A new Utah law will drastically limit charter school expansion while the state conducts a study to see if charter funding formulas needs to be changed.

The state also will examine what should be done in the future to accommodate the booming number of charter schools.

The law, part of an education funding bill passed during the 2006 legislative session, limits approvals to five new charter schools each year, starting in the fall of 2007, and a combined maximum limit of 5,000 new charter students.

The bill funds a $150,000 six-month study to evaluate the services state agencies provide to charter schools as well as the schools' operating costs. It will identify needs and evaluate charter schools' financial conditions.

John Broberg, state charter director, said the new law is a blow to the more than 25 schools that have either applied or intend to apply for a charter for fall 2007.

Charter schools are free public schools that usually have a specific emphasis and are often run by parents.

So far, the charter board has approved two schools for the 2007-08 school year. That means more than 2 dozen schools will compete for the three remaining slots over the next six months.

In the past, Broberg said, the board has approved about 65 percent of the applications it has received.

"All of us were a bit concerned that we are moving a little too fast — my office has been overwhelmed and we are happy for the breather," Broberg said. "But on the other hand, there are so many schools who want to be chartered and so few spots that it puts a terrific amount of pressure on us."

Sen. Howard Stephenson, R-Draper, and co-chairman of the Education Appropriation Committee, said the cap would only be for the the 2007-08 school year. But charter leaders are concerned it will be longer since there is no specific language in the bill that indicates the cap will be lifted after that year.

"In one year we can approve five schools — there is no language that says we can do more after that year," Broberg said.

However, Stephenson said the cap is a step up from the moratorium lawmakers had originally proposed to implement while the study was taking place.

During the study, analysts will look at many things, including funding equity between charter schools and district schools.

Earlier this year, the Utah Foundation reported an $800 gap per student in charter school funding as opposed to traditional students. During the legislative session, Stephenson said the state voted to change the funding formula to narrow that gap to a difference of $400.

The study will look at what else needs to be done and how to go about it.