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
The Charter School Funding Misconception: Who’s money is it?
This article was originally posted here on September 5, 2018 by The74 and written by James V. Shuls, Ph.D., is an assistant professor of educational leadership and policy studies at the University of Missouri-St. Louis. It is an opinion article that challenges one key assumption about charter school funding: does the funding for public schools belong to the child or to the district? This question is at the heart of education reform arguments.
Proponents of school choice believe that every family deserves to choose the best educational option that suits their child’s specific and unique needs—whether that school is a traditional district public school or a public charter school. Opponents of the charter school movement believe that families that choose the public charter school are “taking” money away from traditional district schools. As this writer suggests, this may hold true if you believe the child, and the funding that follows them, are district property.
Do the traditional district schools have less money if the student opts for a public charter school? Yes. That is the natural result of freedom of choice as it is within any other industry, so why should it be different for education? If your local charter schools are outperforming your local district schools or offer your child something unique to their needs, shouldn’t you be able to make that choice?
If you think the funding belongs to the district and not the student, this writer makes an enlightening comparison to shopping at Walmart versus shopping at your local farmer’ s market, “It presupposes that the customer belongs to Walmart; that any time the individual chooses to buy cucumbers from a local grower or salsa from an aspiring entrepreneur, he or she is “robbing” the dominant grocer.”
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 and the advancement of the charter school movement as a whole. We hope you find this—and any other article we curate—both interesting and valuable.
Read on for the complete article.
Shuls: Do Charter Schools Take Districts’ Money? Only If You Think Children, and the Funding That Comes With Them, Are District Property
How would you respond if you stumbled across a headline that asked, “How much do farmers markets cost Walmart?” It’s a ridiculous question. It presupposes that the customer belongs to Walmart; that any time the individual chooses to buy cucumbers from a local grower or salsa from an aspiring entrepreneur, he or she is “robbing” the dominant grocer. That’s just absurd. Yet this is the standard frame we use when talking about education. We blithely assume that education is wholly different from any other field.
Consider, for example, a recent headline on the Education Writers Association’s website: “How Much Do Charter Schools Cost Districts?” It’s the same question, and it is just as absurd as when talking about groceries. Worse, it is unethical, because it dehumanizes children, reducing them to economic units. In this formulation, neither they nor their parents are individuals with aspirations, endowed with free will and the ability to act in their own self-interest; they are a mere funding stream for public school districts.
This type of headline is all too common. Most people wouldn’t even bat an eye at it. But this isn’t just semantics. It gets at the heart of the way many people view public education.
It is only in education that we presume the customer is the rightful property of a specific supplier and therefore “costs” the supplier when he or she goes somewhere else. Indeed, this is the fundamental problem with the public education system in the United States: We presume the tax dollars that fund a child’s education belong to the public school district and the child belongs in a public school seat.
If, heaven forbid, parents want to use those education funds at a charter school or a private school, they must prove that “choice” works. We demand that school choice programs justify themselves by increasing student achievement on standardized tests, or increasing graduation rates, or fixing decades-old segregation issues. We would never ask the farmers market to prove its tomatoes are bigger and juicier than Walmart’s as a condition of operation.
It doesn’t stop there. A few years ago, one writer went as far as to say, “You are a bad person if you send your children to private school.” You can almost hear Snowball from Animal Farm repeating the mantra, “Four legs good, two legs bad.” It’s us versus them. We treat public education as if it — the system, the school district — were the ultimate good to be served. Just google “school vouchers” and look at the images. The internet is replete with political cartoons that characterize school choice programs as systematically dismantling traditional public schools, brick by brick.
Challenges to this concept are not new. In his 1958 book, Freedom of Choice in Education, Father Virgil Blum wrote that “our educational policy must be philosophically based on the dignity and transcendent value of the individual, on the integrity and freedom of the human person; it must be legally based on the Federal Constitution, recognizing the individual student clothed in all his constitutional rights.” We are no closer to that reality today than we were 60 years ago.
Our commitment to educating every child, regardless of wealth or ability, is a reflection of our highest and noblest ideals. What we do today in our public education system is a feat that was almost unthinkable even 100 years ago. Yet in the process of building that system, we somehow lost our purpose. Instead of the system serving the children, we now insist the children must serve the system.
If we are ever to change this, we must first change how we talk about public education. We can’t presume, as the author of the Education Writers Association piece did, that children and their funding inherently belong to the public school system. Do public school districts have less money when a student goes to a charter school or a private school? Absolutely — as they should. This is what happens in any industry when customers choose to spend their dollars at one place instead of another. More to the point, it is what happens when students leave a district school for any reason.
In the final analysis, we must realize that public education is not about the school system, but the students that it is supposed to serve. They have value. They have worth. They should have choices.
James V. Shuls, Ph.D., is an assistant professor of educational leadership and policy studies at the University of Missouri-St. Louis.
Since the company’s inception in 2007, Charter School Capital has been committed to the success of charter schools. We provide growth capital and facilities financing to charter schools nationwide. Our depth of experience working with charter school leaders and our knowledge of how to address charter school financial and operational needs have allowed us to provide over $1.8 billion in support of 600 charter schools that have educated over 1,027,000 students across the country. For more information on how we can support your charter school, contact us. We’d love to work with you!
How Charter School Capital Helped Minnesota School Thrive
With so many choices for where go to access financial resources for your school, it’s important to select the right one for you. At Charter School Capital, we believe in the power of charter schools and their leaders to deliver quality education to families across the country. And we’re proud to provide the reliability and stability charter leaders require as they walk their journey to better educate more students today—and in the future.
Please watch and listen as Eric Mahmoud Founder and former CEO of the Harvest Network and Best Academy in Minneapolis shares his experience working with Charter School Capital during some very difficult financial times for charter schools in Minnesota.
This video was originally published Jul 17, 2014. While we’re no longer funding Best Academy, we are proud of the way our support has helped them continue to serve their students. Because, when you no longer need Charter School Capital, that means we’ve done our job and your school has become financially stable, successful, and set up for future growth. To learn how other school’s have achieved success by partnering with us, check out our other success stories here and filter by the content type, “School Spotlights”.
Watch the short video to hear Eric’s story and find the transcript below. You can learn more about Charter School Capital here.
We started as a daycare in our home with about 10 children and then after seeing our children graduate from our preschool program and go into the public schools where they weren’t being challenged, we decided that we would expand our preschool program to elementary school, which we did in 1992.
We’ve taken a population that traditionally (both in Minneapolis and around the country) has not done well, and we’ve actually raised their achievement all the way up to the top. And, while at the same time we were growing our BEST academy program, the state was going through their own financial crisis.
And so we went from a 10 percent [state] hold back – maybe about five, six years ago – to subsequently 17 percent, 27 percent, then 30 percent. And last year, a 40 percent hold back. And for many schools it actually crippled them. And, actually, I thought it was very appalling.
The opportunity to talk with Charter School Capital came about and within a very short period of time, we were able to get the resources that we needed.
There was a whole lot of flexibility working with Charter School Capital in a number of situations when we thought that we were going to get a certain amount of revenue from the state and we didn’t.
Charter School Capital was very flexible and it’s been very easy working with Charter School Capital to fulfill the needs that we have as a school. Certainly, they helped us think about our overall financial picture. And so it was more than just writing us a check.
We had a very good relationship during the years that we’d been using charter school capital. I think it was a good business decision. And as a result of that business decision, we’ve been able to move our children where they need to be academically.
Are you looking into funding options for your charter school? Our team of dedicated professionals works with you to determine funding and facilities options based on your school’s needs. If you are trying to meet operational expenses, expand, acquire or renovate your school building, add an athletic department, enhance school safety/security, or buy new technology, complete the online application below and we’ll contact you to set up a meeting.
Charter School Capital Funding Allows School Leaders to Stay Focused on Their Students
With so many choices for where go to access financial resources for your school, it’s important to select the right one for you. We believe in the power of charter schools and their leaders to deliver quality education to families across the country. And we’re proud to provide the reliability and stability charter leaders require as they walk their journey to better educate more students today—and in the future.
Please listen as Ricardo Mireles, Executive Director, Academia Avance shares his experience working with Charter School Capital.
This video was originally published Jul 17, 2014. We are proud of our continued partnership with Academia Avance. We are honored to support them in continuing their mission of setting a standard for public charter school excellence and inspiring a lifetime of learning and leading.
Charter School Capital Funding Helps Academia Avance Sustain Thier Growth
Academia Avance is a charter public school in the northeast community of Highland Park in Los Angeles. We serve grades six through 12. We are on track to having 500 students for this upcoming fall charter funding.
[The way that we can access] charter funding makes it very difficult for schools that increase their enrollment [because] you don’t see those funds until the spring. But the relationship that we had built with Charter School Capital allowed us to say, look, this month I need this much money.
Another challenge that charter schools have, is the need (in any kind of financial transaction) to provide some kind of collateral. And so, for new schools, small schools, they don’t own a building. They don’t have assets that they can pledge just for collateral. It’s just very difficult.
I’m really appreciative of how Charter School Capital was able to understand what our need was. We looked at this as a very different way of getting funding based on the one collateral that we do have – and that’s our students.
Charter School Capital has allowed us to work with a product that is flexible in terms of the amount, in terms of the timing. In all the conversations I’ve had with the leaders of Charter School Capital and their entire staff, they always understand what we’re trying to do with our students and how they’re joining us in making it work for our students.
We’ve been working with Charter School Capital now for four years and throughout, they’ve been flexible, and they’ve been very professional, and they’ve allowed us to stay focused on our students.
Starting the relationship with Charter School Capital is different from what we have experienced with other financial institutions in that they are very focused on the viability of the school going forward relative to the charter.
Without Charter School Capital, Academia Avance wouldn’t exist.
Learn more about Charter School Capital Funding
Our team works with you to determine funding and facilities options based on your school’s needs. If you are trying to meet operational expenses, expand, acquire or renovate your school building, add an athletic department, enhance school safety/security, or buy new technology, complete the online application below and we’ll contact you to set up a meeting.
Charter School Financing: Your Guide to Budgeting Best Practices
The Charter School 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. We put together this guide to share best practices and call out common pitfalls to avoid. (This guide won’t teach you how to put a budget together—you’ll need to call on your finance team for that.)
Whether your school is growing student enrollment, expanding facilities, or implementing new educational programs, your annual budget should serve as an essential tool to help you achieve your goals as quickly—and as realistically—as possible.
In this guide, we discuss budgeting strategies for the various stages of charter school development including:
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
At Charter School Capital, we believe in the power of charter schools and their leaders to deliver quality education and foster success in their students. Over more than a decade, we’ve invested over $1.6 billion in more than 600 charter schools to help them grow, finance facility projects, and achieve operational stability. We view ourselves as a resource and partner of charter schools and a strong advocate of the charter school movement as a whole.
This manual is intended for charter school leaders who want to be more strategic about charter school financing and budgeting and avoid short-term mistakes that can lead to unintended long-term consequences. This manual is only for informational and planning purposes. If you’re seeking financial advice or support, please seek out the guidance of a qualified professional organization such as Charter School Capital.
Download your free copy here! 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.
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.
Charter School Capital Funding Products
About Us
We are 100% dedicated to the charter space and to enabling the success of charter schools and the charter school movement. Working exclusively with charter schools, we measure our success by the number of students we serve. Our mission is to provide school leaders access to the financial and other charter school resources they need – whether it’s operational capital, growth funding, or facilities expansion. We believe in the power of charter schools and their leaders to deliver quality education to families across the country. And we’re proud to provide the reliability and stability charter leaders require as they walk their journey to better educate more students today—and in the future.
Why Partner With Us?
We’re mission-driven and 100% dedicated to the charter school space.
Unlike traditional lenders like banks, we work with you to solve the unique challenges you face.
We are dedicated to financing schools ethically and responsibly.
Your success is our success. Our goal is to help your school become financially stable, successful, and set up to serve more students.
OUR CHARTER SCHOOL FUNDING PRODUCTS:
Working Capital
Charter School Capital provides flexible funding solutions so charter schools can gain ground and achieve success. Our charter school working capital financing enables school leaders the flexibility and stability to support everyday expenses and – importantly – fuel their growth.
Why might you need to access working capital?
To expand or grow programs
To open a new charter school
To enhance facilities – with labs, gyms, etc.
To provide new technology in the classroom
To hire and/or develop your staff
To address budget shortfalls and delays (deferrals, holdbacks, etc.) gracefully
To improve transportation options
To enrich educational programs
Charter School Capital is a trustworthy, reliable funding source. They are a true friend and ally to charter schools, the movement, and the children we serve.
~Caprice Young, CEO & Superintendent, Magnolia Public Schools
Facilities Financing
Our facilities financing product is a long-term lease that allows schools to access funding through all stages of growth – from start-up to expansion through maturity. As a long-term partner, our team works closely with you as we explore budgetary and financial options to support your facilities needs.
Why long-term lease financing?
You can finance 100% of project costs
You can retain control of your facility
You can plan on long-term affordability
You can enhance your existing building or finance new construction
Your lease can be customized to your school’s model – whether blended learning,
traditional, etc.
Tenant improvements can be financed in your lease
Can be used as take-out financing for an existing bond or potential bridge to bond financing.
It was a blessing to find Charter School Capital. We couldn’t have even looked at a building like this without them. They were responsive, communicative, and very much about the school kids. Our students and their families are very excited about the facility!
~Freddy Mendoza, Founder and Teacher, Arizona College Prep Academy
Since our founding, we’ve been able to provide over $1.6 billion in funding to more than 600 charter schools across our nation and most importantly, to serve over 800,000 students.
We’re proud to provide the reliability and stability charter leaders require as they embark on their journey to educate more students today—and in the future.
If you have working capital needs or would like help with charter school facilities financing, our team of experts is here to help you with a needs assessment. Start by completing our online application or contact us for more information about our funding types (link below).
It’s a big relief to know that, with Charter School Capital, our organization can stand alone. They have done such a good job of making us feel part of something…You don’t get that feeling with a bank.
~Dr. Kris Sippel, Principal, San Tan Learning Center
Our team works with you to determine funding and facilities options based on your school’s needs. If you are trying to meet operational expenses, expand, acquire or renovate your school building, add an athletic department, or buy new technology, complete the online application below and we’ll contact you to set up a meeting to learn more about your needs.
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.
New Five-Day California Charter School Funding Option
We heard from a number of charter schools that they needed a faster funding option for tight-turn budget needs. We’re very excited to now be able to answer that request with our new five-day funding option, currently exclusively for California charter schools.
Since our founding, we’ve been able to provide over $1.6 billion in charter school funding to more than 600 schools across our nation and most importantly, to serve over 800,000 charter school students. We’re proud to provide the reliability and stability charter leaders require as they embark on their journey to educate more students today—and in the future.
If your school needs funds fast, we can provide charter school funding in as few as five business days so you can keep your focus on what really matters – educating your students. And, as an ongoing Charter School Capital client, you may qualify for a lower-cost option on fundings, as well as additional benefits and services as we partner with you to ensure your school’s continued success and growth. We help charter schools access working capital so they can:
Expand or grow programs
Open a new charter school
Enhance facilities – with labs, gyms, etc.
Provide new technology in the classroom
Hire and/or develop staff
Address budget shortfalls and delays (deferrals, holdbacks, etc.) gracefully
Improve transportation options
Enrich educational programs
Buy new equipment
Our team works with you to determine funding and facilities options based on your school’s needs. If you are trying to meet operational expenses, expand, acquire or renovate your school building, add an athletic department, or buy new technology, complete the online application below and we’ll contact you to set up a meeting.
To learn more about this new funding option, set up time with our California Funding Specialist, or get your funding request started by filling out the form here: GET STARTED
Webinar: Top Five Financial Mistakes Charter Schools Make…And How to Avoid Them
Join us for our live webinar this week!
We’re going to answer one really important question, “How do we avoid the top financial mistakes that charter schools make?” We’re being joined by some leaders of Desert Star Academy, SALTech, and Wayne Preparatory – and they’ll be generously and bravely sharing the mistakes they’ve made as charter leaders, and of course how they solved those problems for the future.
We presented some of this content at the National Charter School Conference in Austin, Texas last month to a standing-room-only audience, so we’re bringing it back as a webinar for those that weren’t able to make it out to Austin. Join us to understand the five mistakes and you’ll walk away armed with the tools you’ll need to avoid them. Our esteemed panelists:
Margie Montgomery, Founder / Executive Director, Desert Star Academy
Michael LaRoche, Founder / Executive Director, SALTech Charter High School
Sharon Thompson, Chairman of the Board, Wayne Preparatory Academy
Tricia Blum, Head of Business Consulting, Charter School Capital
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
