Chart 1 - Growth of Charter Schools in Michigan

In 1993, Michigan Gov. John Engler announced to a joint session of the state legislature that, "Public education is a monopoly, and monopolies don't work." With these words, he signaled his support for the innovative concept of charter schools and shortly thereafter, Michigan became the fourth state in the nation to pass a charter school law.1 Just six years later, in 2000, nearly 50,000 students were attending over 170 charter schools across the state. Then in 1996, the governor and legislature passed public "schools-of-choice" legislation, which gave parents and students a greater range of choices within the government school system.

What do charter schools and the public "schools-of-choice" program do? This report focuses on one of the most important functions that charter schools and public "schools-of-choice" currently serve with regard to the debate over education reform: They are "competing" for the "business" of parents and students. They present the traditional public school monopoly with its first serious challenge. While neither the charter-school nor the "schools-of-choice" program takes fullest possible advantage of the reforming power of competition, both are nevertheless forcing public schools to improve. When families are empowered with choices—even limited ones—in where their children are educated, schools must begin to treat parents and students as customers to be served rather than as a captive audience.

Because charter school funding depends on the ability of these schools to attract and retain pupils, charter schools that fail to provide what parents want ultimately will go out of business to make way for schools that do. The "schools-of-choice" program is also forcing traditional public schools to compete for students because they can now choose from many participating government schools. Proponents of school choice maintain that this is the very dynamic missing from the government school monopoly, a dynamic that ensures accountability to parents and students.

Charter schools and the "schools-of-choice" program are the beginning of replacing the "assignment system"—whereby children are assigned to a particular government school based on where they live—with school choice. With school choice, government recognizes and respects parents' right, freedom, and ability to choose the safest and best schools for their children. With school choice, bad or unsafe schools will not survive. Under the assignment system, these types of schools never go away.

The Michigan charter law allows anyone who wishes to do so to establish an agreement (a charter) with an authorizing agency for purposes of creating a new, semi-autonomous, government-funded school. An initial charter can last as long as 10 years, with a mandatory review at least every seven years. Local school districts, intermediate school districts, community colleges, and state universities can authorize charter schools in Michigan.

An appointed board of directors governs each charter school, and the board cannot include charter-school employees. State aid follows charter-school students according to a state-aid formula and the per-student spending of the district in which the charter school resides. The charter-school law essentially allows groups to set up new schools to compete with existing districts for students. One hundred seventy-two charter schools were in operation in Michigan by the fall of 1999, a 25-percent increase from the previous year (see Chart 1).

The more modest public "schools-of-choice" program allows students to transfer between government schools in the same local district, to government schools in the same intermediate school district, or to government schools in other intermediate districts if those districts are contiguous to the ones students are leaving.2 Participation in the "schools-of-choice" program is limited because districts control whether or not they participate. Fewer than 18,000 students were utilizing the government "schools-of-choice" program in 1999 (see Chart 2). Lack of participation by most districts and other legislatively imposed restrictions continue to prevent many students from choosing alternative public schools.

Many states have followed the example of Michigan over the years. There are more than 36 states with charter-school laws on the books and public-school choice is becoming the rule instead of the exception in most states.3

In short, these initiatives made competition the most significant educational reform of the 1990s as well as a catalyst for change in the 21st century. Charter schools and public "schools-of-choice" mean parents now have greater flexibility in choosing government-funded schools for their children. A quasi-"market" in public education has begun to develop in Michigan. Yet despite ever-increasing demand for more choices, less than five percent of the school-aged population are able to choose alternative public schools (see Chart 3).