Chapter 7: Does Fraud Risk in the Charter School Industry Disproportionately Affect Minority Students?

The United States' charter school (CS) industry is a growing alternative to traditional public-school education that is governmentally funded, but are often able to operate independently of the state school system and can be managed by for-profit organizations. This privatization of public education continues to raise questions regarding fraud risk including its negative impact on under-represented minorities (URMs).¹ It is noted that when compared with traditional public schools (TPS), CSs serve significantly different demographics. A National Center for Education Statistics (NCES) study reports 35.9% of CS students were classified as high-poverty schools for the 2016–2017 academic year, with more than 75% of their students eligible for free or reduced lunch (U.S. Department of Education, 2019a). Comparatively, just 23.9% of TPS met the same requirements. Additionally, CSs have a higher proportion of English language learners than all US public schools. The placement of CSs greatly influences these factors, since in most states, CSs are able to choose their locations. According to the same NCES study, 56% of CS students are from urban city areas, followed by 26.2% from suburban locations (U.S. Department of Education, 2019a). Racial demographics more specifically will be addressed later in this chapter.