Educational Service Providers

Michigan law permits charter school boards to contract with service providers/management companies for various school staffing and support functions, which may include facility management, personnel management, payroll and accounting, curriculum development, and professional development services for staff and teachers. Roughly four out of five charter schools in Michigan have contracted with a service provider.

Each charter school/service provider agreement is unique. Some charter school boards contract for only one or two services, such as human resources or accounting, whereas others choose to contract for all day-to-day staff functions. The variation in service provider/management company arrangements is broad and difficult to quantify. Some service providers/management companies work with only one charter school, while others contract with multiple charter schools in Michigan and across the country. Some act in only a limited capacity, while others offer complete “turnkey” operations. This widely varied approach to charter school contracting has allowed for the creation of a diverse service provider/management company marketplace in Michigan.

Service providers/management companies are accountable to the non-profit charter school boards that hire them. The boards are responsible for setting policy, directing operational and academic performance, and ensuring fiscal stability. Regardless of the type or level of support for which it is contracted, each service provider/management company operates under the direction of the charter school board.

Many service provider/management company spending aspects are already reported through their schools’ data submissions to the state. Michigan’s Center for Educational Performance and Information (CEPI) maintains academic, personnel, and financial information about each service provider-managed school, just as it does for all other schools.

Charter schools are required to report salaries of staff who work at the school, even if they are employed by a 3rd party. Additionally, service providers/management companies are vendors hired and overseen by the charter school board through a performance agreement, often referred to as a management contract.

No current statutes specify requirements for contracts between PSA boards and the management companies they hire. However, best practice dictates that management contracts should contain specific performance targets aligned to the goals (and other provisions) in the charter contract. Charter school boards should hold all vendors, including service providers/management companies, accountable for the services they provide.