FACILITIES PROMISING CHARTER SCHOOL POLICIES

The Arkansas Division of Public School Academic Facilities and Transportation oversees and supports public school facilities across the state. In more recent years, its duties have expanded to oversee the state’s statutory arrangement, encouraging districts to make surplus space available to charter schools. Because of its longstanding familiarity with public school facilities across the state, it can effectively implement the state’s surplus space statute.

The California School Finance Authority is California’s multipurpose public finance agency serving various important state finance-related functions. Included among those functions are several charter school programs, including the distribution of state facilities aid, credit enhancement, a revolving loan fund and tax-exempt bond financing. While CSFA currently plays several different roles supporting California’s charter schools, its role was much smaller at the beginning. Its role has expanded over time, showing how multiple programs under one roof can be mutually reinforcing and how strong, entrepreneurial leadership can improve charter school opportunities over time.

Dozens of states feature statutory language allowing or even encouraging school districts to share available space with charter schools. Along with their aspirational language, states often include “explanatory” provisions, such as lists, definitions, criteria and processes facilitating charter school access to district facilities. Those provisions are somewhat helpful, though the weight of experience suggests districts that don’t want to make space available to charter schools have plenty of opportunities to play games with statutes that don’t include enforcement. Several states have recently created enforcement mechanisms that don’t require charter schools to go through lengthy and expensive court proceedings to access available space.

While Florida’s mandatory sharing may be ideal, other states have seen success where state law authorizes districts to share facility revenues with charter schools. Colorado’s statute encouraging districts to share local facilities dollars with charter schools remains voluntary (albeit with clear expectations and detailed steps for the parties involved). Since 2002, it has resulted in hundreds of millions of facilities dollars shared with charter schools.

Florida provides charter schools with per-pupil facilities funding ($562 per pupil in 2023), requiring an annual appropriation of over $200 million. At the same time, Florida school districts are estimated to collect $4.4 billion in voter approved capital outlay funding each year. In 2023, Florida amended a statute that formerly allowed school districts to share capital outlay dollars with charters to now mandate proportionate sharing. State budget analysts estimate the impact once fully implemented to be in the hundreds of millions annually.

New York law requires New York City to either house charter schools opening after 2013 in district facilities or reimburse them for rent paid to commercial landlords.

In 2021, Oklahoma enacted legislation that provides annual funding for improving and acquiring school buildings via the Redbud Program. According to the legislation, “school districts and eligible charter schools that are below the state average in local property taxes for the building fund and the county-wide millage per student are eligible to receive these funds.” The Redbud Program has since provided over $18 million to eligible charter schools, representing approximately 9% of the total funds awarded.

Enacted in 2008, Colorado’s Building Excellent Schools for Tomorrow program provides state grants to build or renovate public school facilities with a primary focus on schools in rural and lower-income areas. At first, BEST legislation did not address charter schools, even though Colorado already had a sizeable charter school community, including schools in those communities that BEST advocates were targeting. This fact ultimately made it too difficult to keep charter schools out of the program. Eligibility criteria for charter schools analogous to school district criteria were developed that opened the door to charter school access to the program.

As an informational source for schools pursuing tax-exempt bonds, the Utah Charter School Finance Authority makes available detailed information about the “costs of issuance” from previous transactions. Schools exploring their tax-exempt financing options can review the treasurer’s data to better understand the costs and fees involved and presumably make more informed decisions.

In D.C., the Office of the State Superintendent of Education operates the Direct Loan Fund to support charter school facility needs. The fund, which is a revolving loan fund, was created in 2003 with an initial $5 million investment (an additional $29 million has been added over the years). The fund was authorized by the District of Columbia Appropriations Act of 2003. D.C. then enacted an implementing statute for it. The program has been popular since its beginning, offering up to $2 million loans for up to five years at low interest rates (currently 1%). As of late 2023, 42% of D.C.’s charter schools have accessed Direct Loan funds totaling $96 million. Because OSSE also operates a credit enhancement program, they can combine a direct loan with a credit enhancement allocation when a combination of the two makes the most sense for the school.

The Massachusetts Loan Guarantee Fund is managed by Mass Development, a quasi-state agency tasked with supporting state infrastructure. Since 2004, they have managed the Loan Guarantee Fund, which is solely focused on providing partial guarantees for charter school loan and bond transactions issued through Mass Development. The fund has been exclusively supported by over $41 million in grants from the federal Credit Enhancement for Charter School Facilities Program. Coincidentally, Massachusetts leads the nation in the number of tax-exempt bond transactions per charter school.

Charter school borrowers in several states have benefitted from a cost-effective and impactful credit enhancement arrangement called moral obligation, effectively allowing eligible charter schools to finance facilities with the benefit of the state’s credit rating. Idaho is one of three states with active moral obligation policies. Idaho law provides a mechanism for limited credit enhancement for eligible, highly rated bond transactions for charter schools by using the state’s moral obligation to back up to $190 million in debt.