An important review of Minnesota charter schools by the state auditor found positive news on finances and mixed results on student performance. But a third area -- oversight and monitoring -- rightly raised the key concerns and dominated the recommendations made in the report released this week.

Financially, about 25 percent of charter schools were struggling in 2002. Last year, about 13 percent were in operating debt, less than the percentage of traditional school districts in trouble. The numbers suggest that budgeting reforms made in previous legislation are working.

Academically, charters posted lower test scores overall than traditional schools. But when schools with similar poverty, minority and mobility rates were compared, district and charter schools performed at the same levels.

In the areas of governance, monitoring and accountability, however, the charter system needs work. Under current law, a charter school can be sponsored by a school district, a college or university or a nonprofit. Auditors called the oversight provided by those sponsors and the state "unclear and often quite complicated.''

The report suggests smart changes in law that would clarify the roles of the Minnesota Department of Education and the sponsors. It suggests that the state approve sponsors, then give the sponsors authority to approve the schools. It also recommends that the state establish standards and provide training for sponsors.

Auditors sent surveys to all state charters and conducted more than a dozen visits. They found that the performance of charter sponsors is uneven. The best meet regularly with their schools, offer advice and guidance and require regular reporting. But in some of the worst examples, sponsors had no clue about what they were supposed to do and had little contact with their schools. In another case, a sponsoring organization was unaware that its school failed to meet adequate yearly progress standards required by law.

Yet, as lawmakers consider changes, they should be careful about too much regulation. Imposing too many restrictions would undermine one of the basics of the charter philosophy -- that the schools operate independently of the traditional public school system and are given more flexibility to experiment with different educational models. The Legislature must nurture new approaches to instruction while holding charters accountable to academic, financial and operational standards.

There is broad agreement about making sensible changes to improve oversight. Advocates such at the Minnesota Association of Charter Schools and the Center for School change have made similar recommendations. Some were included in the 2008 education policy bill that was developed by the House and Senate, but was vetoed by the governor. And the Department of Education is generally supportive of the changes.

Now armed with the auditor's confirmation, legislators should return to the issue during the 2008-09 session and pass the legislation needed to strengthen charter school accountability.