each school to include their own unique indicators of success (e.g., 100 percent of graduating students go on to high performing college preparatory programs).

Of course, there are more than 70 charter school sponsors in Ohio, and not everyone shares Fordham’s approach to sponsorship or our theory behind quality charter contracts. And, to some, our terms will seem strict. But we believe that it’s not asking too much to demand charter schools to be top performers in exchange for true operational freedoms. Standards matter.

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