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Charter School Financing Myths

Charter School Capital

October 8, 2014


AFSA High School, Charter School Capital, Minneapolis, MinnesotaThe 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.
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!

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