CHARTER SCHOOLS -- public schools that have been exempted from selected state and local regulations -- are changing the competitive landscape of American elementary, middle and high schools. Some have had a rocky track record; some have been plagued by mismanagement and poor performance. But overall, the exchange of greater autonomy for greater accountability has worked. Those that have failed to perform have been shut down.

In Los Angeles, which has more charter schools than anywhere in the nation, charters are the key to raising the performance of all public schools. And they offer a lesson that can be applied elsewhere.

Consider the stark reality of the Los Angeles Unified School District: Of the more than 700,000 students in the nation's second-largest district, only 44 percent graduate in four years. For Hispanic students, that number drops to 41 percent.

Now look at the graduation rates of high-performing charter schools, which usually replace lower-performing public ones: Green Dot Public Schools, which operates 12 charter schools in Los Angeles, has an 80 percent graduation rate. Of those students, nearly all go on to college, and two-thirds attend four-year universities. In the next five years, Green Dot will expand to serve a remarkable 8 percent of all high school students in Los Angeles.

KIPP is another charter school operator that has had similar success. In January, our foundation gave it $12 million to open four schools in Los Angeles. Its students attend school from 7:30 a.m. to 5 p.m. daily; they attend school every other Saturday; they attend school during the summer; and they make a commitment to learn. More than 80 percent of KIPP alumni nationwide are attending college.

But what is it that makes these schools work when so many other models have failed? Since 2000, our foundation has sought the answer by closely tracking the progress of the $90 million we have invested in public charter schools nationwide.

What we have learned is this: Successful charter schools across the country have five key ingredients in common that enable them to improve student achievement.

Above all, successful charters keenly focus on getting students to achieve to high standards. They don't get distracted by issues like what color to paint the walls, and they don't play blame games, which happens in many urban districts. Instead, they offer a rigorous curriculum, assess student progress frequently and regularly use these data to improve instruction.

Second, "principals" in successful charters are not just effective instructional leaders or master teachers who work closely with their teachers to improve instruction and learning. They also are effective managers of complex school budgets. And unlike many traditional principals, charter principals are empowered to decide whom to hire, whom to fire and how to spend dollars to best meet student needs.

Third, although charter schools still report to a "central office," these offices look quite different from those in traditional school districts. They have minimal staff and rely on the best research-based practices and technology to funnel all available dollars to the classroom. Green Dot, for example, has only two central office staff for every school. The ratio for Los Angeles Unified is 7 to 1.

Fourth, to meet their students' academic needs, successful charters use research-based practices that have been proved to be successful in educating kids. These include: creating smaller schools, offering double blocks of math or reading, extending the school day, enforcing a strict dress code.

Finally, successful charters hold school leaders accountable for student results. The bottom line: Students perform or the schools are closed.

The power of charter schools is that as their success grows and their numbers swell, market forces will pressure neighboring district public schools to improve. If public schools have to compete for students, they will be forced to look to charters as a model of what is working.

Those of us who come from the world of business understand what is at risk if we do not dramatically improve our public schools. Our economy, our standard of living and our democracy could be jeopardized in a global economy in which education has become not the great equalizer but the competitive advantage. Our students need every advantage we can provide them. And public charter schools have the competitive edge.

Eli Broad is the founder of KB Home and SunAmerica; he and his wife created the $2.5 billion Broad Foundations to advance entrepreneurship for the public good in education, science and art.