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
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
Charter schools don’t get free buildings the way traditional public schools do. You have to find, finance, and manage a facility yourself, on top of running a school. This guide walks through your financing options, the planning mistakes that can trip up leadership teams, and what lenders look for before approving a loan.
Why Is Charter School Facility Financing So Difficult?
District schools get taxpayer-funded buildings. You don’t. Your school competes in the private real estate market and has to qualify for commercial financing, the same as any small business would. That means balancing your program’s needs, how the building looks to families touring it, and what you can actually afford, all while running a school day-to-day.
What Planning Mistakes Should You Avoid?
Two mistakes derail more facilities projects than anything else: an unclear budget and a rushed timeline.
Before you look at a single property, know your numbers. Calculate your current monthly operating costs, project enrollment and revenue growth, and figure out the maximum facility payment you can carry without touching your cash reserves or cutting academic programs. Build in room for moving costs, renovations, and new equipment too.
Then give yourself time. Facility projects take at least 12 months from planning to move-in, and that’s for straightforward ones. Legal approvals, construction delays, and staff and student transitions all take longer than leadership teams expect. Schools that compress the timeline end up making rushed decisions and absorbing cost overruns.
How Do You Balance Program Needs, Appearance, and Budget?
Every facility decision comes down to three things pulling against each other: what your educational program needs, how the building presents to prospective families, and what you can afford.
Your program needs are non-negotiable. A STEM-focused school needs lab space. An arts program needs a performance space with real acoustics. If you serve students with disabilities, you need accommodations built in from the start.
Appearance matters more than most school leaders expect, because it drives enrollment, and enrollment drives the revenue that funds everything else. Families notice the building on their first tour, and they compare it to other options in your area.
Budget is what keeps the first two honest. A facility that fits your mission but breaks your budget isn’t a win. Lenders will look at your cash reserves, your operating revenue, your charter term, and any grants or subsidies you have lined up before they tell you what you can actually borrow.
What Are Your Financing Options?
Most charter schools choose from four paths, and each fits a different stage and size of school.
Paying cash means no debt and no underwriting, but it ties up reserves you could otherwise put into classrooms, and most schools don’t have that kind of cash on hand. It mainly works for well-established schools with strong reserves taking on a smaller project.
Bank financing typically requires 20 to 40 percent equity upfront, plus a strong financial track record and enrollment history. It costs less than bond financing and builds equity over time, which makes it a fit for established schools with cash on hand tackling projects of $7 million or more.
Bond financing offers fixed, predictable costs over a 30-year term and doesn’t require a large upfront payment, but it comes with a lengthy underwriting process, hundreds of thousands of dollars in legal fees, and a $10 million minimum. Only about 12 percent of charter schools nationwide go this route. It suits large, stable schools settling into a permanent home with no more expansion ahead.
A long-term lease, typically 20 to 40 years, gets you a predictable monthly payment and low upfront cost without bond- or bank-level underwriting. You won’t build equity, and rent may climb over the term, but a lease works for schools at nearly any stage that want control over their space without a heavy capital commitment.
What Do Lenders Look for Before Approving Financing?
Four things carry the most weight.
Enrollment stability comes first. Lenders want to see your enrollment holding steady or growing against your charter capacity, a real waiting list, and a market that isn’t already saturated with charter options.
Leadership experience comes next. A track record of running schools well, a board with real financial and governance expertise, and evidence you’ve planned for succession all strengthen your case.
Financial management is where the numbers get scrutinized directly. Lenders want your facility costs under 20 percent of operating revenue, healthy debt service coverage, multiple years of audited financial statements, and cash reserves that hold up under stress.
Governance and your relationship with your authorizer round it out. A strong renewal history, a clean compliance record, and consistent communication with your authorizer all signal that you’re a safe bet.
How Do You Get Started?
Start with the budget analysis, not the property search. Once you know what you can afford, define the space your program actually needs and look at what’s available in your area at that price point. Build your cash position in the meantime, and bring in people who do this for a living: a commercial real estate broker who knows schools, a lender or advisor familiar with charter financing, and legal counsel who’s handled these deals before.
Grow Schools’ Money to Buy Your School program works with charter schools on exactly this kind of financing, from a first permanent building to a major expansion. Reach out and we’ll walk through what fits your school.
How long does charter school facilities financing take?
Plan on at least 12 months from the start of planning to move-in. That covers legal and regulatory approvals, any construction or renovation work, and the staff and student transition, and most of those steps take longer than schools expect.
How much of my operating budget should go toward facility costs?
Keep facility costs under 20 percent of your operating revenue. Lenders use this as a key threshold when they evaluate your loan application, and staying under it protects the budget you need for academic programs.
What percentage of charter schools use bond financing?
About 12 percent. Bond financing has a $10 million minimum project size and a lengthy underwriting process, which puts it out of reach for most schools. The other 88 percent finance facilities through cash, bank loans, or long-term leases.
How much equity do I need for bank financing?
Most banks want 20 to 40 percent equity upfront, along with a strong financial track record and stable enrollment history. This route generally suits established schools taking on projects of $7 million or more.
What’s the minimum project size for bond financing?
$10 million. Bond financing also comes with hundreds of thousands of dollars in legal fees and a long approval process, so it’s built for large, stable schools settling into a permanent facility with no further expansion planned.
What do lenders look at before approving a charter school facility loan?
Four things: enrollment stability, leadership experience, financial management, and governance. Lenders want steady or growing enrollment, a proven leadership team, facility costs under 20 percent of revenue, and a clean compliance record with your authorizer.
What’s the best financing option for a school’s first permanent building?
A long-term lease is usually the best fit for a first building. It requires minimal upfront cash, gives you a predictable monthly payment, and skips the heavy underwriting that bank and bond financing require, which makes it accessible to schools at any stage.
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
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
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.
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:
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:
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 found 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 found 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.
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!
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.
California Prop 39 Deadline for Charter Schools
California’s Prop 39 zero-cost energy upgrades can yield charter schools up to 40% reduction in ongoing utility costs. The State of California has generously allocated $55k-$500k+ to every California charter school for energy upgrades.
So far, only 40% of schools have taken advantage of the program. We think the reason for low participation is either:
Schools think this is the previous Prop 39 – which had nothing to do with energy upgrades, or
Schools believed that if they didn’t own the building, they could not participate in the program
Not only can any charter school participate; but – in some cases – you can bill the program for upgrades that have been implemented in the past.
We believe in the program so much that our affiliated real estate arm is supporting upgrades on 100% of our properties in California. The program is simple and we can help
All that is required is to 1) invite a qualified energy consultant (we can help you get in touch) into your school for an energy audit; and 2) provide them with your last 12 months of utility bills, and that’s it.
The audit you’ll get back will include:
Projected costs (which you can pay for with your allocation)
Projected savings on your utility bill every month
A non-intrusive implementation plan so your students and teachers are not interrupted
This is a great program, but your allocation will evaporate on February 26th 2018 if you have not filed the paperwork (the energy consultant will do this for you). You would have 2+ years to actually conduct the upgrade.
We can help you look up your allocation, provide you with energy auditor contacts, answer your questions and provide contacts at the California Dept. of Ed and Energy Commission.
Thanks. Let’s talk. And soon.
How To Avoid The Top Financial Mistakes Charter Schools Make
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
The Charter Leader’s Definitive Guide to Budgeting Best Practices
Plan – Begin planning at least one year in advance
