A state legislature creates a charter law, which gives specific authorizers, such as public school districts and universities, the right to grant charters to foundations, community organizations, or other groups. The charter is a contract between the group that wants to operate a school and the authorizing organization; it details the school's mission, the student population the school will serve, and the ways the school will measure performance, among other things. Once a group earns a charter, that group can either manage its own school programs or contract with another organization to manage the school programs.
There are several similarities between a charter school and a traditional public school. Both are open to all students and funded by public dollars. As it does with failing traditional public schools, the city has the right to close a poorly performing charter school.