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The 5% Rule and The 5 Year Rule: How to Prudently Grow a High-Performing Charter District

Note: Neerav Kingsland, chief strategy officer for New Schools for New Orleans, is guest posting this week.

An Open Letter to Urban Superintendents in the United States of America Part IV

The 5% Rule and The 5 Year Rule: How to Prudently Grow a High-Performing Charter District

Superintendents, in recommending that you become Relinquishers and transition your school systems to charter districts, I hope to recommend great change with a sufficient amount of humility--especially given the potential pitfalls discussed yesterday. So let me introduce you to two rules that may mitigate the many risks in developing charter school districts.

The 5% Rule

The rule is simple. It states: urban school districts with early stage charter sectors should charter roughly 5 percent of their systems a year--ideally phasing out the bottom 5 percent of schools in the system at the same time. Chartering at a far greater pace, say 20-30 percent a year, greatly increases risk of failure by putting too much stress on government regulators, charter operators, and talent pipelines.

As it happens, in New Orleans we received a federal Investing in Innovation (i3) grant to execute the 5% Rule over the next five years. During this period, we aim to replace the bottom 25 percent of schools in New Orleans with high-performing charter schools.

What would this look like in other cities? See below:

City Chart 1.20.jpg

So for a mid-size school district, like Newark, you need to charter 3.7 schools a year to meet the 5% Rule. For a larger urban district, like Memphis, you need to charter 10.45 schools a year. And for one of the largest districts in the nation, Chicago, you need to charter 33.75 schools a year. All in all, the 5% Rule appears to be doable--and perhaps even somewhat conservative in high-quality but smaller charter markets such as Newark.

In summary: Given all the potential pitfalls in growing a charter district, the 5% Rule sets limits on the annual pace of early stage charter market growth.

The 5 Year Rule

The 5 Year Rule is as simple as the 5% Rule. It states: the 5% Rule should be executed in 5 year increments. The 5 Year Rule requires Relinquishers to analyze the progress of the power transfer before marshaling on. At the end of five years, if the charter sector is underperforming the traditional system, then put the brakes on market growth. In subsequent years, grow your top charter performers to replace your low charter performers until quality is more consistent, then proceed onward. Washington, DC would have benefited greatly from The 5 Year Rule.

In summary: The 5 Year Rule triggers an automatic market share cap if the charter sector underperforms the traditional sector.

Today's Chart of the Day

NOLA charter share 1.20.jpg

The above chart details New Orleans charter growth from 2007 to 2011--a more stable period than the first wave of chartering that took place right after Hurricane Katrina. Charter growth averaged 5.6 percent over this five year period. Note that we expect this trend to continue for at least the next three years.

The five year period from 2007 to 2011 show a city roughly abiding by both The 5% Rule and The 5 Year Rule. You'll also notice that the 2008-2012 period will be closer to 7 percent growth. As a charter district further develops, growth will likely accelerate as capacity builds.

So would-be Relinquishers, perhaps the transition could look like this:

    • Phase I: 5% a year for 5 years (25% cumulative market share)
    • Phase II: 7% a year for 5 years (60% cumulative market share)
    • Phase III: 10% a year for 3 years (90% cumulative market share)

Or something like that.

But the point is this: charter districts can be developed in 10-15 years. That could be the work of you and one successor.

This is feasible, especially if you happen to be a thoughtful and visionary superintendent.

Part V--the last section of the letter--tomorrow.

Take care,

Neerav

--Neerav Kingsland

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