Charter schools are not public schools, but they aren't exactly private schools either. Like public schools, they're free to attend for students within the school district, and they're typically funded by taxpayers. Like private schools, they can set their own rules for admission and choose which students they'll accept -- provided the schools follow all laws that forbid discrimination, of course.
The exact rules governing the operation and funding of charter schools vary from state to state. While there are federal laws in the U.S. that are related to charter schools (including, in part, the No Child Left Behind Act), there isn't one that determines their specific operation. State law sets the rules for charter schools within that state and determines which of the three primary types of authorizing bodies govern charter schools within that state: the state board of education, local boards of education or a separate authorizing body independent from the board of education. Forty states, plus Washington, D.C. have laws allowing the creation of charter schools [source: Center for Education Reform].
To create a charter school, a group first must apply to an authorizing body. Groups might include a cluster of parents who have formed a non-profit organization, a university, or, in states which allow it, a for-profit organization. The group's plan for the charter school must meet the criteria set by the authorizing body, which vary from state to state or even from school district to school district. If the plan is approved, the authorizing body issues a charter. The charter is only valid for a limited period of time -- typically three to five years -- which allows the school's performance to be reviewed periodically when it's time for charter renewal. A struggling school might have its charter renewed for only a one-year period so the authorizing body can look for evidence of a turnaround.
Next, we'll talk about how charter schools are funded.