Federal Policy 104: Oversight of Federal Funds in Charter Schools


Charter schools receive money from a variety of federal programs and are responsible for using that federal funding appropriately. A network of entities— such as the charter school, the authorizer, a local school district, a State Education Agency, and the federal government itself—have varying responsibilities for overseeing and reporting on the use of different types of federal funds.

Oversight of Federal Funds 2016

The Role of the Authorizer: Supplementing Traditional Oversight through Charter Oversight and Accountability

The authorizer does not replace the traditional chain of federal financial oversight, but rather, using the state’s charter school law, supplements this oversight with the added overlay of contractual accountability.

The authorizer plays a vital role in charter school financial oversight, as it is the only entity charged with looking at the entire picture of the charter school—it’s financial, organizational, and academic operations—and verifying that the school is meeting all of its federal obligations. Required reports from the charter school, along with the annual audit, often serve as evidence that this is the case.

Authorizers also have the direct ability to hold charter schools accountable for their use of federal funds and compliance with all federal obligations, particularly through actions such as revocation or non-renewal. This is a unique and powerful oversight responsibility that can be exercised if needed.


Fed Policy 104 Side Bar BlueHow an Authorizer Provides Supplemental, Charter-based Oversight of Federal Funds

The authorizer’s primary task is to determine if the charter school is using federal funds and fulfilling federal requirements in full compliance with its charter agreement and charter law. The goal is not to duplicate the role of other entities tasked with financial oversight, but rather to provide that supplemental layer of contractual oversight that is unique to charter schools. Different authorizers and charter schools will take different approaches to fulfilling this responsibility. To make a determination of compliance the authorizer will seek to answer three core questions:

  • Is the charter school receiving the right amount and types of federal funds?
  • Is the charter school using the federal funds for the right purpose?
  • Is the charter school meeting all requirements for the use of those funds, including those set by the entity tasked with overseeing those federal funds?

To answer these questions an authorizer needs to identify (1) what federal funds a charter school receives; (2) what responsibilities those funds create; and (3) who oversees those funds and how. The more coordination there is between authorizers, charter schools, and other government agencies the easier this is to achieve (and the less duplication there is for all parties).

Identifying Funds and Responsibility

The state, and sometimes the local school district and/or charter school, identifies what federal funds the school should be receiving and, consistent with federal law and guidance, the responsibilities the charter school has for receiving and using these funds. Charter schools often play an active role in this process even if they are not always legally obligated to do so. The mix of funds that the charter schools receive will vary considerably from state to state and from school to school, with a significant factor being the charter school’s LEA status.

  • The most common sources of federal funds received by charter schools include: Title I funds to support low-income students; Title II funds to support professional development; Title III, VI, VII, and IX funds to support special populations; IDEA funds for special education; and Title IV grant funds through the Expanding Opportunity through Quality Charter Schools program.
  • A charter school may be responsible for fulfilling a federal requirement that stems from a funding stream even if it is not a recipient of that funding stream. These responsibilities should be identified as well. Often the state, as the official recipient of federal funds, must provide assurances that all public schools in its jurisdiction (even those that do not receive those federal funds) will comply with the requirements associated with that funding stream as a condition for the state to receive any of the federal funds.

Identifying Lines of Oversight and Reporting Requirements

The charter school, sometimes assisted by the SEA, is responsible for identifying what agencies have an oversight role for the federal funds it receives and meeting its reporting responsibilities to those agencies.

  • A charter school will likely have to report to: The LEA on use of some Title I and Title II funds; the SEA on use of some Title I, Title II, Title III, Title VII, and Title IX funds and compliance, as well as Charter School Program grants through Title IV; and the US Department of Education on the use of IDEA funds and other areas of federal compliance. This is not meant to be an exhaustive list—there are many situations where a charter school may interact with a different public oversight entity—but is suggestive of the more common federal financial oversight relationships in many states.

Every public entity has a responsibility to use federal funds appropriately. Working together the federal government, the state, LEAs, authorizers, and charter schools can ensure that the necessary oversight is in place to see that this happens.