Tag: charter school facilities funding

Charter School Facilities

Should States Support Public Charter School Facilities Funding?

Editor’s Note: This article was originally published here on July 31, 2019 by EdWeek and written by Andrew Ujufusa. 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 school choice, 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.

If Charter Schools Build It, Will States Help Pay For It?

By Andrew Ujifusa on July 31, 2019 4:34 PM

Most states have policies on the books to provide some kind of funding support for the facilities that charter schools use. But dive deeper into what’s on the books, and the number and types of policies can vary significantly from state to state.

That’s one relatively straightforward conclusion to draw from a new report from the National Alliance for Public Charter Schools published earlier this month. ”State Policy Snapshot: Facilities Funding for Public Charter Schools“ says that 30 states and the District of Columbia have a policy covering at least one of the following funding issues charters deal with:

  1. Providing a per-pupil facilities allowance to charter schools;
  2. Creating a charter school facility grant program;
  3. Ensuring that charter schools have equal access to all existing state facilities programs and revenues for district-run public schools in a state;
  4. Providing a charter school facility loan program;
  5. Providing charter schools with access to local property tax dollars generated for facilities.

In addition, 20 states and the District of Columbia have more than one such policy on the books. However, no jurisdiction has all five policies listed above, according to the alliance. And not every state’s policy, such a grant or loan program, actually gets funded.

Need some of that report’s data in visual form? Check out the interactive map here.

Questions about charter school facilities raise several issues and can prove particularly divisive.

Supporters believe that as public schools, charters shouldn’t face particular hardships when it comes to issues like paying for space. And some charters, particularly those that aren’t part of big established networks or are just getting off the ground, do face major hurdles when it comes to finding and paying for their locations. As one Portland, Ore., charter founder told Education Week back in 2013, ”We have to meet all of these code requirements that older schools [and private schools] may not have to comply with because we’re a new school, which makes even the consideration of most spaces impossible and difficult.”

However, others argue that comparing charter schools’ facilities access to the bonds and other financial tools used by traditional district-run schools oversimplifies how the traditional public schools actually get their facilities. Skeptics have also cited the instance of a charter school suing its management company, Imagine Schools, which also rented a facility to the school, over allegations that Imagine charged the school excessive rent. A similar case played out in Los Angeles in 2013 that ended with two founders of a charter school getting sentenced to prison and community service.

In New York City, which must provide charters with rental assistance if it doesn’t provide public space for them, charter schools’ facilities access has provoked bad blood for years.

New Opportunity for Charter Facilities?

One additional policy areas charters are exploring? Opportunity Zones. As we wrote earlier this week, these zones were established by the 2017 tax law and are designed to provide tax benefits to investors who put money into designated distressed communities. Supporters of Opportunity Zones believe charters could be big beneficiaries by linking up with these investors, possibly in conjunction with other groups and institutions seeking space, to help with facilities and other costs.

A February presentation on Opportunity Zones hosted by the alliance notes that the structure of the zones “rewards patient capital” (since the tax incentives hinge on long-term investments) and “takes equity capital off the sidelines and puts it to work in low-income communities.”

The alliance’s July report on state policies says this about the general landscape and trends for this issue:

One of the biggest challenges to the continued expansion of charter schools is the fact that many charter school laws place the ultimate burden of obtaining and paying for facilities on charter schools themselves. As a result, charter school leaders struggle to find suitable and affordable facilities to house their growing numbers of students.

States play an important role in determining the options available to help fund charter school facilities. Increasingly, states are enacting and updating state policies to help offset the cost of leasing, purchasing, and maintaining charter school facilities.

Read the full alliance report on those policies below:

State Policy Snapshot: Facilities Funding for Public Charter Schools

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.

GET THE RESOURCE

Charter School Facilities

Charter School Facilities: Overlooked and Underfunded

Editor’s Note: This article was originally published here on May 17, 2019 by the Washington Examiner and was written by Nina Rees, CEO of the National Alliance for Public Charter Schools and Ramona Edelin, Executive Director of the DC Association of Chartered Public Schools.

Across the U.S., accessing charter school facilities is, by far, the greatest challenge faced by charter schools. With more than 1 million students across the country on charter school waitlists and the fact that many charters operate in suboptimal buildings, we know that the lack of facilities is a serious obstacle to charter growth.

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 school choice, 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.

Charter school facilities are still overlooked and underfunded

It’s National Charter Schools Week, when advocates speak out for the 3.2 million students — 6% of all public school students — educated at charter schools, a thriving public education option that is increasingly popular with families.

Since the first public charter school opened one quarter of a century ago, the charter school reform has spread to 47 states and U.S. territories. In historically troubled school districts, student enrollment has grown dramatically. In New Orleans, Detroit and Washington, D.C., the share of students enrolled in public charter schools is 92%, 53%, and 47%, respectively.

Taxpayer-funded and tuition-free, charters develop their educational programs independently of school districts while being held accountable for improved student performance. This autonomy enables these unique public schools to adopt approaches that boost student outcomes. But it also creates a challenge: unlike traditional public schools, charters do not receive a schoolhouse upon opening. This makes acquiring adequate school space a constant challenge.

Nationwide, charter school leaders report that lack of access to suitable school facilities is one of their primary concerns—and one of the biggest barriers to expanding student enrollment. Nearly 1 in 5 charters had to delay opening by a year or more due to facilities-related issues.

While public school buildings paid for by taxpayers should be available to all public school students, the reality is that many school districts, including Detroit, Indianapolis, and Minneapolis, refuse to allow charter schools to lease or buy even vacant school buildings. Sadly, this results in many schools operating out of shopping malls, office buildings and repurposed industrial facilities.

Accordingly, around 40% of charters lack essential amenities such as gymnasiums, libraries, science labs, cafeterias and outdoor space, National Alliance for Public Charter Schools research finds.

This is a vital issue. Why? Because demand for charter schools from parents and guardians significantly exceeds supply. Indeed, if all families seeking a place for their child could secure one, the total number of charter students would be 8.5 million — almost three times today’s actual enrollment — according to research by Phi Delta Kappa International, a professional organization for educators. Of parents who would like to send their child to a public charter school, over half cited lack of access — the school is too distant or has a waitlist — as the reason why their children did not attend one, PDK found.

Importantly, over half of the nation’s charter students live in economically-disadvantaged homes eligible for federal lunch subsidies.

In Washington, D.C., the government spends three times the amount per student on school properties for traditional schools compared to the facility funding it makes available to their charter school counterparts, even though the charters serve a higher share of needy students. Local charters receive a per-student allowance for school facilities that varies each year through city budget wrangling and election cycles, and consequently lacks appeal to the private sector loan market to which charters must turn in a city with a red-hot real estate market.

Meanwhile, the District government has proved an appalling steward of its own property: for decades, scores of surplus school buildings have been sold to private developers, often for luxury uses, or simply left to rot. Only months ago, developers acquired five historic schoolhouses at a time when 11,000 students are on waitlists for city charters.

The District’s own laws actually require it to offer surplus school property to charters to lease or buy before developers can. This mandate is flouted more often than not, an injustice one finds repeated in the minority of other jurisdictions whose laws ostensibly protect charter students’ interests.

While four in five D.C. charter students are economically disadvantaged, those representing the city’s most vulnerable communities are twice as likely to meet college and career readiness benchmarks as their peers in the traditional school system.

At the federal level, the Charter Schools Program helps charters access space and overcome other start-up hurdles. But funding amounts to less than 1% of the U.S. Department of Education’s budget, which does not reflect the extent of charter school enrollment — or demand — today.

Because parent demand indicates millions more students would attend a charter school if one were available to them, local jurisdictions need to allow charters access to surplus public school buildings and space before developers can bid for them. Prioritizing equality in per-student facilities funding also is essential. Federal education grants could encourage this best practice.

America’s public charter schools have significantly enhanced public education quality, especially for the nation’s most disadvantaged students. Federal, state, and local government should step up to back them.

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.

GET THE RESOURCE

Charter school facilities

A Barrier to Growth: The Charter School Facilities Gap

Editor’s Note: This content was originally published here in May by Academica Media. The charter school facilities gap is one of the biggest barriers to growth and a universal challenge for many charter schools. Listen as Ryan Kairalla from Doral College, speaks with Mark Medema, the Managing Director of the Charter School Facility Center for the National Alliance for Public Charter Schools. Whether it’s finding a facility, affording one, maintaining one, relocating because you’ve outgrown your facility, these are all common issues charter leaders face. Learn about the current state of charter school facilities across the country and what’s on the horizon to address some of these issues on a legislative level.

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 school choice, 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.

Listen to the complete podcast here or read the transcript below.

Bridging the charter school facilities gap with the National Alliance’s Mark Medema

Ryan Kairalla: Welcome to the show everybody. I’m Ryan Kairalla from Doral College. Our guest this week is the Managing Director of the Charter School Facility Center for the National Alliance for Public Charter Schools. In his role, he leads the National Alliance’s facility experts and addresses the facility policy and regulatory issues confronting charter schools nationwide. He has also worked with the Charter Impact Fund, Building Hope at the international education reform organization EdVillage and more. You can find out more about his work by visiting www.publiccharters.org.

Ladies and gentlemen, we are happy to have Mark Medema on Charter School Superstars. Hi, Mark.

Mark Medema: Hello.

Kairalla: It’s so good to be hearing from you. I’m excited to finally get to talk with a guest about facilities. That is a topic that we haven’t touched upon, and I know it’s definitely one that matters to the folks listening that are charter school advocates, charter school employees, charter school enthusiasts. So, let’s get it right into it. Can you tell the listeners a bit about the work you do with the National Alliance with the Charter School Facility Center?

Medema: Would be happy to. One of the biggest barriers to growth of charter schools these days is facilities, and as you mentioned, it’s often not talked about. Educators like to focus on education, and facilities is to say it, some people like thinking it’s like watching paint dry, and facilities, it actually is watching paint dry.

So, what we’re trying to do is bring to light some of the best practices happening for facilities, whether it’s about how school leaders and board members can develop and design and finance buildings much more affordably, or how policymakers can use public resources, whether it’s a building or state or federal funding to help lower the cost of facilities so that schools are paying more into the classroom rather than paying more money on the classroom.

Kairalla: Absolutely, and you’re so right when you say that facilities are the biggest challenges or represent one of the biggest challenges that charter schools face when building a sustainable program. I see it on the education services company side. I see it on the legal side as a lawyer. I’ve seen a lot of really otherwise successful charter schools with great models have trouble because they have issues with the actual building itself. As you noted, it can be either a problem with finding a good facility, affording that facility, maintaining that facility, getting a new facility once you’ve outgrown the old facility. Among those kind of different areas of facilities, where do you tend to see charters having the most trouble when it comes to getting a stable place to call home?

Medema: It really starts with going out and finding and developing a facility. School leaders are educational experts. They’re not commercial real estate experts, and so they’re venturing into a world that they don’t know. Commercial real estate, I think, probably doesn’t have a great brand to it to begin with, and now an educator has to figure out how to navigate an area that doesn’t really have a lot of straight ground rules and guidelines. So, they’re really in just unchartered territory for themselves.

Once they do get familiar with this, then it comes down to the cost of money. Charter schools have to borrow money at rates much higher than the government can, which is just another level of unfairness between charters and other traditional school systems, and so we need to find lots and lots of new, creative, innovative ways to bring down that cost of funds to a much more equitable level to what the traditional school systems are paying.

Kairalla: Yeah, there’s a lot about just the inherent nature of the charter model that makes facilities acquisition a challenge, or least from what I see on the legal side. You spoke about the difficulty dealing with lenders because … And I think it’s similar to the difficulty that charter schools have when dealing with landlords. These are two groups of people that look at the charter model and say, “You’re on a five-year charter maybe. This charter could succeed. It might not.” We don’t know what the political climate’s going to be, so it makes you a bigger risk either to underwrite a mortgage for or to ultimately for a landlord to want to take a chance on you, and so it does create this sort of gap. What kind of solutions have you explored with maybe your past work with Building Hope or what you do at the National Alliance that try to help bridge that gap?

Medema: There are some groups that really understand the inherent risks in charter schools much better than others. Charter schools typically will have much lower default rates, I think, than the private capital markets expect, but they just quite haven’t begun to pricing that. So, a lot of it educating the private marketplace or finding replacements for the private marketplace, and those can be through non-profit funds, which are seeded by social capital really looking for double bottom line type returns and those kind of financial returns that are much more affordable for charter schools than what the private commercial marketplace would provide.

Kairalla: And are you seeing an emergence of more of these kind of charter-friendly lenders or real estate owners or landlords as the charter model proliferates nationwide?

Medema: We’re seeing more of them. I’m not sure it’s there are tons of them still, so there’s still a huge demand. The foundations I think are stepping into this place now. They’re starting. Some of the family funds are creating their own, so not just investing in existing non-profits but creating new non-profits. So, it’s exciting to see that happen.

What we haven’t tapped into very well is the individual retail investor who would love to see their personal investments go to social good, but we haven’t really developed easy mechanisms or products for them to be able to support charter schools in their communities. I think that’s the next venture.

Kairalla: That’s a particularly interesting development because you certainly see those kind of investment vehicles in other areas of real estate space, and so perhaps if those things could emerge in the charter school field, that could be a pretty welcome development.

You spoke earlier, Mark, about policy reforms and some of the legal issues that exist maybe state by state that sort of create additional challenges for charter schools in the facility space. So, can you talk a bit about the work you do at the National Alliance to advocate at the policy level to try to make the facilities challenge easier for charter schools? Are there particular reforms that your shop is really trying to fight for?

Medema: So, we were really excited to see Idaho’s Legislature pass and the Governor pass a moral obligation bill. So, when a traditional school district borrows money, it has the backing of the state or the school district that’s in the state behind it because it has a taxing authority, so they usually are very little risk. The students who go to public charter schools are the same public-school students that should afford the same backing of the state, and a moral obligation really says the state is providing its obligation that it’ll backup a charter school’s debt. It’s not a legal, binding obligation, but it’s a moral obligation. Idaho’s now the third state to do that behind Colorado and Utah, which will see great success and great savings to schools. What-

Kairalla: Well, that’s interesting.

Medema: What the National Alliance would like to do is talk more about this and share this with more state legislators. Lots of them just never even heard of this. It’s kind of a not very well-known strategy that’s been used in affordable housing and higher ed and healthcare centers, and we want to try and spread this to more states. So, that’s one low-hanging fruit that we should be working on the next few years.

Kairalla: Well, that’s pretty interesting, and so what you’re finding is that … Are you finding that when states adopt these moral obligation bills, which as you said don’t actually require the state to step in if the charter school defaults, just having the moral obligation bill is enough to actually allow charter schools to get more attractive lending terms?

Medema: Yes. A state might have a AAA rating and so a school district can borrow at AAA rates. That’s an S&P rating methodology criteria.

Kairalla: Mm-hmm (affirmative).

Medema: A moral obligation will get you close. It might get a AA rating, which is probably 100 basis points or one full percentage point less on the interest rate. That, over a 30-year mortgage, is millions of dollars of savings to a school. That’s money that can be spent on teachers. It can create jobs. It can go into special programming, and all with no cost to the state because again, it’s not a binding obligation. Now, the states will most likely adhere to it because they don’t want the markets to know that they’re backing out on their moral obligations, but it just doesn’t get called because charter schools are really such a good risk for investors. So, it’s never been called upon in its history.

Kairalla: Yeah, really, it’s just about the state kind of just stepping a little bit with this moral obligation, and all it’s really doing is just educating the marketplace because it sort of gives people an opportunity to take a chance on charter schools. Then, they realize, well, this is actually a pretty good investment. This is a stable, commercial real estate tenant. It’s going to be there a while. It’s performing a social good in the community, and by the way, a good school in an area tends to have an effect for surrounding real estate that’s pretty positive. And so, that can be a big win all around.

Medema: And it’s not new. It started in the ’70s in New York with housing. We just hadn’t figured out how to transfer it over to the charter school sector. Now, we’re seeing more progress on that front.

Kairalla: That’s very exciting to hear. You’re actually going to be participating in the National Charter Schools Conference. You’re going to be doing a session about, surprise, facilities, and for a lot of the listeners out there who I think are hungry for more information about this and want to hear more about the developments and how they can up their facilities game, I’m sure that they want to take part. Can you tell the listeners a bit about what you’re going to talk about at the conference?

Medema: We’ll direct the audience or for two audiences. If it’s a school leader, it’s a lot about best practices from what other schools have been doing to identify property, acquire it, work with developers, secure financing. And then as for the policymakers and some of the philanthropic foundations who are looking for more systemic changes, things like these bills or including charter schools in a district’s school bond offering, which we’ve started to see around the country, there’s a handful of policy initiatives that we think should resonate and should spread from one city to another.

Medema: Again, a lot of cities don’t know about what’s happening around the country. This isn’t a topic that’s talked about very much. Again, a little bit like watching paint dry, and so we just need to figure out how to share these best practices from one city and state to another.

Kairalla: Well, let’s start talking about this, people. Facilities are super, super important. We all have to have a place to call home for our charter schools, and I’m telling you folks. I can tell you from my own experience, a solid facility, good landlord, good property owner, everything can really make a big difference for charter schools. So, Mark, I’m so grateful for the work you do at the National Alliance to help the charter schools thrive in this area.

Let me ask you this last question before we let you go, and this has been truly a pleasure speaking with you. If with a snap of your fingers, you could make any change to the education system, what change would it be?

Medema: I think it starts with a belief that all children have the potential to meet and rise to their full expectations. I think if everybody, whether they work in schools or even just the general population, really believed that they and their neighbors and their friends and people who live down the street really believed in the full potential of all kids, making these policy changes would be easy. It’d be a snap of the fingers. Everybody would know exactly what we’re doing.

I think there’s probably still some hesitancy, and we think watching students excel is sometimes an exception. And rather than exception, I think all these students are just exceptional, and I think we can all come to that realization.

Kairalla: He is the Managing Director of the Charter School Facility Center for the National Alliance for Public Charter Schools. Find out more about his work by visiting www.publiccharters.org and don’t forget to take part in the National Charter Schools Conference June 30th to July 3rd in Las Vegas. Visit ncsc.publiccharters.org.

Kairalla: Mark Medema, everybody. Mark, thank you so much for joining us this week.

Medema: Thank you very much.

Kairalla: And thank you all for listening to Charter School Superstars.

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.

GET THE RESOURCE

 

charter school facilities

Charter School Facilities Program Overview

About Charter School Capital

Working exclusively with charter schools, we measure our success by the number of students we serve. Our team works with all sizes – and types – of charter schools to budget and plan for current needs and future growth – whether your school requires operational capital, growth funding, or facilities expansion. We partner with our clients so they can focus on what’s most important – educating students.

Long-Term Lease Financing

Our lease product allows schools to access funding through all stages of growth – from startup to expansion through maturity. Our transparent lease terms mean that there are no artificial incentives to seek refinancing – another great benefit. As a long-term partner, our team carefully evaluates each school’s unique operation to help them determine the revenue that can be committed to supporting facilities.

Benefits of Long-Term Lease Financing

  • Finances 100% of your total project cost
  • Retain control of your facilities
  • Enhancements of existing buildings and ground-up construction
  • Ensures long term affordability
  • Tenant improvements included in the financing
  • Customized to school specifications (blended learning model, traditional, etc.)

Charter School Capital Facilities Program Overview

As part of our ongoing support of charter school growth, our Facilities team assists charter leaders in finding appropriate real estate, providing long-term lease financing as well as managing leases and facilities development. We are building our portfolio specifically with charter school properties in order to service a niche market with niche needs. We currently own 42 school properties in 11 states, more than $350 million in assets.

Financing Approval Criteria

Our experienced team will support you every step of the way and answer any questions you may have.

  • Experienced school leadership
  • Proven and consistent track record of operational success
  • History of good academic performance
  • Stable or increasing enrollment
  • Strong community demand (student waitlists, expanding grades)
  • Sound financial performance
  • Lease payment target that’s less than 20% of total revenue
  • A healthy relationship with the school’s authorizer
  • Solid and engaged Board of Directors

Download the PDF of this content here.

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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.

GET THE RESOURCE

 

How Does Your School Building Impact Student Health, Attendance, and Performance?

A large body of research has demonstrated that school buildings can influence student success. In Schools for Health, Foundations for Student Success: How school buildings influence student health, thinking, and performance by Harvard School of Public Health, researchers identify nine foundations of a healthy school:

  1. Ventilation
  2. Thermal Health
  3. Lighting and Views
  4. Air Quality
  5. Moisture
  6. Dust and Pests
  7. Water Quality
  8. Safety and Security
Grow Schools Healthy School Foundation
  • As of 2019, there were up to 13.8 million missed school days each year due to asthma.
  • Kids can face adverse environmental exposures associated with building decay, such as water damage, mold growth, poor plumbing, and legacy pollutants that persist in the environment.
  • Common indoor air pollutants in schools have been associated with acute, chronic health effects. Elevated CO2 levels in classrooms have been linked to increased student absence.
  • Thermal conditions can impact focus and performance. Low absolute humidity has been associated with increased transmission of seasonal influenza outbreaks, leading to absenteeism.
  • Students in schools with the noisiest types of HVAC systems were found to underperform on student achievement tests.
  • Students’ perceived sense of security can impact their mental health, engagement in school activities, and academic achievement.
  • Allergens common in schools can affect student attendance, comfort, and performance.
  • Students exposed to blue-enriched white light in the morning have shown faster cognitive processing speed and better concentration performance.
Grow Schools Healthy School Benefits
Resources for Building Upgrades

The scientific evidence presented in the Harvard study represents only a fraction of the vast body of research supporting the need to upgrade and improve school buildings.

The good news is that when schools take action, tangible results follow. Here are more resources to help you if you’re starting a building renovation project.

If you feel that finding the perfect facility for your charter school seems like a huge, complicated undertaking, you’re in good company. Across the U.S., facilities are, by far, the greatest challenge faced by charter schools. 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. Check out these five key considerations when considering charter school facility financing.

1. Before you do anything else, understand what you can afford.

Take the time to understand your revenue and expenses. Knowing what you can afford for rent will inform how much you can borrow for your new facility or facility expansion.

2. Plan at least a year ahead.

Any kind of facility expansion will involve quite a lot of effort and likely involve your entire team. The range of burden varies, but moving staff, students, furniture, and equipment is an enormous undertaking. If you’re renovating your current facility, you still need to plan ahead so your programs aren’t disrupted.

3. Look at market trends

The charter school market boils down to this: Plenty of kids want to attend charter schools, but there just aren’t enough seats, classrooms, and schools to serve all of them. Looking at market trends, money is cheaper than it was a decade ago or even five years ago, but interest rates have actually been rising over the last few years and are expected to continue to rise even more. The Federal Reserve Board is always analyzing the effect of interest rates on inflation and economic growth and has the ability to raise or lower them at any time. Changing interest rates affect every aspect of the capital markets.

4. Reconcile your dreams with your budget realities

Three key considerations here are:

  • Requirements: Everyone wants a school that they can be proud of, but that isn’t as important as having a facility that enables you to meet your academic mission, fulfill the promises made in your charter, and meet your charter’s enrollment goals in the near term. So, go back to your mission and your board of advisors and dive deeply into what your facility must have to carry out your mission. Science lab for a STEM school? Auditorium or music room for a performing arts school?
  • Curb Appeal: What are the minimum requirements needed to attract enough families to meet your enrollment goals? The way your facility looks isn’t as important as what it can do—but it’s still important. Depending on the area, the way a school looks can have a significant impact on student enrollment, and enrollment numbers drive operating revenue, which in turn affects the quality of your academic programs.
  • Budget: Taking into account revenue and financing streams, what can you afford? Getting prequalified is the key first step in the process of renovating, expanding, or finding a new facility.

5. Understand the financing options available to your school

There are four main types of financing that charter schools use to finance facilities:

  • Cash
  • Investment Banks
  • Bonds
  • Long-term Leases

Your financing options may expand as your school matures. After a school secures its first charter renewal, more options become available, and the more conservative players in the capital markets begin to feel more confident about participating.
Depending on your school’s specific situation, one option may be the obvious best choice, or maybe you’ll need to weigh the pros and cons of a few different options. For each option, compare and contrast the amount of funds you’ll spend up front and annually to get the facility that you need. The time and opportunity costs associated with each option can vary widely, with bonds generally on the high end and long-term leases on the low end. Some transactions can take six to 12 months; a long-term lease typically takes between 60 and 90 days.

Charter school facility financing is complex, that’s why it’s so important to find the right funding partner to help guide you through the process and help you succeed. Charter School Capital has years of experience in navigating the unique needs and challenges of charter schools and has helped schools achieve their facility goals using each of those methods—and our team of dedicated charter school experts will help you see which solutions might be best for your school’s situation. Connect with one of our charter school advisors to learn how we can help you achieve your goals.

If you’re still feeling overwhelmed, don’t worry, we’ve developed a manual to cover our perspectives on the charter school facilities landscape market and provide you with practical and actionable advice on planning and realistically balancing your team’s facility dreams with budget realities. We also cover in-depth the four primary funding structures that charter schools use to finance facilities mentioned above: cash, banks, bonds, and long-term leases.

Download this guide to get a deeper dive into the five keys to charter school facilities financing we’ve mentioned in this blog post.


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.

GET THE RESOURCE

Atlantic Montessori Charter School (AMCS) was founded by their passionate and dedicated Executive Director, Juana Garcia, with the mission to provide quality instruction following the founding principles and philosophies of the Montessori Method. They strive to create a learning environment that respects children as unique individuals in an atmosphere of caring, creativity, kindness, firmness, dignity, and independence. Their first campus, Pines, is a K-3 school and they’ve since added an additional campus, West, a K-5 school.

Atlantic Montessori Charter School Partners With Charter School Capital To Add A Campus And Pay Off Debt
Challenges
  • The struggle to find funding was frustrating as other lenders would not take the time to explain things clearly.
  • AMCS wanted to expand to a second campus but needed $80,000 for a deposit and the first month’s rent.
  • In order to expand to a second campus, a daunting fight with the city for approval led to over $100,000 in legal fees.
  • With 122 students, it was difficult to operate paycheck to paycheck with no leeway or the ability to pay back their substantial legal debt.
Solution
  • Grow Schools helped AMCS access working capital to finance their new campus deposit (and first month’s rent) as well as pay off their legal bills.
  • Charter School Capital purchased state aid payments due to AMCS from the State of Florida; and, in exchange, provided funding to the school they needed, when they needed it.
  • Charter School Capital also worked with AMCS to devise a plan to stop using receivables payments after a certain period of time.

[Their] approach, they way they explained everything to us in detail—how everything worked—made us feel like we weren’t stupid for asking the questions we had. We felt like we could trust them. It all comes down to their exceptional customer service. — Juana Garcia, Executive Director, Atlantic Montessori

Atlantic Montessori Charter School Partners With Charter School Capital To Add A Campus And Pay Off Debt (2)
The Result

The funding provided by Grow Schools helped springboard AMCS’s success. It enabled their expansion; helped them pay off legal fees; increase enrollment; purchase needed Montessori materials; provide training for their teachers; acquire new computers and furniture; and covered basic operational costs. Executive Director, Juana Garcia, the life force behind Atlantic Montessori Charter School, is now looking toward their future. In addition to some facility renovations and upgrades, her dream of opening a middle school may be on the horizon now for this now growing, thriving school.

Charter School Funding

Charter School Funding: Why Do Charters Get Less Per Pupil?

Editor’s Note: This article was originally published here by The 74 on January 8, 2019. It was written by Patrick J. Wolf, a distinguished professor of education policy at the University of Arkansas. Corey A. DeAngelis is an education policy analyst at the CATO Institute. Larry D. Maloney is president of Aspire Consulting. Jay F. May is founder of and senior consultant to EduAnalytics.
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.

The Shortchanging of Public Charter School Students: Why Do They Get So Much Less Per Pupil Than Students at Traditional Schools?

In December, we released our study Charter School Funding: (More) Inequity in the City. We meticulously tracked all public school revenue — including federal, state, local, and nonpublic dollars — during the 2015-16 school year in 14 cities with high concentrations of public charter schools.
Charter schools in those cities received on average 27 percent less total revenue per pupil than traditional public schools, a gap of $5,828 per student. The cities with the largest gaps were Camden, N.J., at $14,671 per student, and Washington, D.C., at $10,258 per student. Charter school students in Atlanta, Georgia, received an average of 49 percent less per pupil in revenue than students in traditional public schools. In Little Rock, Arkansas, charter students received 39 percent less.
One critical feature of our public school funding studies is that we focus on revenue. We think it’s important to know how much money is being provided to the public charter and traditional public school sectors. It represents the resources committed to educating students. (School expenditures, while interesting, are a different topic.)
Second, we count everything. Public schools receive funds from federal, state, and local governments as well as philanthropies, parents, and valuable in-kind services such as student transportation and access to school buildings. We identify and record every dollar, and the dollar value of in-kind benefits, directed to the public charter or traditional public schools in each jurisdiction, regardless of its source. When traditional public school districts pass through money to charter schools or receive funds to provide services to charter students, we count that as charter school revenue.
Money passed through traditional public school districts to charters also is counted on the charter side of the ledger. We then divide the total revenue received by the public charter sector by its total per-pupil enrollment and do the same for traditional public schools. Our method generates a complete measure of per-pupil revenue in each sector.
Some analysts say our method is flawed because it is too complete. Certain revenues, they argue, should be excluded from school funding totals because they come from special sources or are intended for specific purposes. Only the school revenue that runs through the official funding formula in a given state should be counted as “per pupil” revenue, they claim. By excluding large categories of school funding, researchers adopting this approach generate smaller per-pupil funding amounts, especially in the traditional public school sector where much of the revenue comes in the form of categorical grants, not formula funding.
By excluding school revenue categories, our critics suggest that only some K-12 school funding is intended to support students. Our challenge to them is this: If large categories of school funding are not intended for students, then whom are they for? If the reason for providing any and all revenue to schools is to support students, in direct and indirect ways, then why exclude any school funding from per-pupil calculations? Our critics have difficulty answering those questions.

RELATED: The Charter School Funding Gap: Why Are District Schools Getting More?

A great example is facilities funding. Traditional public schools receive facilities funding mainly through local property taxes or bond issuances, sometimes supplemented by state categorical grants. Whatever the source, traditional public school systems handle facilities funding through a capital budget that is separate from their operational budget.
A separate set of books reports capital revenue and capital spending. Public charter schools receive facilities funding from a great variety of sources, including (sometimes) a fair share of local property taxes, the in-kind benefit of co-location in a traditional public school building, state categorical grants, or state per-pupil allotments.
We track all of these revenue amounts in our study. Many public charter schools have no access to any revenue sources dedicated to facilities. They have to fund their facilities out of operational monies, by paying rent.
Some critics of our comprehensive approach argue that all capital funding should be excluded. After all, it pays for buildings, not educating kids. But don’t school children benefit from having a facility built and maintained for their education? If so, capital revenue should be counted in any true measure of total per-pupil revenue.
Charter school students need buildings, too. Since one sector finances buildings as a capital expense and the other funds it as an operational expense, any comparison that excludes capital revenue will be biased, reporting a deceptively low funding total for traditional schools. We refuse to introduce that bias into our calculations. We count all revenue received by all schools in both sectors, whether intended to support school buildings or school operations.
A final possible objection to our inclusion of capital revenue is that it distorts funding totals in the year in which funding is received and counted. Facilities are funded and built in a specific year but benefit students across decades. A better approach, some argue, would be to depreciate the value of school buildings across their useful life. Certainly, that would be true if we were studying individual schools in isolation. We are not.
We are studying large school sectors — charter and traditional — with capital needs that are smoothed across time simply because not every school in the sector needs a new building every year. When one charter or traditional school receives funding for a new building, that revenue influx is averaged across the group of schools in the sector for that year, because some day they all will get theirs. Moreover, depreciating the value of each school building requires making a host of economic assumptions. We prefer our method, which relies on actual dollars in specific years, over approaches that speculate about the future.
In sum, our comprehensive school revenue reports raise hackles with some people because we count everything. We think completeness is a virtue, especially when the education of students — all students— is at stake.

 Charter School Facilities

Learn the Five Essential Steps to Charter School Facilities Planning

Charter school facilities planning can be daunting. We’ve created this handy checklist as a starting point to help you move towards realizing your facility expansion or relocation goals. 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. Download this manual to get concrete, actionable steps for success!

The 5 Essential Steps to Charter School Facilities Planning

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:
Charter School Facilities Planning

  1. Plan – Begin planning at least one year in advance
  2. Fund – Understand your options to make savvy decisions
  3. Acquire – You know what you can afford and how you’ll pay for it … now go get it
  4. Design – Partner with experts to design your new space
  5. Execute – Let the construction begin and get ready to move in
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Facilities Financing

Your Facilities Financing Journey with Charter School Capital

We are 100% dedicated to the charter school space and measure our success by the number of students we serve.
We’ve created this infographic to show you what a typical facilities funding journey with Charter School Capital looks like. Our team works closely with you to find innovative solutions to your facilities challenges. We pride ourselves on having the ability to be as creative, flexible, and innovative as possible to meet your specific needs so you can focus on your mission — educating students. You can download a PDF of the infographic here!
We are so excited to share this new infographic with you, so let us know what you think!
Facilities Financing