Paying for Scale: Results of a Symposium on CMO Finance

In April 2010, the Center on Reinventing Public Education (CRPE) and the Bill & Melinda Gates Foundation convened a group of researchers and financial analysts to discuss how to better understand the financing and sustainability of Charter Management Organizations (CMOs). The goals of the meeting were twofold: (1) to suggest a set of common ways of assessing CMO financial viability, and (2) to outline a research agenda for settling the most urgent CMO finance questions relevant to policy and practice. The following themes emerged from the meeting: (1) For most CMOs financial self-sustainability is an aspiration, not yet a reality; (2) Public funding levels clearly limit, but may not fully explain, CMO scale-up difficulties; (3) CMOs are experimenting with different cost and service delivery models, but there is little evidence yet about which ones are most cost effective; (4) Politically and financially, CMOs need to figure out how to do more school turnarounds; (5) Technology and innovation are critical paths to sustainability; (6) Spending comparisons between CMOs and school districts are hard to do and not likely to yield much payoff; and (7) There is at least as much speculation about CMO finance as there is fact: a rigorous research and development agenda is needed. The report that came out of the meeting offers this conclusion: While public policy plays an important role in the future of CMOs, they cannot wait for legislative solutions. CMOs need to find new ways to help schools operate more efficiently, save money, innovate with new technologies, and adapt to leaner times. (Contains 7 footnotes.)