Charter School Funding Reaching Schools in 38 States

Editor’s Note: This post on charter school funding originally ran here, on November 6, 2018. It was written by Christy Wolfe, a Senior Policy Advisor for the National Alliance for Public Charter Schools (NAPCS)and was published by The National Alliance for Public Charter Schools. We are always inspired by the outstanding content disseminated by the NAPCS and are proud to share their valuable information.
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.

FY 2018 PROGRAM UPDATE: CHARTER SCHOOLS PROGRAM FUNDS REACHING SCHOOLS IN 38 STATES

In September, the U.S. Department of Education (ED) awarded grants in four of the six Charter Schools Programs (CSP): State Entities, Developers, Credit Enhancement, and Dissemination.

Congress appropriated a total of $400 million for these awards for FY 2018, including funds for active awards previously awarded. Due to increased funding in recent years, more states than ever have access to start-up funding—31 states have State Entity grants and charter schools in an additional seven states were successful in receiving Developer grants. Many states are also seeing charter school growth through grants to Charter Management Organizations for the Replication and Expansion of High-Quality Charter Schools, but awards were not made for that program during FY 2018.
This year, the program awards are a bit more complicated because, for the first time, two competitions were run under the new requirements in the Every Student Succeeds Act (ESSA). Let’s take a closer look at where the money went:

State Entity Grants: Funds to Open Charter Schools and Build Statewide Sector Quality

The State Entity grant program plays a key role in not only awarding subgrants to schools, but also providing funding for technical assistance and strengthening the quality of authorizers in a state.

Eight states received awards: Arkansas, Arizona, Colorado, Delaware, Idaho, Michigan, North Carolina, New York.
Five states were not successful: Alabama, D.C., Guam, New Hampshire, Puerto Rico.
Two Charter Support Organizations (CSOs) were funded: The new changes in ESSA unlocked CSP funding for non-state educational agency applicants, including CSOs. This year, two funded applicants from Arkansas and Idaho were CSOs.

At the close of this competition, 31 states (including D.C.) have a current CSP grant in their state (14 states with charter school laws are unfunded). Next year, nine states will likely have expired grants, which leaves a potential (although unlikely) pool of 24 applicants. If Guam and Puerto Rico are included, there will be 26 potential applicants.

Charter School Developer Grants: The Safety Net Program

This is the first year the competition has been run since the passage of ESSA. What is new is that there were two sub-competitions: one for replication/expansion grants, and the other for new charter school operators. There were 22 replication/expansion awards and 10 single site applicants. This year there were 32 funded applicants for a total of $30.2 million.
Ideally, this program would be obsolete. It is a safety for charter schools that wish to open in states that do not have a state entity program. If there was enough funding – and state capacity – for every state with a charter school law to have funding, new charter schools could simply apply to their state. Instead, after obtaining their charter contract, schools need to jump through the hoops required by federal grants to access funding. So, until every state has adequate funding for start-ups in their state, this program will continue to play a key role in advancing charter school growth.
BUT—you may have noticed that some developer grants went to states that also got a state-entity award (Idaho, Illinois, Michigan, North Carolina, and New York). The reason for this is, in part, because ED ran the State Entity and Developer competitions at the same time this year, so Developer applicants didn’t know if their state would receive a State Entity grant prior to applying. ED did not deem those applicants ineligible even when their state ended up receiving a State Entity grant. In addition, some developers were awarded a grant for replication and expansion because their state didn’t have a State Entity grant that permits them to make such awards, such as Ohio (NCLB-era grants don’t permit such awards unless a state has an approved waiver).
Of states that don’t have a CSP State Entity grant, seven have schools that received Developer grants: Alabama, Hawaii, Maine, Missouri, New Jersey, Pennsylvania, and Utah have charter schools that received Developer grants. Eight states with charter school laws have neither State Entity nor Developer grants (not including Guam and Puerto Rico).

Current Charter Schools Program Grants: State Entity and Developer Grants

Credit Enhancement: Reducing Facility Costs for Charter Schools

The Credit Enhancement program awards grants to organizations to “enhance” charter school credit so that they can access private-sector and other non-Federal capital in order to acquire, construct, and renovate facilities at a more reasonable cost. This year early $40 million was awarded to four entities.
This is a significant decrease from the $56.2 million in awards for 2017. More funds were awarded last year, in part, due to the large pool of high-quality applicants and the needs of the sector. This year, appropriators restricted ED’s flexibility to fund additional applicants, so they were limited to $40 million. Unlike the other CSP programs, Credit Enhancement funds are a one-time allocation so there aren’t any continuation awards—the amount appropriated is the amount that goes out the door.

Dissemination: Advancing Accountability and Facilities Access

Like the Developer program, this was the first competition year for the new National Dissemination program under ESSA. Previously, this program was known as the National Activities program and had a somewhat broader focus. Under ESSA, the program is focused on the dissemination and development of best practices. This year, 8 grants were awarded to organizations and charter school operators for a total of $16.2 million over the grant period. There were two “buckets” of funding to which applicants could apply: charter school authorizing and charter school facilities. For FY 2019, we anticipate that ED will propose new priorities for this program.
The National Alliance is pleased to be a recipient of a Dissemination grant to establish the National Charter Schools Facilities Center to develop and disseminate best practices and reduce the burden of obtaining and financing charter school facilities.

Grants to Charter Management Organizations for the Replication and Expansion of High- Quality Charter Schools: A Delayed Competition

ED did not run a competition for the CMO Replication and Expansion program because the agency is required to propose and take public comments on new program rules under ESSA. Comments for the new competition closed on August of 2018 and the competition will open later this year or in early 2019. Congress knew that ED would need extra time, so FY2018 funds for this program didn’t expire on September 30—ED has until March 2019 to make awards. ED’s “forecast” indicates that the competition for this program will be announced in late November 2018 and applications will be due around the start of the New Year. $120 million is available, and a little more than half of that amount will likely be available for new awards.

At Charter School Capital, our dedicated team of finance 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.

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The True Impact of Charter School Capital Funding

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. We were honored to get some of our customers and partners to share with us the true impact of charter school capital funding on their students and schools in this short video.
We are the nation’s leading provider of charter school financing including working and growth capital as well as facilities financing. Over the last 10 years, we’ve put more than $1.7 billion to work for 600+ charter schools educating more than 800,000 students across the country. Not only do we provide funding for charter schools, we also provide strategic planning for growth, financial planning, legislative and state budget insights, charter school resources, and an ongoing commitment to charter schools. To learn how some our clients and partners have been impacted by working with us, take a look at the video. The transcript can be found below.

Intro Speaker 1: I think funding for education, in general, is difficult, but in charter schools, we have some additional problems. One example is the hold-back situation
Intro Speaker 2: For every dollar we’re spending, we’re suddenly only getting sixty cents back during the current year with the promise that next year we’ll pay you back. I mean that was a serious problem for us.
Intro Speaker 3: We’ve made commitments to students, parents, and teachers to provide a high level of education and, unfortunately with the state of the economy and the state of deferrals, we find ourselves having to find different options.

CHALLENGE ACCEPTED…

NOT A BANK

Ricardo Mireles, Executive Director, Academia Avance (RM): Starting the relationship with charter school capital is different from what we have experienced with other financial institutions and that they’re very focusing on the viability of the school going forward relative to the charter.

Frank Stucki, Chairman of the Board, Paladin Academy (FS): They have educators on staff, they understand the process, understand what running the school means, so they were different than any other lender that we had talked to. That was refreshing and important.
Dr. Bill Spira, Executive Director, Augsburg Fairview Academy (DBS): That’s something I think that is probably different with most banks, is that they really haven’t gotten the message that charter schools are a dynamic small business.
Dr. John Biroc, Principal, Charter High School of the Arts (DJB): You know, banks, financial institutions, and that seems to me like an awful lot of work that an awful lot of effort. We have bigger fish to fry. We’re trying to educate kids. And Charter School Capital has always stated to us in one way or another, we believe in you.
FS: Their commitment to the industry of charter schools is that I don’t. I don’t know anybody else out there doing that and that’s very, very important.

A RELIABLE OPTION

Becky Meyer, Executive Director, Academy for Science & Agriculture (BM): I never looked at selling receivables previously. Once I understood what it was and how we were going to guarantee our money, then it became a pretty easy process.
Paul Okaiteye, Director of Business Services, New Design Charter Schools (PO): It’s helped us to stay afloat, to be able to stay in business for our teachers and all the employees to have the confidence that when I go to work I can give my all and know that by the end of the period when I’m supposed to get my check, they will come on time.
DJB: They pay us the money up front and then we have the money to pay our teachers, to buy our textbooks, to keep the place clean, and to keep the whole school running.
Sandro Lanni, Founder & President, Charter School Management Corp. (SL): And there isn’t all the legal compliance once a receivable is sold, it’s sold and that’s it. So, it’s just much simpler, cleaner process and a lot of the other options.
Skip Hansen, Senior Vice President, Learn4Life (SH): Unless somebody is going to create vehicles in order for charter schools to really grow and have access to cash, then I’m going to open my arms up to any investors in any business that is going to make greater opportunities for kids to have more schools, have more books, hire teachers and all the things that we want to do.
DBS: The amount of time you have to spend convincing a skittish banker that you are worth taking the risk, is time you don’t spend focusing on your real needs. And that to me is fundamentally one of the structural values of financing by the sale of receivables. That’s a wonderful model.

A STEADY RELATIONSHIP

Sabrina Bow, Executive Director, New City Public Schools (SB): I view them as a close partner. It’s never been a doubt for me that Charter School Capital is deeply concerned, deeply interested in the well-being of schools.
RM: You’ve been working with charter school capital now for four years. They’ve been flexible, and they’ve been very professional, and they’ve allowed us to stay focused on our students.
Joanna Koenig, Engagement Director, Clifton/Larsen/Allen (JK): The knowledge that it’s a partnership long-term was very, very important. I don’t know how you can run a school when you never know if next year I’ll get that funding or not.
Xavier Reyes, Executive Director, Academia Moderna (XR): They want schools to be healthy financially and otherwise because at the end of the day, who they serve and who we serve are the same people.
PO: They’re very professional. They want to get you what you need.
BM: They spent a lot of time at our school. They got to know staff members. They got to know students and they worked with us. They seem to be proud of our accomplishments as any one of the members of our community would be.
Eric Mahmoud, Founder/CEO, BEST Academy (EM): It was more than just writing us a check. We had a very good relationship during the years that we’ve been using Charter School Capital.

BUILDING ON SOLID GROUND

JK: If we weren’t able to find an organization like charter school capital who was willing and able to provide the funding that we needed, I can’t imagine we would have survived.
PO: They have been a lifeline because they have come through for us at times when we needed it the most. And they have done things in the setting of timing that other institutions have not been able to do.
DJB: We need them. We need them desperately. And I could see where any charter school under these conditions would need Charter School Capital to keep their school alive.
EM: Now, I think it was a good business decision and as a result, we’ve been able to move our children where they need to be academically.
XR: If it wasn’t for charter school capital, we would not be here today. We would not be serving those kids that need it really bad.
SH: I think we’ve served another 2000 students in the last two years because of the availability of cashflow financing. Those are 2000 kids that could on to cure cancer or do something really great in our society.
BM: I think they’re interested in making sure that charter schools are successful and that’s an important piece to me.
EM: Based on all the options that were available to us, Charter school capital was the best option.
Sandro Lanni, Founder & President, Charter School Management Corp.: In the end, that is why we’re all here and the bottom line is if this option was not around, there’d be a lot of kids that would not be able to participate in their local charter school because their local charter school would not be open.

Charter School Capital is committed to the success of charter schools and has solely focused on charter school capital funding since the company’s inception in 2007. 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 make a difference to students, schools, and communities across the country. Ask us how we can help your school.

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Charter School Capital Funding Supports Provisional Accelerated Learning Center’s Success

In this School Spotlight, we share how Charter School Capital funding helped Provisional Accelerated Learning Center (PAL) become financially solvent. Read this full case study to learn more about PAL and how they partnered with Charter School Capital to fill funding gaps.

In the mid-1980s, San Bernardino’s traditional public high schools were suffering a dropout rate of 40-50%. The system was failing. The community was in desperate need of help, and The Provisional Accelerated Learning (PAL) Center opened to provide a new path.
Understanding how critical a strong education is to success, The PAL Center began as a not-for-profit tutorial program in 1984 to help those students most at-risk. As the program expanded, it evolved into a charter school that now serves approximately 700 students. The PAL Center welcomes students in grades 9–12 hoping to earn their diploma as well as 19– 21-year-olds seeking job skills training and career placement assistance.
“We’re all about giving young people a second start in life,” says Lawrence T. Hampton, chief financial officer for The PAL Center. “We have specialized in working with students who have been the hardest to serve.” Though designed to focus on those students most in-need, Hampton notes an interesting trend that has occurred in recent years.
“We’re becoming more of a school of choice. When we first started, we strictly took those students that were headed toward dropout,” he explains. But in the late 2000s, “we started seeing more incoming freshmen choosing to come to school here instead of being referred… So it’s been fun to watch that transition.”
The reasons The PAL Center has grown from a school of last resort to the first choice for so many are the non-traditional benefits it offers students.
The school operates from 7:30 a.m. – 12:30 p.m. four days a week, providing students with the open schedule many of them need to hold jobs or help with their families. In addition, the school is located just outside of the city in a quiet area surrounded by mountains. This picturesque setting helps encourage calm and focus.
Finally, class sizes average around 21 students, helping teachers provide more personal attention than students would receive at other area high schools where class sizes are larger.
Despite the school’s successful track record, Hampton has had to manage challenges threatening The PAL Center’s existence. Deferrals of state payments in California forced the school to tap into its savings, which proved to be insufficient as the deferrals increased. The school also obtained a credit line, but it quickly ran out. School administrators – having made a promise to the students and families of San Bernardino – needed to find a more permanent solution.
The PAL Center’s accountant referred the school to Charter School Capital for funding. Within a few weeks, the two organizations began a long-term relationship that at times has been a lifeline to the school.

“The relationship has allowed us to stay financially solvent, and I can honestly say without that we would’ve been out of the charter school business,” says Hampton. “This school would have folded.”

“They have taken a personal interest in seeing us survive, and that comes through quickly when you’re talking to them. It’s more than just business, and I’m grateful for them.”

Charter School Capital is committed to the success of charter schools and has solely focused on funding charter schools since the company’s inception in 2007. 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 $1.6 billion in support of 600 charter schools that educate 800,000 students across the country. For more information on how receivable sales will benefit your charter school, contact us!

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