Your Ultimate Guide to Charter School Facilities Financing
If you clicked from somewhere to read this blog post, you probably already feel that finding charter school facility financing finding or locating the perfect facility for your charter school is a huge, complicated undertaking. Not to worry, you’re in good company. 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.
Across the U.S., accessing charter school facilities is, by far, the greatest challenge faced by charter schools. In addition, planning and financing any facility project is complex,time-consumingg, and has the potential to distract your team from its core mission: serving your students.
We’ve created this manual to share our insights and perspectives on the charter school facilities landscape market and also share advice on planning—and realistically balancing—your team’s facility dreams with budget realities.
In it, we also cover the four primary funding structures that charter schools use to finance facilities: cash, banks, bonds, and long-term leases.
It can indeed be a complicated endeavor and that’s a key reason as to 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 is 100% dedicated to charter schools and has years of experience in navigating the unique needs and challenges they face. We have helped schools achieve their facility goals using each of those methods—and we’ll help you determine which options might be the best fit for your school’s unique situation.
Over the past ten years, we’ve invested almost $2 billion in more than 600 charter schools to help them grow, finance facilities, and achieve academic excellence and operational stability. We view ourselves as a long-term partner of charter schools and a strong advocate of the charter school movement.
Download this free guide to get all of your facilities questions answered!
In it, you’ll get straightforward, actionable advice on:
If you are trying to meet operational expenses, expand, acquire or renovate your school building, add an athletic department, enhance school safety/security, or even buy new technology, complete the online application below and we’ll contact you to set up a meeting. Our team works with you to determine funding and facilities options based on your school’s unique needs and mission. Contact us, we’d love to get to know you.
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:
Plan – Begin planning at least one year in advance
Fund – Understand your options to make savvy decisions
Acquire – You know what you can afford and how you’ll pay for it … now go get it
Design – Partner with experts to design your new space
Execute – Let the construction begin and get ready to move in
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.
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.
7 Things to Know About Facilities Financing
1- Facilities access is an obstacle to growth
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:
The Ultimate Guide to Charter School Facility Financing: Straightforward advice on planning, financing options, getting approved, and choosing a partner.
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:
The 2017 Florida Charter School Conference is a wrap, and having had some time to reflect on this year’s flurry of activities, I can safely say this one was perhaps the best yet! A clear topic trend at the conference seemed to be centered on facilities needs for charter schools. By my count, there were at least four different breakout sessions discussing different challenges and best practices around facilities.
One of those sessions was even hosted by Charter School Capital, titled “I Need a New Facility for My School, Now What.” Aptly named, panelists Thom Jackson, President and CEO of EdisonLearning Inc., Mike Morley, President and CEO of American Charter Development, and Stuart Ellis, President and CEO of Charter School Capital, walked through funding options, challenges and best practices for schools finding themselves in need of a new or updated facility. If you missed the session, you can find the slides and recording here.
I had the pleasure of meeting onsite with leaders from charter management organizations, education management organizations, independent charter schools, and others. While the funding needs and visions for these organizations differ, they are all rooted in and motivating passion for the charter school movement, and were inspiring to speak with.
I even found some time to attend sessions outside the Charter School Capital content, and particularly enjoyed the “Legal Update for Florida Charter Schools” presentation provided by Daniel Woodring, of Woodring Law Firm. His session covered lawsuits over Florida House Bill 7069, information on what happens to persistently failing schools, legal issues for charter schools in Florida with respect to public records, among others.
All in all, this year’s conference was a hit. I am sincerely looking forward to the return of the Florida Charter School Conference next year in Orlando, Florida at the Caribe Royale Resort and Convention Center. Mark your calendars now for October 16 – 18, 2018 and I hope to see you there!
If you are trying to meet operational expenses, expand, acquire or renovate your school building, add an athletic department, enhance school safety/security, or even buy new technology, complete the online application below and we’ll contact you to set up a meeting. Our team works with you to determine funding and facilities options based on your school’s unique needs and mission. Contact us, we’d love to get to know you.
