Expert Advice on Accessing and Funding Charter School Facilities

In this CHARTER EDtalk, we sat down with Mike Morely, Founder and Principal at American Charter Development to talk about charter school facilities. Mike shares his years of experience in working with charter schools and supporting charter school success. Learn some insights on how to know when you’re ready for a new facility, what your funding options are, some pitfalls to avoid, and how to set yourself up for success whether building from the ground up or renovating your charter school facility.

Janet Johnson (JJ): Good day. This is Janet Johnson with Charter School Capital at the National Charter School Convention in Austin, Texas, and we’re honored today to be talking with Mike Morely with is ACD, who is a developer of charter schools.
Mike Morely (MM): That’s correct, yes.
JJ: John Dahlberg from Charter School Capital, and we’re going to have a conversation about charter school facilities. Take it away gents.
Jon Dahlberg (JD): Thank you. Hey Mike, thanks for making the time.
MM: My pleasure.

Why Charter Schools?

JD: We’re doing a campaign, We Love Charter Schools, can you share what you love about charter schools in less than 20 minutes.
MM: That may be hard, but I can sure try. You may know, in fact I know you know that we’ve got a large family. I come from 13 kids and have nine children of my own and so we’re into kids, and so we’re into whatever is good for kids. Several years ago I was in the legislature in Utah and was introduced to charter schools, didn’t really know much about them. A wise senator told me, as I was looking at that in terms of policy decision, that if parents can vote with their feet we’re going have a lot less administrative and regulatory needs for schools.
I got into charter schools, started looking at them, seeing that they were doing more with less, and in many cases outperforming schools that were run by districts with seemingly unlimited funds. Not obviously that, it is something that is debatable, but certainly on less funds that are being provided for district schools and being successful. We fell in love with the choice in education. We started a couple charter schools, started doing facilities for charter schools, and they were accepted well and been successful. My children, at least those that were growing up during the years that we were in charters schools and been in them, and we’ve been really pleased with the outcome. We love philosophically the choice option and we also are committed to providing that opportunity for others.

How to Know When You’re Ready for a New Facility

JD: That’s great. Well, so let’s take that to our listeners here. How do you know when a school is ready for a new facility?
MM: Well, we have been in the business of trying to help schools get facilities from the beginning, and we initially started back in the early 2000s trying to figure out how to bring construction and development funds into the charter school. Because obviously, it’s not available through state funding, they get funded based on the kids that they have in the seats. It’s kind of cart before the horse because they don’t have any kids in the seats when they’re starting out. We have funded schools from inception or even before inception and help them get their charters, help them establish a board, help them move through the process and having a school, a brand new school, ready for them to start in the first year.
Not all schools are able to do that, and it may not even be wise for all schools to do that. It really has a lot to do with the demand in the area, what the curriculum is going to be. I mean we’ve helped schools from project-based, sports, STEM and STEAM. We’ve helped classical education schools, and there are schools that are focused on a particular niche that may not be as widely accepted as maybe some other schools.
We look at the experience of a board. We like to see a wide diversity of experience on a board. We like to see the somebody that has accounting experience, marketing experience, legal experience business experience, school experience, but usually, that’s not the problem. Usually, most of them have good education experience, but we like to see a really diversified board with experts in many areas so that they can pull from that. We like to see some experience in the charter school world now. In the beginning not many had it, but now there’s usually good experience to be had on a board from the charter world. If we’ve got that, and we are comfortable with their curriculum, and their focus, and their direction, we may take them on right out of the chute.
If not, we like to see them have a year or two in maybe a rental facility, and it’s hard sometimes to find. But they may have to start out a little small and rent some space from a church, or some other local facility that’s not going to be maybe the best situation for the first year or two, but to build a little bit of a track record to see if they’re going to be successful. It really is ultimately a business and ultimately it’s pretty risky. We’ve had a few of those, as you know, that hasn’t been quite as stellar and so we’re trying to make sure that we don’t repeat those that are not quite as well prepared as others.
JD: Well, I think to the point about the risk, I think that proof of concept starting in any space where you can get your school open and get the kids coming and prove your operation of success and your academic success, that momentum builds and builds and creates opportunity in the future.
MM: It does.

Avoiding Mistakes

JD: When you talk about the business aspect of it, right? The education is not hard. What are some of the avoidable mistakes that a school should be mindful of as they’re building and growing in to their next facility project?
MM: You know, to be honest, most of the mistakes that we have seen have been very preventable and most of them have been friction within the board, within the founding boards. When the schools have the most trouble it’s typically when the board itself gets heavily in two separate directions and end up in a collision course with each other, and end up destroying what they created or trying to change direction from what was originally envisioned. Because of that they lose half the parents, they pick sides, and it becomes a disaster. Cohesiveness on board is really key and to avoid that they need good board training, they need to recognize what a board does, how a board operates and the way that a board should function with regard to the administration, and the product that they’re proving. They’re really providing an education product, and they need to be on board with that and need to understand how a board effectively is to run, so that’s been our biggest problem.
There are mistakes. They get into a building that doesn’t meet their needs, they get into a building that they didn’t really clearly think out what their program was or growth options. They could then be unable to grow in that position in that particular building and then be tied into either a long-term lease, or they purchased the building, and it isn’t suitable for their current needs or expanding needs. It’s really important that you really sit down with somebody that understands and lay out a long-term vision of the school.
Have the board be on board with that decision as well. Make sure that everybody is kind of firing with the same cylinders and moving in the right direction. Recognizing that, “Hey, we want to be a 400-student school forever. We want to grow to a K-12, or we’re going to stay at K-6, or we want to grow to 600.” Come up with what your ultimate vision is because if you’re in a place that can’t be expanded and you’re tapped out at 200 kids and you got a long-term commitment and you want to grow, you’ve contract yourself. Those are some concerns that need some-
JD: I think the advice that you gave to our audience about making sure that your building and your charter are in sync is really, really sound advice here. The building is going to create the culture of your school. We do speak with leaders who are very intentional, and we also speak with leaders who have that aha moment that goes, “Oh, a stem school but I don’t have a science lab.” That’s a good …
MM: A sports school and don’t have a gym or a …
JD: Right.
MM: … or a performing arts school and no place to perform. Yeah, those are a lot of the issues.
JD: If you’ve got a board that’s cast division and everybody’s on board, what are some of the guidelines and guiding principles that schools should pay attention to when they’re thinking about that next facility?
MM: Well, if everybody’s locked stamp, then I think it’s important to maybe look at what’s the most economical and formal way to provide those facilities. It always seems to be the vision of every school to bond. That’s the goal. We just come out of a situation not too long ago where the school was ready to bond, they were so excited about it. They were saying, “Hey the cost of this building is too high, we can’t really bond because we’re going to be paying $106,000 a month for our facility.” I said, “Whoa, what are you paying for it now?” In a lease scenario, they were paying $65,000 and they were expanding with the bond. They were going to add on a gymnasium and some other classroom, but we’d already priced that out, and under the lease scenario they were going to be at $85,000 a month with total expansion taken into account. I said, “Why are you so anxious to bond and pay $20,000 more a month for a facility that you can control and have long-term security for $85,000.” That was the A-ha moment.
“But their interest rate is lower than your PACT rate.” Okay, let’s look at that, what that means. Interest rates are easy to talk, but they were adding on several million dollars in reserves, they had the cost of issuance, they had attorneys fees that were building up this huge amount that they would have to bond and pay interest on. Then it was advertised rather than just an interest only, so by the time you take all that into account the interest rate of the bond had very little to do with the cost of the facility on a monthly basis. Be careful that you’re not misled by some arbitrary interest rate or some lost leader kind of thing, and becoming so consumed with owning the facility.
Ownership is great and there are some times when it is a good decision, but ultimately if you own it you really own it. You’re responsible for all of the future expansions, you’re responsible for whatever taxes or insurance or other things, and you may have those kinds of things in the lease agreement as well, but you’re amortizing the facility and the ultimate goal is to own it, and if it’s a 30-year bond you own it just in time to completely refurbish it and start over. I’m not saying ownership is not a good thing, but it’s not the only way to do it.
JD: What’s in the middle? There’s the bond, which historically meets the need of about 12% of the charter schools since the exception. Then we talk about the lease. You’re in the market, are there other options besides the lease or beside a bond that you’re seeing schools take advantage of right now?
MM: Well, you know, there are organizations like the CSC that have purchased facilities and leveled the lease market and created an option for schools. That we have worked together on a couple of schools where you would’ve been able to purchase the school and put them in a better position than they would’ve been in a bond situation. It’s an interesting dynamic because right now the cost of constructions is going up.
JD: And so is the cost of money.
MM: And so is the cost of money, which is hard. You got the cost of construction, cost of land skyrocketing in this market which is … The fed just raised the rates again last week, and so we’ve got interest rates going up. And they’re indicating that there will probably a couple more bumps, in trying to cool inflation. In a market where cost and money are going up even though we are seeing increases in education funding that are a much lower rate, you may get a two or three percent bump each year, while we’re seeing double digit increases in funding cost and in construction cost. We are in a kind of a paralysis market right now, and it is hard. We’re struggling to try and balance those things and make sure that schools are getting affordable facilities for themselves. It’s a bit of a challenge.
JJ: It’s a dance.
MM: It is.
JD: It’s a dance.
MM: We’re in that dance, and you’re in that dance, and we’re all trying to …
JD: It’s a fun place to be.
MM: It is.
JD: It’s work, because if it was easy they would call it a PTO.
MM: A while back it was kind of easy you know because the cost were fair. Right now, we’ve talked about this multiple times, there is a point where the school can’t pay any more than maybe 20% max of their gross revenue. If the cost of facilities goes beyond that then it really does make it difficult, if not impossible, for them to go for owning. There are places in the country like that.
JJ: But you’re here to help.
MM: We’re here to do what we can.
JJ: Right, yeah. That’s right. That’s great. Well, we’re very grateful for your time today Mike, and John thank you for facilitating this discussion and I know you guys speak a lot on the road so I’m sure that our viewers will see you again soon. Thanks for your time.
MM: You’re welcome. My pleasure, thank you for inviting me.

How To Avoid The Top Financial Mistakes Charter Schools Make

If you missed this information-packed webinar on how to avoid the top mistakes charter schools make, don’t despair! We’ve got the recording for you to watch at your convenience. In this webinar, we were joined by some phenomenal charter school leaders from Desert Star Academy, SALTech, and Wayne Preparatory – and they generously and bravely shared the mistakes they’ve made as charter leaders, and of course, how they solved those problems for the future.
Watch the video recording to understand the five mistakes and walk away armed with the tools you’ll need to avoid them.
Our esteemed panelists:
Tricia Blum Head of Business Consulting, Charter School Capital

Margie Montgomery Founder, Desert Star Academy

Sharon Thompson, Chairman of the Board, Wayne Academy

Michael LaRoche Founder/Executive Director, SALTech

Watch the video of the live presentation, here.

And, to download a printable PDF datasheet, click here.

The Charter Leader’s Definitive Guide to Budgeting Best Practices
Over the past decade, we’ve reviewed thousands of charter school budgets and helped guide countless schools through their charter school financing processes. Year after year, we see many charter schools make the same mistakes when budgeting for the academic year. To help you achieve your goals, we’ve put together this informative and thorough guide to share best practices and call out common pitfalls to avoid.
It covers:
• Planning for long-term financial health
• Implementing best practices for achieving buy-in and setting internal controls
• Understanding key financial metrics to watch
• Utilizing tips on cashflow planning and more!
Download it now and get the tools to be more strategic about your budgeting practices!
GET THE RESOURCE

Navigating the Most Complex Challenge Facing Charter Schools Today

Charter school facilities financing represents the single greatest challenge facing educational leaders across the United States. While your expertise lies in education—not real estate or finance—securing the right facility at the right price is critical to your school’s success and your students’ futures.

This comprehensive guide breaks down everything you need to know about facilities financing, from initial planning through final approval, helping you make informed decisions that align with both your educational mission and financial realities.

Why Charter School Facilities Financing Is So Challenging

Unlike traditional public schools that receive taxpayer-funded facilities, charter schools must navigate the complex world of private real estate markets and commercial financing. This fundamental difference creates unique challenges that can distract leadership teams from their core mission of educating students.

The facilities challenge extends beyond just finding space—it involves balancing educational requirements, aesthetic considerations, budget constraints, and long-term strategic planning while maintaining focus on academic excellence.

Critical Pitfalls That Derail Charter School Facilities Projects

Pitfall #1: Not Understanding Your True Budget

Before exploring any facility options, you must have a clear understanding of your financial capacity. This means conducting a thorough analysis of your revenue streams and existing expenses to determine realistic parameters for facility investments.

Essential Budget Analysis Steps:

Calculate current monthly operating expenses
Project future enrollment and revenue growth
Determine maximum affordable monthly facility payments
Account for one-time costs like moving, renovations, and equipment
Maintain adequate cash reserves for operational stability

Understanding your budget limitations early prevents costly mistakes and ensures you focus on realistic facility options that won’t compromise your educational programs.

Pitfall #2: Inadequate Planning Timelines

Facility projects require extensive advance planning—typically a minimum of 12 months for any significant expansion or relocation. The complexity of these undertakings affects your entire organization, from administrative staff to teachers and students.

Why Extended Planning Is Essential:

Legal and regulatory approval processes take time
Renovation and construction projects often face delays
Staff and student transitions require careful coordination
Furniture, equipment, and technology installations need scheduling
Program continuity must be maintained throughout transitions

Schools that underestimate these timelines often face rushed decisions, cost overruns, and disruptions to their educational programs.

The Strategic Triangle: Requirements, Aesthetics, and Budget

Successful charter school facilities decisions require balancing three critical factors that often compete with each other.

Educational Requirements: Mission-Critical Needs

Your facility must support your specific educational approach and student population. Different school models have vastly different space requirements.

Questions to Consider:

What specialized spaces does your educational program require?
Do you need state-of-the-art science laboratories for a STEM focus?
Does your arts program require performance spaces with specific acoustics?
Are you serving students with special needs requiring specialized accommodations?
Do you offer dropout recovery programs needing flexible classroom configurations?

Aesthetic Considerations: The Enrollment Impact

Your facility’s appearance directly affects enrollment, which drives the operating revenue that funds your academic programs. In competitive markets, aesthetics can make or break enrollment success.

Aesthetic Impact Factors:

First impressions for prospective families during tours
Competitive landscape—how does your facility compare to alternatives?
Community expectations and demographics
Impact on student pride and school culture
Long-term brand positioning in your market

Budget Reality: What You Can Actually Afford

Financial sustainability must guide all facility decisions. Even the most educationally perfect facility becomes a liability if it strains your budget beyond sustainable limits.

Pre-Qualification Process: Financial institutions evaluate multiple factors when determining your borrowing capacity:

Existing cash reserves and financial stability
Current and projected operating revenue
Charter renewal status and term length
Public subsidies and private funding sources
Grant opportunities and foundation support

Comprehensive Guide to Charter School Financing Options

Option 1: Cash Financing

Pros:

No interest payments or ongoing debt obligations
Complete ownership and control over the property
No collateral requirements or underwriting processes
Faster transaction completion

Cons:

Depletes cash reserves that could fund educational programs
Limits financial flexibility for unexpected needs
Opportunity cost—funds could generate returns elsewhere
Not feasible for most charter schools

Best For: Well-established schools with substantial reserves considering smaller facility investments.

Option 2: Investment Bank Financing

Overview: Traditional bank loans for charter school facilities typically require significant equity contributions and extensive underwriting processes.

Requirements:

Typically 20-40% equity contribution from the school
Demonstrated financial stability and enrollment trends
Strong leadership team with proven track record
Comprehensive business plan and financial projections

Pros:

Lower transaction costs compared to bond financing
More flexible terms than bond structures
Builds equity ownership over time

Cons:

Substantial upfront cash requirement
Extensive underwriting and approval process
Personal guarantees may be required
Limited availability for newer schools

Best For: Mature schools with substantial cash reserves undertaking major facility projects ($7+ million).

Option 3: Bond Financing

Reality Check: While many charter schools aspire to bond financing, only 12% of charter schools nationwide actually secure bond market funding. The remaining 88% rely on alternative financing methods.

Bond Financing Process:

Extremely thorough underwriting process
Hundreds of thousands in legal fees per transaction
Requires maintaining cash reserves for taxes and bondholder security
Typically 30-year terms with fixed costs

Pros:

No major upfront cash investment required
Potentially attractive interest rates for large projects
Fixed long-term costs provide budget predictability

Cons:

Complex, time-consuming approval process
Substantial legal and transaction costs
Ongoing compliance and reporting requirements
Reserved for larger transactions ($10+ million minimum)
Requires continued interest payments during cash accumulation period

Best For: Large, stable schools ready for permanent “forever home” facilities with no expansion plans.

Option 4: Long-Term Lease Financing

Overview: Long-term leases offer many benefits of ownership without the capital requirements and risks of property ownership.

Typical Structure:

20-40 year lease terms available
Minimal upfront cash requirements
School maintains operational control
Landlord retains property ownership and maintenance responsibilities

Pros:

Low initial capital requirements
Predictable monthly costs over lease term
Less complex underwriting than bonds or bank loans
Allows financing for furniture and equipment
Future operating revenues not held as collateral
Available to schools at various maturity stages

Cons:

No equity building over time
Potential rent escalations based on lease terms
Less control over major property modifications

Best For: Schools at any stage seeking facility control with minimal upfront investment and predictable costs.

Four Critical Factors for Financing Approval

1. Sustainable Enrollment Patterns

What Lenders Evaluate:

Current enrollment compared to charter capacity
Historical enrollment trends and stability
Waiting list size and demographic alignment
Local market demand for charter options
Competition analysis and market positioning

Red Flags for Lenders:

Enrollment significantly below projections
Declining enrollment trends over multiple years
Waiting lists that don’t support expansion plans
Oversaturated local charter market

2. Strong Leadership Team

Leadership Factors Lenders Consider:

Previous experience successfully operating schools
Educational leadership credentials and track record
Financial management experience
Board composition and governance experience
Organizational management depth

How to Strengthen Your Leadership Profile:

Document previous successes and achievements
Highlight relevant experience in education and management
Demonstrate board expertise and engagement
Show succession planning and organizational depth

3. Sound Financial Management

Financial Health Indicators:

Debt service coverage ratios above minimum thresholds
Operating margins that support debt payments
Facility costs representing less than 20% of operating revenue
Strong internal financial controls and reporting
Appropriate cash reserves for operational stability

Financial Documentation Requirements:

Multi-year audited financial statements
Current year budget and financial projections
Cash flow analysis and debt service projections
Enrollment and revenue modeling
Expense management and cost control evidence

4. Excellent Governance and Authorizer Relations

Governance Evaluation Criteria:

Board composition, experience, and engagement
Compliance with charter requirements and state regulations
Financial oversight and audit processes
Academic performance and accountability measures
Community relations and stakeholder engagement

Authorizer Relationship Assessment:

Charter renewal history and prospects
Compliance with authorizer requirements
Academic performance relative to authorizer expectations
Financial management and reporting quality
Communication and collaboration effectiveness

Strategic Planning for Long-Term Success

Aligning Facilities with Educational Vision

Your facility should support and enhance your educational approach rather than constrain it. Consider how different spaces can:

Support innovative teaching methodologies
Accommodate diverse learning styles and needs
Enable collaborative and project-based learning
Provide flexibility for program evolution
Create positive school culture and community

Financial Sustainability Beyond Initial Financing

Ongoing Facility Considerations:

Maintenance and repair costs over time
Utility expenses and efficiency improvements
Technology infrastructure and upgrades
ADA compliance and accessibility requirements
Future expansion or modification needs

Building Community Support

Strong community relationships can provide additional resources and support for facility initiatives:

Parent and family volunteer assistance
Local business partnerships and support
Community foundation grants and donations
Municipal cooperation and assistance
Neighborhood integration and support

Next Steps: Moving from Planning to Action

Immediate Action Items

Complete Comprehensive Budget Analysis: Determine your realistic facility investment capacity
Assess Current and Future Educational Needs: Define space requirements that support your mission
Evaluate Market Conditions: Research available properties and competitive landscape
Strengthen Financial Position: Build cash reserves and improve operational efficiency
Engage Professional Support: Connect with experienced charter school facilities specialists

Building Your Facilities Team

Successful facilities projects require expertise beyond your educational leadership team:

Commercial Real Estate Professionals familiar with educational requirements
Architecture and Construction Specialists experienced with charter schools
Financial Advisors knowledgeable about charter school financing options
Legal Counsel specializing in educational and real estate transactions
Project Management Support to coordinate complex timelines and processes

Conclusion: Making Informed Facilities Decisions

Charter school facilities financing doesn’t have to derail your educational mission. With proper planning, realistic budgeting, and the right financing approach for your school’s stage and circumstances, you can secure facilities that support excellent education while maintaining financial sustainability.

The key is starting early, understanding your options, and choosing financing approaches that align with your long-term educational and financial goals. Whether you’re a startup school seeking your first permanent home or an established school ready for expansion, the right facilities financing solution can enhance your ability to serve students and strengthen your community.

Ready to explore charter school facilities financing options? Our team specializes in helping charter schools navigate complex facilities decisions and secure financing that supports long-term educational success. Contact us to discuss your specific needs and explore solutions tailored to your school’s unique circumstances.

Editor’s Note: We understand that the planning and financing of any facility project are complex, time-consuming, and have the potential to distract your team from its core mission: serving your students. That’s why we wanted to sit down with the Founder and Executive Director of Desert Star Academy, Margie Montgomery, to get her insights and tips on planning for a charter school facility project. To help other charter leaders embark on their facility project, Margie generously shares what she’s learned and what she wished she knew before she started her facilities project—and what she’ll do now as she embarks on yet another!
We think it’s vital to keep tabs on the pulse of all things related to charter schools, including informational resources, and how to support charter school growth. We hope you find this—and any other blog post we write—both interesting and valuable. Below you will find the video and the transcript. Please read on to learn more.

Janet Johnson (JJ): Hello. I’m Janet Johnson with Charter School Capital and we’re honored today to be with a rising star in helping other people understand how to negotiate the charter school landscape, Margie Montgomery, who is the executive director and founder of Desert Star Academy in Arizona. And Tricia Blum, who is also with Charter School Capital and we’re just going to talk a little bit today about how facilities can trip you up and how you can be so much better as a result of negotiating your way through the morass Right?
Margie Montgomery (MM): Absolutely.
Tricia Blum (TB): So before we get there, I’d like to ask you a question that we’re asking all of our schools and thought leaders we’re talking to and that’s … We’re doing a campaign called We Love Charter Schools. You know that because you have socks that say that.
MM: Absolutely.
TB: Can you please tell us in two sentences or less why you love charter schools?
MM: It gives family and friends a choice of education. They can choose what charter school to go to and charter schools have a lot more flexibility than the district schools.
TB: I think that’s super interesting. Can you tell me how many days a week your students or scholars go to school?
MM: In Arizona, the charter school calendar is 144 days. We typically, as most charter schools in Arizona, go 144 days and it’s a four day work week. We go Monday through Thursday. Our hours are a little bit longer. We go an hour and a half longer than the other schools in our area but we get it done in four days.
TB: Your parents are really appreciative of that, right?
MM: They do love that. We’ve noticed it helps on attendance. It also helps with staff attendance because you have that Friday to do all of your business. You can schedule doctor’s appointments then, you can schedule whatever you need to do on Friday and still have a full weekend.
JJ: That’s awesome.
TB: I know. I’d forgotten about that. That’s why I was like, “Oh we have to talk about that.”
MM: It’s amazing. Yes, absolutely.

Consider Your Facility Constraints and Know the Rules for your Charter School Facility

TB: Okay so we’re going to talk, as we said, about facilities and you have been in what I would call hyper-growth mode, right? Four years, 460 students. Bang, bang, bang, bang. So you have a new building, tell me what were your expectations going into getting a new building?
MM: I didn’t have time for expectations. I was like get me a building. We had our first year of 67 kids and we were renting, literally, a strip mall. We had four different offices of a strip mall. And it was like, “I need help, I need help.” So we were talking to Charter School Capital from the beginning and the process is very long and it takes a little while to get off the ground so I was just … I need a building.
I had 50 scholars to one classroom and two teachers in that classroom and we literally were calling the fire department to say, “How many scholars can we put into a classroom? What is the capacity for one room?” And I found out that a child’s desk occupies a child. But if you put in a teacher’s desk or you put in other types of tables, it takes away from your square footage and you cannot have as many scholars in the room.
So my teachers were teaching from clipboards and on the board because we had no room for them or their desk. And we just had the scholars in the desks. And we did this for three months. For a whole entire quarter. And it was a challenge.
It was a challenge keeping the parents happy knowing that they were getting incredibly impatient. But in the end, Charter School Capital came through for us, they built us a fabulous building, beyond belief and made everybody incredibly happy.
TB: Yeah. Amazing, right?
MM: It was. And it still is.
TB: I think what you said is amazing too because what I’m hearing you say is look, I just needed a building, I could have done with anything, doesn’t matter, right? Just give me a building.
MM: I was. I was like I don’t need a Taj Mahal, I just need a building. I need walls and I need a building. But by the time it actually all rolled around, we were picking colors and we were doing landscaping and furniture and all this exciting stuff. And pretty soon I got the Taj Mahal.

Understand the Realities of the Process and Get Prepared

TB: What do you wish you knew before you started? Because like you said, I didn’t have time to think, I just needed a building.
MM: I wish I knew the process and the length of time that it truly takes and the planning involved and all of the construction aspects of the planning. Getting it through Charter School Capital, it had to be approved through this business and that business or the sections of the different companies.
I wish I had a better understanding of that. In fact, if anybody has a building, that should be one of the things that the client should go through, is this is the process and this is the time that it takes and this is what you need. Because they were always asking for financial this or that and this. And so I was literally jumping through hoops and I found myself not as prepared as I would have liked to have been.
TB: Right. And that’s because you have to have financials, there’s a plan that has to be agreed on with you and construction and then you have to get permits and you’re talking about all sorts of that kind of process, right? Is that what I’m understanding you say?
MM: I was a building principal and I ran the school and so the whole everything else from building to facilities was just … I had no idea about it. But it was a learning process and I would do it all over again.
TB: Well you’re getting ready to do it all over again.
MM: Absolutely.
TB: Right. We’re gonna add some more grades. She’s already facilities constrained. Right?
JJ: That’s great.
MM: Yes.
TB: So apparently if you build it they will come.
MM: They absolutely will come and that has been our story. We started with 64 scholars in 2014 and we right now have 437 and our cap is 475. So we are really constrained.
JJ: Well but congratulations on the success.
MM: Thank you so much.
JJ: You’re making a lot of families happy, aren’t you?
MM: We are. We have a lot of happy children.
JJ: Yes.

Make a plan with your builders: the details matter

TB: What would you have done differently? I know we talked a little bit about that but I have some ideas, like on the (furniture, fixtures, and equipment) FF&E, on the whiteboards and the lockers and paint colors … tell us about paint colors because that was a really funny, funny as in interesting, right? Because Margie had a very clear idea what paint color she wanted and the contractor had a very clear idea on what paint colors the contractor did not want. So I think that’s an interesting, again you have to negotiate that. The thing is why would you even think you have to negotiate that, right?
MM: You wouldn’t think so. But we came across that, absolutely. And so I think the next time I want to sit down with the builders and talk about a plan. Well, in education you have to have colors. I couldn’t live with just two colors. And so it was quite funny because I was talking to the contractor and to the superintendent and saying, “Well, if these are the only two colors that I have to pick from, this is what I’m picking. But I will tell you, as soon as you’re out of town, we’re going to repaint these walls and we’re gonna add color.”
And so it was a negotiation as far as alright, well if you have this can you live without that? And I was like yep, I can do that. So, we had brick on the outside of our building and it was like well we only need brick on half of the building so let’s take the other half of the building brick off and we added lockers because that was a commitment to the parents, to our community that we have lockers.
The year before when we were constrained in this building, before we had our facility, parents were like, “They have to carry their books around.” Some of these backpacks were heavier than these girls and you thought they were going to tip over.
Just have knowledge of the process and meet with the builders because the facilities people are out of state, they don’t know the community. Every community is different and unique. And if you’re going to be successful in the community, I think it’s really important as a leader of the community and leader of the school to listen to your community. Truly listen to them. Listen to the parents, listen to their concerns, listen to what they like.
The first thing that they do when they come in either one of our buildings is like, “Whoa.” And it’s the colors. We are not a white school, we are not an institution. Our elementary school is turquoise, and red, and yellow, and bright. And it’s all mixed up. It looks like blocks and it looks fun and exciting. Our middle school is apple, orange, and blueberry, literally. And it looks very techy. Very techy for that customer. And so we kind of looked at those scholars and the parents as our customers so we aim to please and it was really exciting. A lot of fun.
TB: Congratulations.
MM: Thank you.
TB: Now you’ve got a new building to do, are you going to do the same colors?
MM: Similar. Similar.

Working with Charter School Capital

TB: One last question, if you would, please tell me or tell us a little bit about your experience working with Charter School Capital.
MM: Amazing. Absolutely amazing. From everybody to Tricia to the COO, Brad, yes. I remember Brad.
TB: He did visit your school.
MM: And he saw all the colors.
TB: And he said it was a sweet school. He said he would love to send his kids there. And I agreed with him for sure.
MM: Incredibly supportive. Very, very supportive. And you know, I was very excited through the whole building facilities process is they allowed the contractors and the people to actually talk with us and negotiate with us. So they were not rigid like, “No, this is what we’re doing and this is what we like.” Because they liked two colors. And from what I understood it wasn’t bright colors, it was very subdued colors. But they understood and I think as a whole Charter School Capital understands that every market is different. So I appreciate that.
MM: On the funding side, again, Tricia’s been amazing.
JJ: She is.
TB: Thank you.
MM: You know, Bryan and Christina has led us in a lot of different directions, helped us out when they don’t have to. But they have that very personal touch and commitment to the schools and to the client. So it’s very nice to say that we’re partners with Charter School Capital.
JJ: What a nice way to end.
TB: Thank you.
JJ: Thank you, Margie.
MM: Absolutely. We would not be the school that we are and we would definitely not be in the position that we are without Charter School Capital funding the growth and really taking an interest in charter schools and helping the charter schools grow. Charter schools are a huge movement, they’re so successful across the country and the states do not typically like … There’s not money for facilities provided for the state. So I think for you guys, whoever came up with a niche to go out to the charter schools and help them fund is amazing. Thank you.
TB: Thank you.
JJ: Thanks.

The 5 Essential Steps to Charter School Facilities Planning

Charter school facilities planning can be daunting. If you think that finding the perfect facility for your charter school seems like a huge, complicated undertaking, you’re in good company. This handy, information-packed guide, will help as you move towards realizing your facility expansion or relocation goals.
In it, we cover these five essential charter school facility planning steps—in detail:

Plan – Begin planning at least one year in advance
Fund – Understand your options to make savvy decisions
Acquire – You know what you can afford and how you’ll pay for it … now go get it
Design – Partner with experts to design your new space
Execute – Let the construction begin and get ready to move in

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Demystifying Bond Financing for Charter School Leaders

Charter school bond financing represents one of the most complex yet potentially advantageous funding mechanisms available for educational facility projects. While only 12% of charter schools nationwide successfully secure bond financing, understanding when and how bonds work can unlock significant opportunities for the right schools at the right time.

This comprehensive guide breaks down everything charter school leaders need to know about bond financing, from basic concepts through qualification requirements, helping you determine whether bonds align with your school’s facility financing strategy.

What Are Municipal Bonds and How Do They Work for Charter Schools?

Understanding Municipal Bond Basics

Municipal bonds are debt securities issued by government entities or qualified organizations to finance public projects. For charter schools, these bonds provide access to tax-exempt financing that can significantly reduce borrowing costs compared to traditional commercial loans.

Key Bond Characteristics:

Tax-Exempt Status: Interest earned by bondholders is typically exempt from federal and often state taxes
Long-Term Financing: Bond terms usually range from 20-30 years
Fixed Interest Rates: Provides predictable debt service costs throughout the bond term
Large Transaction Sizes: Most bonds are issued for projects of $10 million or more

How Charter School Bonds Differ from Traditional Financing

Unlike bank loans or lease agreements, bonds involve selling debt securities to multiple investors in the public market. This process requires extensive documentation, legal review, and ongoing compliance but can provide more favorable interest rates for qualified schools.

Bond Market Structure:

Issuer: The entity responsible for bond payments (often the charter school or related organization)
Underwriter: Investment bank that manages the bond sale process
Trustee: Third party that oversees bond compliance and payments
Credit Enhancement: Insurance or guarantees that improve bond ratings
Investors: Individual and institutional buyers who purchase the bonds

When Charter School Bond Financing Makes Strategic Sense

Ideal Candidates for Bond Financing

Bond financing works best for charter schools that meet specific criteria related to stability, size, and long-term planning.

Optimal School Characteristics:

Mature Operations: Schools with at least 5-7 years of operational history
Stable Enrollment: Consistent or growing student populations with waiting lists
Strong Financials: Healthy operating margins and cash reserves
Permanent Facility Needs: Schools ready for their “forever home” without expansion plans
Large Project Size: Facility investments of $10+ million to justify transaction costs

The Charter School Bond Financing Process: Step by Step

Phase 1: Pre-Qualification and Planning (6-12 months)

Financial Assessment:

Comprehensive review of school’s financial history and projections
Analysis of enrollment trends and market position
Evaluation of debt capacity and coverage ratios
Assessment of cash reserves and working capital needs

Feasibility Analysis:

Project cost estimation and budget development
Market analysis for proposed facility location
Educational program alignment with facility design
Long-term strategic planning confirmation

Phase 2: Team Assembly and Documentation (3-6 months)

Professional Team Selection:

Bond Counsel: Legal experts specializing in municipal bond law
Underwriter: Investment bank to manage the bond sale process
Financial Advisor: Independent advisor representing the school’s interests
Trustee: Institution to oversee ongoing bond compliance
Credit Rating Agencies: Organizations that assess and rate the bonds

Documentation Development:

Official Statement: Comprehensive disclosure document for investors
Bond Indenture: Legal agreement outlining bond terms and conditions
Continuing Disclosure Agreement: Ongoing reporting requirements
Credit Enhancement Applications: If applicable for better rates

Phase 3: Credit Rating and Marketing (2-3 months)

Credit Rating Process:

Detailed presentation to rating agencies (Moody’s, S&P, Fitch)
Site visits and management interviews
Financial analysis and stress testing
Rating assignment that affects interest rates

Bond Marketing:

Investor presentations and roadshows
Market timing and pricing strategies
Order collection and allocation
Final pricing based on market demand

Phase 4: Closing and Implementation (1-2 months)

Final Documentation:

Legal review and execution of all bond documents
Funding arrangements and escrow establishment
Insurance and compliance confirmations
Bond delivery and payment processing

Making the Decision: Is Bond Financing Right for Your School?

Charter school bond financing represents a powerful tool for the right schools at the right time, but it’s not suitable for every situation. Success requires careful assessment of your school’s readiness, thorough understanding of the process, and realistic evaluation of alternatives.

The schools that benefit most from bond financing are those that have achieved operational maturity, demonstrated long-term stability, and are ready to make permanent facility commitments that will serve their communities for decades to come.

Whether bond financing aligns with your school’s strategy depends on your specific circumstances, timeline, and long-term vision. The key is making an informed decision based on comprehensive analysis rather than assumptions about what financing approach is best.

Funding Charter School Facilities: How the Federal Government Can Help

Editor’s note: This post was originally published here on March, 26, 2108 by The 74 and written by Christy Wolfe, a senior policy adviser for the National Alliance for Public Charter Schools. Finding suitable buildings and financing charter school facilities have been ongoing challenges for charter schools across our country. This article takes a look at some ways the federal government can remove some of the barriers that are contributing to this issue.
We think it’s vital to keep tabs on the pulse of all things related to charter schools, including informational resources, and how to support charter school growth. We hope you find this—and any other article we curate—both interesting and valuable.

Opinion: Charter Schools Can’t Grow If They Can’t Afford Buildings for Their Students. Some Ways the Federal Government Can Help

Charter schooling is often described in terms of the charter bargain: increased accountability in exchange for high-level autonomy. Unfortunately, in most places around the country, that bargain doesn’t include a building or funding for building expenses. Although charter schools today account for 7 percent of K-12 public school enrollment nationwide — more than 3.2 million students in more than 7,000 charter schools — and in some localities, charters educate 50 percent of the students, districts generally have a monopoly over public school buildings. Meanwhile, charter school operators must rely on a patchwork of solutions to access space and cover their operating costs.
Consequently, school facilities are one of the biggest obstacles to expanding charter school options. Given that charter schools are public schools, and the federal government plays a key role in providing funds to startup charters, the National Alliance for Public Charter Schools has examined how federal programs and the public sector can assist charter schools with their funding and financing needs in a new paper, Strengthening Federal Investments in Charter School Facilities. Some key findings:
Inequitable access: Charter schools face steeper challenges in acquiring facilities than do district schools, which typically own or control their facilities and can issue tax-exempt bonds to support new construction or renovations. Districts pay back these bonds with taxpayer funds out of their capital budgets, independent of their schools’ operating budgets. Some states also provide direct operating and construction financing to districts. And, districts usually maintain large inventories of school buildings that can be renovated to accommodate growing enrollments.
Higher costs: Charter schools, despite being public schools, lack the options available to districts for accessing buildings and financing new ones. When a charter school wants to open or expand, it is generally on its own to find appropriate space. And once a charter school has a building, most states do not provide per-pupil funding to cover operating expenses. Charter schools may not raise taxes. They lack an inventory of buildings, and in many states and localities, districts refuse to allow them to purchase or lease existing school buildings even when they are vacant or underutilized. Depending on how well-established a school is and its geographic location, it may or may not be able access federal assistance to reduce the costs of acquiring capital.
Because of these two barriers, there is a shortage of facilities for charter schools, especially for those serving students in our nation’s poorest communities. Consequently, they must operate in any space they can find; frequently, these are expensive and suboptimal, such as storefronts and commercial buildings that lack libraries and outdoor space.
This deficiency in the public infrastructure for education is having a significant impact on the education choices for millions of parents and children. But the federal government can help to remove this significant barrier to school choice and charter school growth through two key strategies:
● Leverage federal funds to incentivize state support for charter school facilities and access public buildings. Policies assisting charters can be encouraged through an improved and better-funded State Facilities Incentive Grant Program. Other funds, such as new infrastructure spending, could be tied to state charter school facilities policies and equitable access to public buildings.
● Reduce the cost of acquiring capital to access charter school buildings. Existing federal initiatives, such as the Credit Enhancement for Charter Schools Facilities Program and the U.S. Department of Agriculture’s Community Facilities Grant Program, can be strengthened and better funded to meet the needs of more charter schools. Additionally, creation of new charter school-focused instruments could encourage private investment, similar to tax-credit bond programs or New Markets Tax Credits. Without intervention, the market will not respond to the needs of charter schools to make capital affordable.
A silver policy bullet that can fix charter school access to facilities doesn’t exist, especially at the federal level. Reforms like those above can equalize that access, enhancing what is already working well and creating new, efficient programs to ensure that all charter schools — including those that are higher-risk — are able to access financing to meet the demands of today’s and tomorrow’s students.

The Ultimate Guide to Charter School Facility Financing:
Thinking about a new facility for your charter school or enhancing your current one? This guide shares straightforward and actionable advice on facilities planning, financing options, getting approved, choosing a partner, and much more! Download it here.

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7 Things to Know About Facilities Financing

1- Facilities access is an obstacle to growth

One of the biggest challenges charter leaders face today is access to suitable and affordable facilities. With more than 3 million students enrolled in nearly 7,000 charter schools, many still have suboptimal facilities that hinder their growth. More than 1 million students remain on charter wait lists. With more facilities financing options, charters can expand their enrollment allowing more children to attend their local charter school.

2- Facilities financing volume

3- Facility strategy

Ownership is an investment
Control is critical to maintaining stability or growth
Evaluate true all-in costs, not headline rates
Cost is not just money, but time and opportunity
Consider flexibility to address long-term needs

4- Realistic Budget

5- Funding Comparison

6- Key Considerations

Plan ahead
Watch the market
Line up internal
resources
Prepare for the deal

7- We’re Charter School Specialists

Specialty finance company 100% dedicated to empowering charter growth
Began funding charter schools in 2007
More than $1.5 billion of funding provided to date
$500 million facilities fund specifically for charters
0% loss rate
Relationships with 550+ charter schools serving 650,000+ students nationwide

Does finding that perfect facility for your school seem like a huge, complex undertaking? Well, you’re not alone…it’s the greatest challenge faced by charter schools across the country. We understand that most charter school leaders aren’t financial or real estate experts, and for a good reason—you’re focused 100% on educating children. And, you want the best for them. Planning and financing any facility project is complex, time-consuming, and has the potential to distract your team from its core mission: serving your students.
This manual covers our perspectives on the charter school facilities financing landscape market and provides practical and actionable advice on planning and realistically balancing your team’s facility dreams with budget realities. We also cover the four primary funding structures that charter schools use to finance facilities: cash, banks, bonds, and long-term leases. Download this free guide to get all of your facilities questions answered!
In it, you’ll get straightforward, actionable advice on:

Facilities planning
Financing options
Getting approved
Choosing a partner

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The Ultimate Guide to Charter School Facility Financing: Straightforward advice on planning, financing options, getting approved, and choosing a partner.
Does finding that perfect facility for your school seem like a huge, complex undertaking? Well, you’re not alone…it’s the greatest challenge faced by charter schools across the country. We understand that most charter school leaders aren’t financial or real estate experts, and for a good reason—you’re focused 100% on educating children. And, you want the best for them. Planning and financing any facility project is complex, time-consuming, and has the potential to distract your team from its core mission: serving your students.
This manual covers our perspectives on the charter school facilities financing landscape market and provides practical and actionable advice on planning and realistically balancing your team’s facility dreams with budget realities. We also cover the four primary funding structures that charter schools use to finance facilities: cash, banks, bonds, and long-term leases. Download this free guide to get all of your facilities questions answered!
In it, you’ll get straightforward, actionable advice on:

Facilities planning
Financing options
Getting approved
Choosing a partner

DOWNLOAD NOW

Editors Note: This post was originally published here on 12/13/2017 by National Alliance for Charter Schools, and authored by Stephanie Vittitow. We think it’s vital to keep tabs on the pulse of all things related to charter school facilities and growth and therefore, hope you find this—and any other article we curate—both interesting and valuable.

Phi Delta Kappan (PDK) recently fou nd that 17 percent of parents would choose a public charter school for their child if location and capacity were not an issue. And just last month, EdChoice foun d that 16 percent of parents would like to send their child to a public charter school—which is up nine percentage points since 2013. Together, these two surveys indicate that the potential number of charter school students in the U.S. is between 8 and 8.5 million. In 2016-17, there were just over 3 million charter school students. This means that the potential size of the charter school sector—based on current parent demand—is almost three times larger than what it is today. In order to satisfy this demand, the sector would need to open, and find suitable homes for, thousands of charter schools over the next 5 to 10 years.

However, charter schools already struggle to access adequate and affordable school buildings and charter schools generally lack access to the same funding and financing mechanisms as most school districts. To make matters worse, the House version of the tax bill would eliminate three financial instruments that charter schools use for the construction, renovation, and expansion of school buildings. Should the House prevail in the conference committee, it would be a giant step backward for charter schools. Should the Senate prevail, we would maintain the status quo, which is necessary—but far from sufficient—to meet the large and growing demand for high-quality charter schools.
The Charter School Facilities Initiative (CSFI), a national research project and partnership, has studied charter school facilities and facilities costs in 19 states. Over the past three years, the CSFI team has conducted five charter school landscape surveys: Ohio in 2014-15, Albuquerque and Delaware in 2015-16, and Colorado and New Hampshire in 2016-17. These recent surveys are indicative of broader national trends and these five locations represent more than 650 charter schools – or nearly 10 percent of all charter schools nationwide. Across these five locations, charter schools face clear challenges in acquiring and paying for suitable facilities:

The majority of charter schools (53 percent) were renting or leasing space from a non-profit organization or a commercial entity. In fact, only 27 percent of charter schools had constructed their own building. The remaining 20 percent were located in a district or government building (16 percent) or had a mixed ownership structure (4 percent). Not surprisingly, nearly half of charter schools (49 percent) were located in buildings that were not originally intended to be a school.
Nearly half of charter schools (49 percent) were in school buildings that did not have space for their anticipated enrollment in five years. Parent demand for charter schools is increasing, but facilities constraints are restricting supply. For charter schools that were planning to grow but were limited by their current school building, only 51 percent had developed a specific, feasible plan to construct or acquire additional space.
Nearly one in five charter schools (17 percent) had to delay their opening date by a year or more due to facilities related issues. The inability of new charter schools to find an adequate and affordable school building is a major barrier to the continued growth and health of the sector. Facilities related issues have discouraged countless other developing groups from submitting or completing their application.
Charter schools spent an average of $748 per pupil on rental and/or financing payments after accounting for any state facilities assistance. This spending on facilities diverts critical funds away from the classroom and limits programming options for charter school students. In addition, 40 percent of charter schools completed a major capital project in the past five years in order to renovate, upgrade, or otherwise maintain their facilities—and the median capital project cost nearly $500,000.
Forty percent of charter schools did not have the ideal amenities, nor desired specialized classrooms, to best implement their educational model. Most instruction during the school day takes place in general classrooms; however, specialized instructional spaces, such as science labs, libraries, and computer labs, are an important part of a comprehensive educational program—and charter schools often go without these types of spaces.

The lack of affordable and adequate school buildings limits the growth of high-performing operators, limits the ability of new and independent charter schools to open, diverts critical funds away from the classroom, and limits programming options for charter school students. Congress should work to expand access to programs that help charters schools obtain school buildings—not take them away. In addition, states and districts should also provide charter schools with equitable access to public space. Without equitable access and resources, millions of students and families will continue to wait for a seat at one of these innovative public schools.

Do you need to expand, renovate, or move your charter school? We’d love to support you. It’s our mission to help you educate more students, so we focus on providing products and services that enable you to meet – and exceed – both your growth and facility goals. When you succeed, we succeed—it’s that simple.
We’ve reached out to our network of charter school experts for best practices and strategies for success at every stage of maturity. So, whether you’re just beginning the process of starting up a charter school, looking to expand or trying to prioritize your next steps, download our Charter School Growth Manual to get expert tips and pitfalls to avoid as you grow.

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We’re thrilled to share some fantastic news with you about the inspiring facility growth of one of our charter school customers, Genesee STEM Academy. Genesee STEM Academy is located in Flint, Michigan and is a top-tier K-9 Charter School authorized by Saginaw Valley State University. Last year, we worked closely with Genesee STEM Academy to complete their Phase I charter school expansion and now we’ve just helped them complete Phase II of their facility growth, adding an additional 14,300 square feet! This newest phase increases their available space with 13 classrooms, four administrative offices, student and faculty bathrooms, and upgrades to their auditorium.
We’re always thrilled to be a part of the growth and success of charter schools and help them better serve students – and their communities. We also know that they’re ecstatic about taking control of their own destiny.
This successful charter school expansion would not have been possible without the strong partnership between Charter School Capital and the dedicated team at Genesee STEM: including—but certainly not limited to—Laura Legardye, Rita Cheek, and Pasquale Battaglia.
At Charter School Capital, we understand that access to adequate charter school facilities continues to be one of the top challenges facing charter leaders today. There are currently more than 1 million students on charter school waitlists around the country and a relative lack of accessible financing options for charter facilities needs. In order to reach and teach more students and reduce these waitlists, charter schools require state of the art facilities that allow them to continue to build quality educational programs for student success.
It’s our mission to help charter schools with growth capital and facilities financing. Because we partner exclusively with charter schools, we understand the operational challenges their leaders face and can deliver financial resources charter schools need to maintain stability and grow. By leveraging the support of our team, charter leaders can stay focused on the school’s most important mission – educating students.
All of us at Charter School Capital are sending Genesee STEM Academy our heartfelt congratulations on their inspirational growth and success!

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