The National Alliance of Public Charter Schools (NAPCS) recently announced their newest campaign, “The Truth about Charter Schools,” where they clear-up common misunderstandings about charter schools.
All of us in the charter industry understand that even though support for charter schools is widespread, there are still myths and misconceptions that create confusion and resistance.
That’s why we’re so excited about the NAPCS’ campaign, and why we’ve decided to support their efforts by tackling some charter school financing myths and facts of our own.
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MYTH: Charter schools should use their reserves to finance growth instead of looking for outside financing options.
FACT: Using outside financing to facilitate growth can make a charter more financially secure in the long run, and pay for continued growth without depleting cash reserves.
MYTH: Working capital should only be used in the case of state funding delays or deferrals or as a last resort.
FACT: Working capital is incredibly flexible and can be used for operational growth, program enhancements, technology upgrades, school expansion, etc.
MYTH: Running a charter school is not like running a business.
FACT: A charter school is a business and making smart, informed business decisions will benefit your school’s viability, financial health, and overall growth.
MYTH: Bonds are the best way to fund a facility.
FACT: Less than 10% of charter schools can actually obtain bond financing. The process of getting a bond is often time-consuming, arduous and incurs hidden fees from audits, trustees and rating agencies.
MYTH: Charter schools should own their own facility.
FACT: You’re in the business of educating students, not owning and managing real estate. There are many other financing options that will give you control and security over your facility.
MYTH: The cost of getting financing is too high.
FACT: There is a significant opportunity cost to being inadequately funded and being unable to pay your staff, enhance your programs and enroll more students.
MYTH: The most important factor of getting financing is the interest rate.
FACT: Just like getting a car loan or a mortgage, there are fees and transaction costs hidden in many financing deals. Make sure you’re comparing your total end-cost when evaluating different charter school financing options as well as making an apples-to-apples comparison.
Are there other myths you have to add? Let us know in the comments below!
Category: Charter School Facilities
Welcome to Charter School Capital’s weekly round-up where we feature charter school news about operations, policy, funding for charter schools, charter school facilities financing, and other trends.
It’s officially the first week of fall, and with school back in full-swing we’ve compiled a few updates including one from California and Florida. Tell us your thoughts and leave a comment.
Tell Your Students: CA State Board of Education is Looking for a Student Member
The California State Board of Education (SBE) is looking fora public high school senior to serve as a Student Board Member. Does your charter school have a student who might be a candidate?
From the application page: “Any student who is a California resident and enrolled in a public high school, will be a senior in good standing in the 2015–16 school year, and will be available to attend a statewide student leader conference November 11-14, 2014 in Sacramento, is eligible to apply.”
For more information, including the 2015–16 Student SBE Member application, please visit the SBE Student Member Application Web page, or contact the SBE by email at sbe@cde.ca.gov or by telephone at 916-319-0691.
Applications must be received by the SBE by 5:00 p.m., Monday, October 20, 2014
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Join Charter School Capital for a Webinar on Charter School Facilities Financing
We’re excited to be partnering with Procopio to lead a discussion on various charter school faciltiies options.
Presented by our president and CEO, Stuart Ellis, and Chip Eady, a lawyer with Procopio who specializes in education facilities and land development, this webinar will cover various financing options and best practices for facilities planning.
If you’d like to register, we recommend doing so as soon as possible, as we only have a few seats left, and registration closes on Monday, September 29th.
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Florida Board of Education Adopting New Charter School Contract
When the Florida Board of Education meets in Tampa at the end of September, they will be moving forward with adopting a standard charter school contract.
According to an article in the Tampa Bay Times, “The recommended new rule makes clear that the standard contract would serve as the basis for an initial draft contract. Both charter applicants and districts would be allowed to modify the document, but would have to indicate clearly how they changed it and why.”
If Florida adopts the standard contract, it would go into effect in November 2014.
On Friday, California Governor Brown began taking action on education related bills that were on his desk and he vetoed SB 1263, a bill that would have impacted charter school facility options.
SB 1263 started out as a local dispute between several school districts in the Santa Clarita Valley, the Acton-Aqua Dulce School District and the charter schools that they have authorized.
It ended up being a bill that restricted charter school facility options state-wide and threatened to shut down the Albert Einstein Academy in the Santa Clarita Valley.
As Governor Brown explains, “this bill seeks to reverse the application of a limited exemption in law that allows a charter school petitioner to locate a single school site outside of its authorizing school district, under specific circumstances. This bill would instead require the charter school to first get permission for the host district where it intents to locate.”
The retroactive nature of the legislation would have punished Albert Einstein even though it is the highest performing school in the area.
As he has shown in the past, the Governor continued to be a strong advocate for charter schools and charter school facility options by vetoing the measure.
Additionally, the advocacy efforts of Albert Einstein and their authorizer, the Acton-Aqua Dulce School District, have to be noted. Together they were able to get thousands of letters and phone calls in to the Governor’s staff opposing SB 1263. They also had several Democratic members of Congress weigh in opposing the measure while it was on the Senate Floor and on the Governor’s desk. For that they must truly be commended.
In his veto message below, Governor Brown says,”while this bill attempts to solve a real problem, I am not comfortable with the retroactive language that could force existing charter schools to change locations. I have assembled a team to examine this situation and come back with solutions that minimize disruption to students and parents.”
In June of this year, we announced a $500 million facilities fund, and the formation of American Education Properties (AEP), a collaboration between Charter School Capital, the nation’s leading provider of working and growth capital to charter schools, and American Infrastructure MLP Funds (AIM), a leading private investment firm specializing in real property, infrastructure and natural resources businesses.
We’re excited to announce that just months later, the first $75 million in charter school facilities funding has been distributed to 11 schools across six states as part of the $500 million in innovative charter school financing to meet schools’ demand for facilities.
The distribution of the first $75 million marks one of the largest charter school facilities financing deals to date. This investment supports facilities at nine schools in Arizona, Colorado, Florida, and Washington, D.C., which educate roughly 4,550 Imagine Schools students, as well as students at two charter schools run by independent operators in Arizona and California.
With growing enrollment and nearly one million students on charter school waiting lists nationwide, charter school leaders need to find facilities that meet their needs, both now and in the future. AEP launched in June of this year, addresses this increasing challenge.
AEP enables school leaders to determine their long-term facility needs and retain control of their buildings, so they can focus on their mission of educating our children. With facilities financing in place, charter schools can expand their enrollment and academic offerings with confidence, knowing they can access and maintain the facilities to sustain their ongoing programs and growth.
“We are supporting one of the top needs charter schools face – facilities,” explained Stuart Ellis, President & CEO of Charter School Capital. “Charter School Capital has committed more growth capital to support the movement and now we are able to ensure that charters have the best facilities to meet their educational goals. With $500 million to invest over three years, we are dedicated to providing charter schools access to the capital they need to thrive.”
“We are pleased to have an organization that focuses on charter schools supporting our efforts and mission,” said James McFadden, Vice President and Treasurer of Imagine Schools. “Having a landlord who partners with us and others in the charter school movement to support the growth of schools makes our collaboration more meaningful.”
Imagine Schools is one of the nation’s largest and most highly regarded charter school networks. Their unique, full-service model currently administers a single, multi-state “school district” with 67 schools across 11 states and the District of Columbia. With total enrollment at approximately 36,000 students, the network is larger than each public school district in Tacoma, Boise and Cincinnati. The model has been successful. Imagine was one of only three school districts in the nation to be named a “2013 National District of Character” by the Character Education Partnership for promoting positive character development in a school environment.
Charter schools often have difficulty accessing funding and affordable credit. Recently, Standard & Poor’s (S&P) downgraded the value of charter school transactions, and Fitch Ratings downgraded the value of charter bonds. With its committed pool of capital, AEP enables schools to get the funding they need when they need it, without strings or fluctuating interest rates. Charter School Capital facilitates all origination and sourcing, underwriting, asset administration and property management for the fund.
“At a time when many are turning away from the needs of charter schools, we look forward to putting more dollars to work for charters of all sizes that will enable school leaders to focus on what they do best – educating students – while alleviating concerns about their schools’ facilities,” said Ellis.
To find out how we can help you with your charter school’s facility needs, give us a call at 877-272-1001 or email us at GrowCharters@charterschoolcapital.com.
Charter School Capital recently attended the groundbreaking ceremony events for Cambridge Prep Academy’s new facility in Arizona. See the article that appeared in the local paper. Read article.
“It’s an exciting time for this school,” explained Jon Dahlberg, VP of Business Development at Charter School Capital. “They currently have 250 students heading toward 1,200 next school year. This new school facility will be a major piece of community development. In the future, the school’s facility will double as a community center and offer other resources for community partnership.”
Our team congratulates Cambridge Prep Academy on their growth and for their support of education in their community. Let us know how Charter School Capital facilities financing options can help your school!