Charter School Facilities Funding: It’s Time to Fill the Gap
Editor’s Note: This content originated here and was posted by the National Alliance for Public Charter Schools. Across the U.S., facilities are, by far, the greatest challenge faced by charter schools and accessing a school building is often the biggest obstacle in expanding charter school options. And, it’s one of the main reasons we have over one million students sitting on charter school waiting lists. Most charter school leaders have to jump over serious hurdles to cobble together the charter school facilities funding to provide their students with an adequate school building. It’s time to fill the gap in public school funding.
Note: The following content is also from The National Alliance for Public Charter Schools on September 18, 2018, and was originally published here.
Here are the five things we think you need to know about charter school facilities:
Charter schools rarely have access to taxpayer-funded facilities, even when they’re vacant.
Taxpayers own public school buildings and they should be available to all public school students, but that’s not the reality. Unlike district schools, charter schools don’t have an inventory of buildings to choose from. And in many places – like Detroit, Indianapolis, and Minneapolis – districts refuse to allow charter schools to lease or purchase buildings even when they’re vacant. As a result, you can find charter schools operating in shopping malls, office buildings, repurposed factories, or co-located with other schools.
Charter schools on average spend about 10% of per-pupil funding on facility space.
While some charter schools access federal or state programs these initiatives have limited funding and reach. They don’t work for all charter schools. Moreover, many of these programs simply reduce the cost of borrowing money – schools still need to cover the debt which shifts much needed funds from the classroom and to the building.
Charter school facilities often lack amenities like gymnasiums, libraries, or science labs.
Specialized instructional spaces, such as science labs, libraries, and computer labs, are an important part of a comprehensive educational program, but about 40 percent of charter schools do not have the right amenities or specialized classrooms to best implement their educational model.
Access to school buildings is one of the biggest obstacles to expanding charter school options.
Charter school leaders report that lack of access to adequate facilities is one of their primary concerns and one of the biggest barriers to growth. In fact, nearly one in five charter schools had to delay their opening date by a year or more due to facilities related issues. Even celebrities can’t avoid the facilities challenge.
5 million parents want to send their child to a charter school, but don’t have the option.
Based on parent demand, estimates suggest that the potential number of charter school students is 8.5 million – almost three times larger than today’s actual enrollment. Thirty percent of parents surveyed would be interested in sending their child to a charter school, with 10 percent saying that a charter school would be their top choice. Of interested parents with charter schools in their community, over half cited access problems – such as the school is too far away or has a wait list – as the reason their children do not attend a charter school. Learn more about the facilities challenge many charter schools face and help ensure charter schools can open their doors to students!
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.
Expert Advice on Accessing and Funding Charter School Facilities
In this CHARTER EDtalk, we sat down with Mike Morely, Founder and Principal at American Charter Development to talk about charter school facilities. Mike shares his years of experience in working with charter schools and supporting charter school success. Learn some insights on how to know when you’re ready for a new facility, what your funding options are, some pitfalls to avoid, and how to set yourself up for success whether building from the ground up or renovating your charter school facility.
Janet Johnson (JJ): Good day. This is Janet Johnson with Charter School Capital at the National Charter School Convention in Austin, Texas, and we’re honored today to be talking with Mike Morely with is ACD, who is a developer of charter schools. Mike Morely (MM): That’s correct, yes. JJ: John Dahlberg from Charter School Capital, and we’re going to have a conversation about charter school facilities. Take it away gents. Jon Dahlberg (JD): Thank you. Hey Mike, thanks for making the time. MM: My pleasure.
Why Charter Schools?
JD: We’re doing a campaign, We Love Charter Schools, can you share what you love about charter schools in less than 20 minutes. MM: That may be hard, but I can sure try. You may know, in fact I know you know that we’ve got a large family. I come from 13 kids and have nine children of my own and so we’re into kids, and so we’re into whatever is good for kids. Several years ago I was in the legislature in Utah and was introduced to charter schools, didn’t really know much about them. A wise senator told me, as I was looking at that in terms of policy decision, that if parents can vote with their feet we’re going have a lot less administrative and regulatory needs for schools.
I got into charter schools, started looking at them, seeing that they were doing more with less, and in many cases outperforming schools that were run by districts with seemingly unlimited funds. Not obviously that, it is something that is debatable, but certainly on less funds that are being provided for district schools and being successful. We fell in love with the choice in education. We started a couple charter schools, started doing facilities for charter schools, and they were accepted well and been successful. My children, at least those that were growing up during the years that we were in charters schools and been in them, and we’ve been really pleased with the outcome. We love philosophically the choice option and we also are committed to providing that opportunity for others.
How to Know When You’re Ready for a New Facility
JD: That’s great. Well, so let’s take that to our listeners here. How do you know when a school is ready for a new facility? MM: Well, we have been in the business of trying to help schools get facilities from the beginning, and we initially started back in the early 2000s trying to figure out how to bring construction and development funds into the charter school. Because obviously, it’s not available through state funding, they get funded based on the kids that they have in the seats. It’s kind of cart before the horse because they don’t have any kids in the seats when they’re starting out. We have funded schools from inception or even before inception and help them get their charters, help them establish a board, help them move through the process and having a school, a brand new school, ready for them to start in the first year.
Not all schools are able to do that, and it may not even be wise for all schools to do that. It really has a lot to do with the demand in the area, what the curriculum is going to be. I mean we’ve helped schools from project-based, sports, STEM and STEAM. We’ve helped classical education schools, and there are schools that are focused on a particular niche that may not be as widely accepted as maybe some other schools.
We look at the experience of a board. We like to see a wide diversity of experience on a board. We like to see the somebody that has accounting experience, marketing experience, legal experience business experience, school experience, but usually, that’s not the problem. Usually, most of them have good education experience, but we like to see a really diversified board with experts in many areas so that they can pull from that. We like to see some experience in the charter school world now. In the beginning not many had it, but now there’s usually good experience to be had on a board from the charter world. If we’ve got that, and we are comfortable with their curriculum, and their focus, and their direction, we may take them on right out of the chute.
If not, we like to see them have a year or two in maybe a rental facility, and it’s hard sometimes to find. But they may have to start out a little small and rent some space from a church, or some other local facility that’s not going to be maybe the best situation for the first year or two, but to build a little bit of a track record to see if they’re going to be successful. It really is ultimately a business and ultimately it’s pretty risky. We’ve had a few of those, as you know, that hasn’t been quite as stellar and so we’re trying to make sure that we don’t repeat those that are not quite as well prepared as others. JD: Well, I think to the point about the risk, I think that proof of concept starting in any space where you can get your school open and get the kids coming and prove your operation of success and your academic success, that momentum builds and builds and creates opportunity in the future. MM: It does.
Avoiding Mistakes
JD: When you talk about the business aspect of it, right? The education is not hard. What are some of the avoidable mistakes that a school should be mindful of as they’re building and growing in to their next facility project? MM: You know, to be honest, most of the mistakes that we have seen have been very preventable and most of them have been friction within the board, within the founding boards. When the schools have the most trouble it’s typically when the board itself gets heavily in two separate directions and end up in a collision course with each other, and end up destroying what they created or trying to change direction from what was originally envisioned. Because of that they lose half the parents, they pick sides, and it becomes a disaster. Cohesiveness on board is really key and to avoid that they need good board training, they need to recognize what a board does, how a board operates and the way that a board should function with regard to the administration, and the product that they’re proving. They’re really providing an education product, and they need to be on board with that and need to understand how a board effectively is to run, so that’s been our biggest problem.
There are mistakes. They get into a building that doesn’t meet their needs, they get into a building that they didn’t really clearly think out what their program was or growth options. They could then be unable to grow in that position in that particular building and then be tied into either a long-term lease, or they purchased the building, and it isn’t suitable for their current needs or expanding needs. It’s really important that you really sit down with somebody that understands and lay out a long-term vision of the school.
Have the board be on board with that decision as well. Make sure that everybody is kind of firing with the same cylinders and moving in the right direction. Recognizing that, “Hey, we want to be a 400-student school forever. We want to grow to a K-12, or we’re going to stay at K-6, or we want to grow to 600.” Come up with what your ultimate vision is because if you’re in a place that can’t be expanded and you’re tapped out at 200 kids and you got a long-term commitment and you want to grow, you’ve contract yourself. Those are some concerns that need some- JD: I think the advice that you gave to our audience about making sure that your building and your charter are in sync is really, really sound advice here. The building is going to create the culture of your school. We do speak with leaders who are very intentional, and we also speak with leaders who have that aha moment that goes, “Oh, a stem school but I don’t have a science lab.” That’s a good … MM: A sports school and don’t have a gym or a … JD: Right. MM: … or a performing arts school and no place to perform. Yeah, those are a lot of the issues. JD: If you’ve got a board that’s cast division and everybody’s on board, what are some of the guidelines and guiding principles that schools should pay attention to when they’re thinking about that next facility? MM: Well, if everybody’s locked stamp, then I think it’s important to maybe look at what’s the most economical and formal way to provide those facilities. It always seems to be the vision of every school to bond. That’s the goal. We just come out of a situation not too long ago where the school was ready to bond, they were so excited about it. They were saying, “Hey the cost of this building is too high, we can’t really bond because we’re going to be paying $106,000 a month for our facility.” I said, “Whoa, what are you paying for it now?” In a lease scenario, they were paying $65,000 and they were expanding with the bond. They were going to add on a gymnasium and some other classroom, but we’d already priced that out, and under the lease scenario they were going to be at $85,000 a month with total expansion taken into account. I said, “Why are you so anxious to bond and pay $20,000 more a month for a facility that you can control and have long-term security for $85,000.” That was the A-ha moment.
“But their interest rate is lower than your PACT rate.” Okay, let’s look at that, what that means. Interest rates are easy to talk, but they were adding on several million dollars in reserves, they had the cost of issuance, they had attorneys fees that were building up this huge amount that they would have to bond and pay interest on. Then it was advertised rather than just an interest only, so by the time you take all that into account the interest rate of the bond had very little to do with the cost of the facility on a monthly basis. Be careful that you’re not misled by some arbitrary interest rate or some lost leader kind of thing, and becoming so consumed with owning the facility.
Ownership is great and there are some times when it is a good decision, but ultimately if you own it you really own it. You’re responsible for all of the future expansions, you’re responsible for whatever taxes or insurance or other things, and you may have those kinds of things in the lease agreement as well, but you’re amortizing the facility and the ultimate goal is to own it, and if it’s a 30-year bond you own it just in time to completely refurbish it and start over. I’m not saying ownership is not a good thing, but it’s not the only way to do it. JD: What’s in the middle? There’s the bond, which historically meets the need of about 12% of the charter schools since the exception. Then we talk about the lease. You’re in the market, are there other options besides the lease or beside a bond that you’re seeing schools take advantage of right now? MM: Well, you know, there are organizations like the CSC that have purchased facilities and leveled the lease market and created an option for schools. That we have worked together on a couple of schools where you would’ve been able to purchase the school and put them in a better position than they would’ve been in a bond situation. It’s an interesting dynamic because right now the cost of constructions is going up. JD: And so is the cost of money. MM: And so is the cost of money, which is hard. You got the cost of construction, cost of land skyrocketing in this market which is … The fed just raised the rates again last week, and so we’ve got interest rates going up. And they’re indicating that there will probably a couple more bumps, in trying to cool inflation. In a market where cost and money are going up even though we are seeing increases in education funding that are a much lower rate, you may get a two or three percent bump each year, while we’re seeing double digit increases in funding cost and in construction cost. We are in a kind of a paralysis market right now, and it is hard. We’re struggling to try and balance those things and make sure that schools are getting affordable facilities for themselves. It’s a bit of a challenge. JJ: It’s a dance. MM: It is. JD: It’s a dance. MM: We’re in that dance, and you’re in that dance, and we’re all trying to … JD: It’s a fun place to be. MM: It is. JD: It’s work, because if it was easy they would call it a PTO. MM: A while back it was kind of easy you know because the cost were fair. Right now, we’ve talked about this multiple times, there is a point where the school can’t pay any more than maybe 20% max of their gross revenue. If the cost of facilities goes beyond that then it really does make it difficult, if not impossible, for them to go for owning. There are places in the country like that. JJ: But you’re here to help. MM: We’re here to do what we can. JJ: Right, yeah. That’s right. That’s great. Well, we’re very grateful for your time today Mike, and John thank you for facilitating this discussion and I know you guys speak a lot on the road so I’m sure that our viewers will see you again soon. Thanks for your time.
MM: You’re welcome. My pleasure, thank you for inviting me.
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.
Funding Charter School Facilities: How the Federal Government Can Help
Editor’s note: This post was originally published here on March, 26, 2108 by The 74 and written by Christy Wolfe, a senior policy adviser for the National Alliance for Public Charter Schools. Finding suitable buildings and financing charter school facilities have been ongoing challenges for charter schools across our country. This article takes a look at some ways the federal government can remove some of the barriers that are contributing to this issue.
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. We hope you find this—and any other article we curate—both interesting and valuable.
Opinion: Charter Schools Can’t Grow If They Can’t Afford Buildings for Their Students. Some Ways the Federal Government Can Help
Charter schooling is often described in terms of the charter bargain: increased accountability in exchange for high-level autonomy. Unfortunately, in most places around the country, that bargain doesn’t include a building or funding for building expenses. Although charter schools today account for 7 percent of K-12 public school enrollment nationwide — more than 3.2 million students in more than 7,000 charter schools — and in some localities, charters educate 50 percent of the students, districts generally have a monopoly over public school buildings. Meanwhile, charter school operators must rely on a patchwork of solutions to access space and cover their operating costs.
Consequently, school facilities are one of the biggest obstacles to expanding charter school options. Given that charter schools are public schools, and the federal government plays a key role in providing funds to startup charters, the National Alliance for Public Charter Schools has examined how federal programs and the public sector can assist charter schools with their funding and financing needs in a new paper, Strengthening Federal Investments in Charter School Facilities. Some key findings: Inequitable access: Charter schools face steeper challenges in acquiring facilities than do district schools, which typically own or control their facilities and can issue tax-exempt bonds to support new construction or renovations. Districts pay back these bonds with taxpayer funds out of their capital budgets, independent of their schools’ operating budgets. Some states also provide direct operating and construction financing to districts. And, districts usually maintain large inventories of school buildings that can be renovated to accommodate growing enrollments. Higher costs: Charter schools, despite being public schools, lack the options available to districts for accessing buildings and financing new ones. When a charter school wants to open or expand, it is generally on its own to find appropriate space. And once a charter school has a building, most states do not provide per-pupil funding to cover operating expenses. Charter schools may not raise taxes. They lack an inventory of buildings, and in many states and localities, districts refuse to allow them to purchase or lease existing school buildings even when they are vacant or underutilized. Depending on how well-established a school is and its geographic location, it may or may not be able access federal assistance to reduce the costs of acquiring capital.
Because of these two barriers, there is a shortage of facilities for charter schools, especially for those serving students in our nation’s poorest communities. Consequently, they must operate in any space they can find; frequently, these are expensive and suboptimal, such as storefronts and commercial buildings that lack libraries and outdoor space.
This deficiency in the public infrastructure for education is having a significant impact on the education choices for millions of parents and children. But the federal government can help to remove this significant barrier to school choice and charter school growth through two key strategies: ● Leverage federal funds to incentivize state support for charter school facilities and access public buildings. Policies assisting charters can be encouraged through an improved and better-funded State Facilities Incentive Grant Program. Other funds, such as new infrastructure spending, could be tied to state charter school facilities policies and equitable access to public buildings. ● Reduce the cost of acquiring capital to access charter school buildings. Existing federal initiatives, such as the Credit Enhancement for Charter Schools Facilities Program and the U.S. Department of Agriculture’s Community Facilities Grant Program, can be strengthened and better funded to meet the needs of more charter schools. Additionally, creation of new charter school-focused instruments could encourage private investment, similar to tax-credit bond programs or New Markets Tax Credits. Without intervention, the market will not respond to the needs of charter schools to make capital affordable.
A silver policy bullet that can fix charter school access to facilities doesn’t exist, especially at the federal level. Reforms like those above can equalize that access, enhancing what is already working well and creating new, efficient programs to ensure that all charter schools — including those that are higher-risk — are able to access financing to meet the demands of today’s and tomorrow’s students.
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.
One of the biggest challenges charter leaders face today is access to suitable and affordable facilities. With more than 3 million students enrolled in nearly 7,000 charter schools, many still have suboptimal facilities that hinder their growth. More than 1 million students remain on charter wait lists. With more facilities financing options, charters can expand their enrollment allowing more children to attend their local charter school.
2- Facilities financing volume
3- Facility strategy
Ownership is an investment
Control is critical to maintaining stability or growth
Evaluate true all-in costs, not headline rates
Cost is not just money, but time and opportunity
Consider flexibility to address long-term needs
4- Realistic Budget
5- Funding Comparison
6- Key Considerations
Plan ahead
Watch the market
Line up internal
resources
Prepare for the deal
7- We’re Charter School Specialists
Specialty finance company 100% dedicated to empowering charter growth
Began funding charter schools in 2007
More than $1.5 billion of funding provided to date
$500 million facilities fund specifically for charters
0% loss rate
Relationships with 550+ charter schools serving 650,000+ students nationwide
Does finding that perfect facility for your school seem like a huge, complex undertaking? Well, you’re not alone…it’s the greatest challenge faced by charter schools across the country. We understand that most charter school leaders aren’t financial or real estate experts, and for a good reason—you’re focused 100% on educating children. And, you want the best for them. 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.
This manual covers our perspectives on the charter school facilities financing landscape market and provides practical and actionable advice on planning and realistically balancing your team’s facility dreams with budget realities. We also cover the four primary funding structures that charter schools use to finance facilities: cash, banks, bonds, and long-term leases. Download this free guide to get all of your facilities questions answered!
In it, you’ll get straightforward, actionable advice on:
Access to appropriate facilities and the funds to pay for them remain big obstacles for charter school expansion today. More than one million students are on charter school waiting lists across the country. One reason for this points to facilities needs. With only 12% of charters able to qualify for a bond, many are left facing financing challenges for facilities they require in order to match their educational programs and the needs of their students. Charter schools across the country are faced with smaller classrooms than their peers, and traditional funding programs simply aren’t sufficient to cover real estate investments or construction costs aimed toward facilities improvements.
According to the National Conference of State Legislation, a “significant relationship” exists between the condition of school facilities and student performance. And, data from the National Alliance for Public Charter Schools (NAPCS), highlights that more than half of charter schools could outgrow their current facilities within five years.
“The dramatic growth of charter schools across the country makes it clear that facilities financing, which is already one of the industry’s largest challenges, is an even more pressing issue today. Working with charter leaders, developers and other partners allow us to serve a broad array of charter schools nationwide by freeing-up resources that schools are then able to allocate to classroom instruction or other operational needs,” explains Stuart Ellis, President and CEO at Charter School Capital.
Back in 2014, Charter School Capital and its facilities arm, American Education Properties, launched with investors a $500 million pool of capital specifically for charter school facilities needs to allow for broader access to charter school facilities funding. To date, Charter School Capital has invested $300 million into charter school facilities with 37 properties under management nationwide. Access to these facilities funds allows charter schools to align their facilities with their educational mission.
Charter schools are able to determine their own long-term facilities needs and maintain full control of their buildings. This represents a major improvement from the year-to-year lease renewals that many charter schools currently experience. By providing long-term facilities security and an investment partner interested in charter school expansion, charter schools now have the ability to expand their enrollment and educational offerings with confidence.
“By providing charter schools security in their facilities, this effort helps lift a burden many schools face and will enable schools to focus, as they should, on their students and their academic results. School administrators will be better able to direct their scarce resources and time toward educating students rather than worrying about real estate needs,” said Nina Rees, president and CEO of the National Alliance for Public Charter Schools.
Charter School Capital offers a variety of financing solutions including working and growth capital in addition to facilities financing, so that charter schools can focus on reaching and teaching more students while continuing to succeed and grow.
If your charter school needs help with expansion, site design and selection or facility development, our team of experts is here to help you with a needs assessment. Contact us at GrowCharters@CharterSchoolCapital.org or learn more on our facilities offerings on our website. Also check out our recent webinars, including one focused on facilities options for 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.
Join us for an informative webinar focused on facilities options for charter schools on February 2nd at 9:00 a.m. PST.
Finding and securing state-of-the-art facilities and financing is one of the top challenges charter school leaders face today. Learn about the various options and how to evaluate what is best for your school.
Topics:
– Funding structure and options available
– Pros and cons to various financing
– Balancing needs versus wants for your facility
– Facing budget realities
– Facilities planning best practices Speakers:
Larry Rieder, President, Charter School Property Solutions
Larry Rieder is President of Charter School Property Solutions (CSPS). He has over 30 years of experience in commercial real estate and has negotiated over $900 million of aggregate lease and equity transactions on behalf of major corporations. He founded CSPS to develop new, long-term academic facilities for charter school institutions. CSPS helps schools by managing the overwhelming tasks of locating, purchasing, financing, constructing and renovating academic facilities throughout the United States. The company has completed projects in Florida, New Mexico, Ohio, Nevada, Texas, and South Carolina.
Stuart Ellis, President & CEO, Charter School Capital
Charter School Capital is the leader in providing working and growth capital and facilities financing to charter schools nationwide. To date the organization has provided more than 1 billion in funding to 500+ charter schools educating 500,000 students across the country. In addition, more than $125 million of a $500 million facilities fund has been put to work in charter school facilities.
REGISTER TODAY!
After registering, you will receive a confirmation email containing information about joining the webinar.
Welcome to Charter School Capital’s weekly round-up where we feature charter school news about operations, policy, funding for charter schools, charter school facilities financing, and other trends.
It’s officially the first week of fall, and with school back in full-swing we’ve compiled a few updates including one from California and Florida. Tell us your thoughts and leave a comment.
Tell Your Students: CA State Board of Education is Looking for a Student Member
The California State Board of Education (SBE) is looking fora public high school senior to serve as a Student Board Member. Does your charter school have a student who might be a candidate?
From the application page: “Any student who is a California resident and enrolled in a public high school, will be a senior in good standing in the 2015–16 school year, and will be available to attend a statewide student leader conference November 11-14, 2014 in Sacramento, is eligible to apply.”
For more information, including the 2015–16 Student SBE Member application, please visit the SBE Student Member Application Web page, or contact the SBE by email at sbe@cde.ca.gov or by telephone at 916-319-0691. Applications must be received by the SBE by 5:00 p.m., Monday, October 20, 2014
Join Charter School Capital for a Webinar on Charter School Facilities Financing
We’re excited to be partnering with Procopio to lead a discussion on various charter school faciltiies options.
Presented by our president and CEO, Stuart Ellis, and Chip Eady, a lawyer with Procopio who specializes in education facilities and land development, this webinar will cover various financing options and best practices for facilities planning.
If you’d like to register, we recommend doing so as soon as possible, as we only have a few seats left, and registration closes on Monday, September 29th.
Florida Board of Education Adopting New Charter School Contract
When the Florida Board of Education meets in Tampa at the end of September, they will be moving forward with adopting a standard charter school contract.
According to an article in the Tampa Bay Times, “The recommended new rule makes clear that the standard contract would serve as the basis for an initial draft contract. Both charter applicants and districts would be allowed to modify the document, but would have to indicate clearly how they changed it and why.”
If Florida adopts the standard contract, it would go into effect in November 2014.
In June of this year, we announced a $500 million facilities fund, and the formation of American Education Properties (AEP), a collaboration between Charter School Capital, the nation’s leading provider of working and growth capital to charter schools, and American Infrastructure MLP Funds (AIM), a leading private investment firm specializing in real property, infrastructure and natural resources businesses.
We’re excited to announce that just months later, the first $75 million in charter school facilities funding has been distributed to 11 schools across six states as part of the $500 million in innovative charter school financing to meet schools’ demand for facilities.
The distribution of the first $75 million marks one of the largest charter school facilities financing deals to date. This investment supports facilities at nine schools in Arizona, Colorado, Florida, and Washington, D.C., which educate roughly 4,550 Imagine Schools students, as well as students at two charter schools run by independent operators in Arizona and California.
With growing enrollment and nearly one million students on charter school waiting lists nationwide, charter school leaders need to find facilities that meet their needs, both now and in the future. AEP launched in June of this year, addresses this increasing challenge.
AEP enables school leaders to determine their long-term facility needs and retain control of their buildings, so they can focus on their mission of educating our children. With facilities financing in place, charter schools can expand their enrollment and academic offerings with confidence, knowing they can access and maintain the facilities to sustain their ongoing programs and growth.
“We are supporting one of the top needs charter schools face – facilities,” explained Stuart Ellis, President & CEO of Charter School Capital. “Charter School Capital has committed more growth capital to support the movement and now we are able to ensure that charters have the best facilities to meet their educational goals. With $500 million to invest over three years, we are dedicated to providing charter schools access to the capital they need to thrive.”
“We are pleased to have an organization that focuses on charter schools supporting our efforts and mission,” said James McFadden, Vice President and Treasurer of Imagine Schools. “Having a landlord who partners with us and others in the charter school movement to support the growth of schools makes our collaboration more meaningful.”
Imagine Schools is one of the nation’s largest and most highly regarded charter school networks. Their unique, full-service model currently administers a single, multi-state “school district” with 67 schools across 11 states and the District of Columbia. With total enrollment at approximately 36,000 students, the network is larger than each public school district in Tacoma, Boise and Cincinnati. The model has been successful. Imagine was one of only three school districts in the nation to be named a “2013 National District of Character” by the Character Education Partnership for promoting positive character development in a school environment.
Charter schools often have difficulty accessing funding and affordable credit. Recently, Standard & Poor’s (S&P) downgraded the value of charter school transactions, and Fitch Ratings downgraded the value of charter bonds. With its committed pool of capital, AEP enables schools to get the funding they need when they need it, without strings or fluctuating interest rates. Charter School Capital facilitates all origination and sourcing, underwriting, asset administration and property management for the fund.
“At a time when many are turning away from the needs of charter schools, we look forward to putting more dollars to work for charters of all sizes that will enable school leaders to focus on what they do best – educating students – while alleviating concerns about their schools’ facilities,” said Ellis.
To find out how we can help you with your charter school’s facility needs, give us a call at 877-272-1001 or email us at GrowCharters@charterschoolcapital.com.
Charter School Facilities Funding: It’s Time to Fill the Gap
