When New York State passed a law last year authorizing charter schools, neoconservatives weren’t the only ones celebrating. Many of the city’s neighborhood groups were thrilled. The law seemed to offer an unprecedented chance to help out kids whose local public schools were letting them down.

It was natural that the Puerto Rican Family Institute would take up the challenge. The Institute, which has hosted a Head Start program for four years and runs a day treatment program for troubled Latino teenagers, proposed to start a charter school in Williamsburg-Bushwick. The area lacks good schools, and the Institute’s plan was to integrate social services and academics in order to reach out to children with difficult family lives.

Because of the programs it already runs, the Institute has strong working relationships with the city Board of Education and state Department of Labor. Just as importantly, it has a strong relationship with Latinos throughout the borough, and especially with Williamsburg-Bushwick residents. The organization offers mental health, education and social services to some 10,000 families.

There was just one problem. “We do not have money,” says program director Victor Bianco. The issue is not finding funding to run the school; the state would pay the group for each student it enrolls. It’s rounding up the capital and resources to get the school started that has proven impossible.

According to their proponents, charter schools enable people from outside the educational mainstream to create alternatives to the public school system. President Bill Clinton is just one booster to stress their potential for transferring power to neighborhoods. “Charter schools are truly community-based schools created by local communities to address their own particular needs,” he gushed in a May memo to his Secretary of Education.

And in theory, a charter school can be founded by anyone who puts together a convincing proposal and submits it to the State University of New York’s Charter School Institute, the body that vets most charter school applications. With the state Regents’ permission, anyone can open a school and receive public funding for each student who enrolls.

But academic quality and innovation, even teamed with a solid administrative plan, do not alone add up to a winning charter application. A group must also be able to hold its own among seasoned professional competitors–and prove that it can pay its own way.

The Puerto Rican Family Institute is “exactly the kind of group that should be competing,” says Gerry Vasquez, director of the New York Charter School Resource Center, a privately funded organization that provides technical assistance to charter hopefuls. “But they’re not, because there aren’t the start-up funds available.”

Right now, New York’s charter schools are hardly community-based. Two of them, Harlem’s Sisulu Children’s Charter School and Albany’s New Covenant Charter School, are run by for-profit education management companies (known as EMOs). The third, also in Harlem, is run by the Learning Project, a large nonprofit management company. The near future will bring little change. Of 23 schools that the state has approved to open in fall 2000 or 2001, only a handful are run by community-based nonprofits. Fully half of the new schools–including two in New York City–will be run by for-profit companies.

These management companies are willing to put their money behind applicants who need it. They set up charter schools, handling everything from construction to curriculum. Once the school is established and begins to make money, it pays fees to the management company for its services.

But the EMOs doing business in New York–both for-profit and nonprofit–all share the same idea of what a good education should be: highly regimented and traditional. Any group that wants to team up with one of these management companies must agree to accept its administrative policies, curriculum and educational philosophy. The EMOs’ distinctive brand of pre-fab education satisfies some applicants, but it is not what all of them are looking for.

Charter school advocates believe that these independent schools will liberate students from bureaucracies like the Board of Education and teachers’ unions. But in New York, the charter school revolution has only replaced the old order with a new one–this one controlled by the EMOs.

For educators who don’t fit the mold, and don’t have their own deep-pocket benefactors, the outlook is bleak. EMOs have already become the only game in town. And without them, says Vasquez, “it’s almost impossible to start a charter school in New York.”

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Advocacy groups like the Washington-based Center for Education Reform tout charter schools as a chance for poor families to have control over their children’s education–just as wealthy people already do. The schools are supported passionately by many African-American leaders, notably Queens minister and former congressman Rev. Floyd Flake, who became head of the charter school division of the for-profit Edison Schools in early May.

The rhetoric of choice goes all the way up the political line. As Governor George Pataki announced when he signed New York’s new law last spring, “Our new charter schools will give parents real choices in education and will provide teachers unprecedented freedom to innovate.”

But the law actually works against innovation. Charter schools can’t get public funding for startup costs–which means, most seriously, no money for constructing, renovating or leasing a building. In this respect, New York’s law is typical: Of the 37 state charter school laws on the books nationwide in 1999, 26 did not provide any start-up funding at all, according to the Center for Education Reform.

Once the school opens its doors, it is eligible for operating funds from the city and state. But in the end, a charter school can get only 75 percent of what a public school receives for each student, working out to an average of $6,207 a year. The rationale is that public schools are saddled with costly obligations, like union salaries and custodial rules, that charter schools don’t have. Costs are also presumed to be lower because the new schools are supposed to be, like businesses, “market-driven”–propelled by consumer preference and ever-greater levels of efficiency.

Big Government still plays a small role. The U.S. Department of Education has launched a $140 million grant program, under which a charter school can apply for up to $150,000. But to get one of these grants the applicant must already have a charter, making the program useless to a group that needs to strengthen its finances in order to get a charter in the first place.

That limited volume of public cash has made the world of charter schools more exclusive than a Manhattan co-op. To start a relatively small charter school in New York City costs about $200,000 to $300,000, Vasquez estimates.

That may even be a low guess. Bronx Preparatory School, a nonprofit institution scheduled to open this fall, has had to raise some $350,000 for capital and start-up, even though its building, a former parochial school, required almost no renovation. But the costs have mounted quickly, says founder Kristin Kearns Jordan. Computers, for instance, took a hefty chunk out of her budget.

Funding for Bronx Prep comes from a combination of small foundations (including the Robin Hood and the Tiger foundations) and wealthy individuals; Kearns Jordan is also applying to the state for $150,000 in federal charter school funds. In applying for the school’s charter, it didn’t seem to make a difference that she has few local connections in the Bronx. What mattered more is that she has experience in the philanthropic and education worlds, as executive director of the School Choice Scholarship Foundation.

A successful charter school applicant must show the state–in great detail–that they can provide a rigorous curriculum, and that they or their partner organization has a successful track record in education. But the hurdle posed by start-up costs can’t be underestimated. Gerry Vasquez says a lack of funding is “crippling many efforts before they even begin. And people of color are not in the ball game.”

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In the city, only one minority-run nonprofit has so far managed to make it on deck. The Association of Progressive Dominicans, a 20-year-old organization with a staff of 125, operates after-school programs throughout Northern Manhattan and the Bronx. It also runs a New Visions school, an alternative school within the Board of Ed. With these resources, the group was able to devote hundreds of hours of paid staff time–including work from accountants and a development department–to applying for a charter, as well as hitting up foundations and corporations for support.

The application was successful, and the Amber Charter School will begin with kindergarten and first grade this fall in Washington Heights, teaching in both English and Spanish. The group is now leasing a temporary facility for the school, and it has launched a capital campaign to construct a new building by 2002. Executive director Victor Morisete, who founded Amber, knows that he can thank the group’s resources for this success. “We started as a grassroots, community-based organization,” he says. “Now we’ve grown to be a professional organization.”

But groups that haven’t yet made that transition have a very different experience. For the Puerto Rican Family Institute, just coming up with the money to keep afloat is a struggle. “We are strapped, constantly searching,” says Victor Bianco. “And we are always understaffed.” The group may try to find foundations to back the school, but, says Bianco, “we have been around for four years, so we have already been to every foundation. The well is dry.” The Family Institute is in discussions with Vasquez, but it appears unlikely that its Williamsburg-Bushwick charter school will ever get off the ground.

It’s not an unusual situation. For many nonprofit groups, even the application process is prohibitively expensive. Gail Foster of the Toussaint Institute Fund, an advocacy group working to widen educational options for African-Americans, has helped nearly a dozen community organizations apply for charter school clearance. But fewer than half have actually been able to submit applications. She expects that at least one of her client’s applications will be approved this summer, and two others show promise. But so far, only one has had been approved–the one that decided to hire a for-profit management company.

Foster estimates that the application process alone costs $15,000 to $25,000. “You have to hire accountants. [And] a lawyer familiar with charter school law, who’s going to be from out of state because New York’s law is so new,” she says, adding that groups that don’t hire professionals to do their applications can’t compete. Foster points to Safe Covenant Christian Church in Westchester, which “had no resources. They did their application, but how could it be competitive? That made me so sad.” Another proposal whose rejection she particularly laments was Narco Freedom Academy, a Bronx school for children of drug abusers.

She cites time demands–difficult for people who work full-time at other jobs–and the need to travel to other schools to see viable models as common obstacles. “A typical community group cannot afford to make that kind of investment in an application that may not even be granted,” she says. “The law passed in New York State was not passed with the thought of how an ordinary group would participate. If it was, it would have included money for start-up, and for writing the application.”

The Toussaint Institute has been unable to help all the organizations and churches that request assistance with charter school applications; Foster says she’s had to turn away at least 20. In an intensely competitive field, such expertise is critical: New York’s 16 charter winners were winnowed down from a pool of 99 applicants.

Of course, some of the rejected groups had deeper problems than slim bank accounts or amateurish applications. Proposed charter schools were nixed for some very good reasons, ranging from fractured governance structures to exclusionary admissions policies. But SUNY and the Regents don’t distinguish between applicants who shouldn’t be in the school business at all from those who have everything going for them but big pots of money.

Even fierce advocates for community-run schools have, to a degree, accepted that the charter school movement–premised, after all, on using the power of the marketplace to decide which schools fly and which flunk–has no room for any but the most experienced and aggressive players. “Maybe it isn’t all that fair,” says Vasquez. “But it may be the only way we sift good ideas from bad.”

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As associate director of college counseling at the upper-crust Horace Mann School, Barbara Tischler would seem to have a lot of advantages that grassroots groups don’t. She is personally acquainted with some philanthropists, and her office answering machine identifies her as “Dr. Tischler.”

Soon after the New York charter school legislation became law, Tischler applied to launch an innovative school in the Bronx neighborhood of Morris Park. The Morris Park Charter School was to be based on her work an extracurricular program called the New York Giants that she and her husband Steven founded. It offers a compelling combination of SAT tutoring, college counseling and competitive baseball to teens all over the city.

As outlined in Tischler’s application to SUNY, the Morris Park school was to provide “at-risk” kids with a curriculum that combined rigorous school work with sports and sports management. The idea was to use sports–something lots of kids are already passionate about–as a way to open doors to academics and career preparation.

But Tischler is first to admit that “the budget is the part I’m weakest on.” Her proposed curriculum was highly rated by SUNY’s Charter School Institute, but staff ultimately turned down Morris Park’s application, telling Tischler that its funding was too shaky. The school’s physical plant, too, was still in question; it wasn’t certain that the building could be brought up to code in time. At a minimum, Tischler estimates that she needs $91,000 for start-up, and an additional $15,000 to launch the school’s proposed summer program.

She is now preparing to apply again, going after federal funds and applying for $100,000 from the Gladys Brooke Foundation. The privately funded New York Charter School Resource Center already gave Tischler a $10,000 grant for the application process, much of which has gone into photocopying and mailing. “And printer cartridges!” she laughs.

Tischler says she has visited schools run by EMOs but decided not to hire one, despite her funding and time constraints, because her unorthodox mix of sports, business and academics would not fit into any of the companies’ formulas. “I’m not starting a traditional school,” she says. “I’m not confident that any particular company would be into it.”

Her proposed school is certainly very different from the ones the EMOs run. Most of them emphasize boosting children’s test scores and getting them to behave; they are academically rigorous and tend to leave little room in the day for anything other than the basics–reading, writing, social studies.

There are, of course, many advantages to working with management companies. They provide technical support throughout the application and start-up process, under arrangements that range from strong guidance to intensive micromanagement. In the case of Sisulu, its management company, Victory Schools, did virtually everything: it put together the application, designed the curriculum, provided all start-up capital, and found the West 115th Street building.

Now that the school is up and running, Victory continues to handle much of its administration. Representatives from the management company are in constant communication with school staff about day-to-day administrative issues like payroll. If you ask Berthe Faustin, Sisulu’s principal, even a basic question about the school’s financing, she will refer you to the management company.

Victory also has a heavy hand in the school’s “Core Knowledge” curriculum, which is mass-marketed by back-to-basics guru E.D. Hirsch (Cultural Literacy). At the beginning of the school year, Faustin felt that Victory’s curriculum consultants were too meddlesome, telling her teachers what to do–even how to arrange their classrooms. She believes the problem was solved when Victory fired one particularly intrusive consultant.

But second-grade teacher Holly Degnan says the problem was hardly limited to one bad apple. “We’ve had so many horrible consultants coming in,” she sighs. “A lot of people wanted to quit.” Degnan came to Sisulu straight out of college because she wanted to work with inner-city children. She enjoys the kids, she says, but still chafes at Victory’s heavy hand.

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The idea of a corporation making money off of children in public schools still makes many people uncomfortable, including some of the educators starting nonprofit charter schools. Bronx Prep’s Kearns Jordan says that she thinks many management companies “do a good job on the education,” but she can’t stomach the idea of public money going to a for-profit corporation. “It’s sad that the money goes to the investors and not to the school,” she says. Amber’s Victor Morisete is even more emphatic. “We would not partner with a for-profit,” he says. “They’d only be interested in the bottom line.”

A growing body of research echoes fears that profits are coming before pedagogy. In a just-published study called “Charter Schools and Private Profits,” Michigan State University researchers found that charter schools operated by EMOs skimped on labor costs. The researchers worried that in the long run such schools could have trouble attracting the best teachers, and that their students might suffer as a result.

EMO executives are understandably defensive on the subject. “We have not yet made a profit,” bristles Peg Harrington, chief operating officer of Victory Schools. Still, she acknowledges, the company does expect to profit from Sisulu Children’s School some five years down the line, once the school can afford to start paying its management fee.

It’s true that Victory Schools’ founder, Wall Street investor Steven Klinsky, is not taking a salary this year, after sinking over $1 million into Sisulu. Indeed, many charter school companies find profits elusive, raising questions about how long the money will continue to flow. Even Edison Schools, the charter school giant that recently went public, took $21 million in losses in the first six months of this fiscal year.

But Victory is counting on making this business profitable. The company views Sisulu as the foundation of a nationwide business, already expanding with the debuts of Merrick Academy in Queens and Children’s Academy in Roosevelt, Long Island, this fall. (Both, like Sisulu, are located in low-income, predominantly African-American neighborhoods.) Profit, says Harrington, will come with “multiple sites and reducing costs by producing a viable business model.”

As it evolves, that business model will be based on building schools out of easy-to-replicate components, in particular a tightly controlled curriculum. Many charter businesses share this emphasis. When Barbara Tischler visited a few schools run by management companies, she was shocked at how constrained they were: “Every hand gesture was scripted!”

She exaggerates only slightly. At Sisulu Children’s School, the degree of administrative control is striking. Every classroom is on exactly the same schedule all day–not only do they all do the same thing, they do it in the same order. At any time of day, Principal Faustin can walk into a classroom and not only recognize exactly what’s happening but know what activities the students have already completed. Faustin points to a group filling out worksheets: “They’re doing independent work. That mean they’ve already met with their reading groups.”

Teachers’ interactions with children, all of whom are in kindergarten through second grade, are remarkably unspontaneous; they all follow the written curricula provided by the management company. In the morning, that means Direct Instruction, which emphasizes basic skills and rote repetition. In one classroom, a teacher recites: “Light is the opposite of dark. What is the opposite of dark?”

Degnan, the second-grade teacher, concurs with Tischler’s account of how a company school is run. “Yeah, I just read the scripts,” she says. “That’s really what it is. It’s teacher-proof. I can’t mess it up, but I find it disempowering.”

Faustin has a loftier opinion of Degnan. “She’s so creative,” says the principal. “If I had a Xerox machine I would duplicate her.”

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There’s a reason for the uniformity. As in any industry, success in the education business can have less to do with the quality of a product than with its marketing and customer service. Although charter schools are often billed by their advocates as fertile sites for innovation, they are more concerned with keeping customers happy. And in the end, the customers are not children but their parents.

So the schools emphasize extended school days and years, a godsend for working parents. Uniforms and rigid structure are likewise blessings for parents concerned about keeping their kids in line. Victory’s Peg Harrington brags about a recent field trip to the Met, during which museum staff kept remarking how well-behaved the children were. Observing teachers and the principal with the children, I noticed that an adult asked a child to tuck in his shirt or otherwise attend to his appearance at least once every 10 minutes. Says teacher Holly Degnan, “It looks really good.”

But behind the polish, Degnan says, are quite a few problems. These very young children are in the same small classroom from 7:45 a.m. to 4 p.m. every day, with only 15 minutes for recess. They have no gym, art or music. I had wondered all day why the children were so fidgety; standing in line, a group of kindergartners was literally dancing in place. The teachers themselves work all morning without a break, which would be illegal in the unionized Board of Education schools. And though the school accepts special education students happily (they bring more dollars with them), Degnan reports that it is not adequately staffed to serve them.

But perhaps most perniciously, Sisulu, like many other charter schools, seems to market conventional stereotypes about poor communities to the people who live in those communities. The wisdom for sale is that poor people need discipline and character-building, rather than access to resources. Sisulu embodies this: it is starved for money and space, but it does offer discipline and a boot-camp ethic.

Part of the reason that charter schools are saddled with these management companies is that traditional sources of cash for community-based projects have been slow in coming. Only a few small foundations are supporting New York charter schools, among them the Achilles, Tiger and Robin Hood foundations.

Foundations “have heard that the right wing wants them, so they’re scared,” says Gerry Vasquez. “There’s also the fear that you’re undermining public schools” by draining resources from public education. For now, most foundations are watching and waiting.

Other potential sources of money are just starting to emerge. In particular, banks are discovering that they can underwrite charter schools to fulfill obligations, under the Community Reinvestment Act, to put money into urban neighborhoods. “Six months ago, I couldn’t spell charter school,” says Judd Levy, president and CEO of Community Development Trust, a for-profit financial institution that puts banks’ money into neighborhood projects.

Now CDT is in the preliminary stages of its first charter school deals, in Washington, D.C., and Midland, Michigan. The Trust will buy and rehabilitate buildings, then lease them back to the schools. But Levy is starting out playing it safe: His clients are schools operated by Advantage, a for-profit corporation based in Boston.

Levy says he hopes to help nonprofits in the future, but since this is CDT’s first charter venture, and the market is “new and untested,” he needs to be conservative for now. “We need the comfort of a large for-profit operator,” Levy says, then corrects himself. “What’s important is not so much that it be for-profit as well-capitalized.”

Levy’s enthusiasm for charter schools suggests the one way in which they have unquestionably succeeded so far. Like dot-coms, they have attracted investment not on the basis of present profits but on speculation–the belief of professional investors like Levy and Klinsky that charter schools are an industry that will rapidly grow and flourish. To do that, the schools will have to attract still more private money, bring in larger volumes of students, and promise increasing profits and diminishing operating costs.

In other words, they will have to become more and more unlike the specialized schools, tailored to community needs and childrens’ own interests, that so many educational groups are eager to found. Gerry Vasquez knows the organizations that seek his help don’t have much of a choice. “As long as we continue to discriminate against groups that don’t have deep pockets or investors,” he says, “people will have to learn to live with this.”

Liza Featherstone is a Brooklyn-based freelance writer.