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Charter schools can use federal funds for facility projects, but these funds usually flow through state or local conduit government agencies. Check with your state and local governments about the following programs.
Community Facilities Grants and Loans
The U.S. Department of Agriculture (USDA) provides affordable funding through its Community Facilities Direct Loan & Grant Program. Funds can be applied toward purchasing, constructing, and improving educational facilities in rural areas. For more information on this program and other USDA programs, visit www.rd.usda.gov. For more information, see the Federal Initiatives section of SchoolBuild.
Start-Up and Replication and Expansion of High-Quality Charter Grants
The U.S. Department of Education (DOE) provides various grants to states and charter schools as part of its Charter Schools Program (CSP). Funds are for new schools or for charter management organizations that want to replicate and expand high-quality charter schools. For more information on this program, visit https://www2.ed.gov/about/offices/list/oii/csp/about-cs-competitions.html.
Managed by DOE, the Credit Enhancement for Charter School Facilities Program provides grants to public and private nonprofit entities, enabling them to help charter schools enhance their credit; this allows schools to secure financial capital to buy, construct, renovate, or lease appropriate school facilities. Individual charter schools can look for the list of grant recipients to see who may be able to help them with credit enhancement. For more information, visit www2.ed.gov/programs/charterfacilities/ index.html. For more information, see the Federal Initiatives section of SchoolBuild.
Qualified Zones Academy Bonds
The Qualified Zones Academy Bonds (QZAB) federal program facilitates bond financing for charter schools. QZABs can be used for renovation and modernization of an existing school structure, but cannot be used for new construction. Schools should either be located in an Empowerment Zone or Enterprise Community, or have at least 35% of the school’s students eligible for free or reduced-price lunch under the federal lunch program. Interest on the QZAB is paid by the federal government through a district reimbursement or tax credit to the bondholder. Thus, the charter schools are permitted to borrow money from financial institutions at a zero interest rate. For more information, contact your state department of education. For more information, see the Federal Initiatives section of SchoolBuild.
State and Local Funds
See the State Financing Map for more on the many state programs available to charter schools for facility funding.
Direct State Funding
States provide either direct funding to charter schools for their facilities (per-pupil funding appropriated annually) or funding through a variety of mechanisms such as competitive applications. As of January 2016, 19 states provide direct funding, and 32 states provide other types of funding. Contact your state department of education for more information.
State Programs for Charter School Facilities
Administered by DOE, the State Charter School Facilities Incentive Grant Program assists charter schools with facility costs. Grants are available to help states establish or enhance and administer per-pupil facilities aid for charter schools; this allows states to make payments for charter school facilities based on a formula that takes into account the number of pupils enrolled. Each state program has specific guidelines for application and awards. For more information, see www.ed.gov/programs/statecharter/awards.html.
Community Development Block Grant
Administered by the U.S. Department of Housing and Urban Development (HUD), the Community Development Block Grant (CDBG) program provides communities with resources to address a wide range of unique community development needs. Federal funds are distributed to states to revitalize communities. For more information, contact your local county or city development office, or visit https://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/communitydevelopment/programs.
Check with city and/or county governments to learn about local sources of grants. Your school may be eligible for funds based on the demographics of students you serve, or because you are revitalizing the community through your facility project. Some schools have received small grants from local legislators when they have been able to demonstrate the positive impact of their school on a neighborhood.
Nothing in this material should be construed as investment, financial, brokerage, or legal advice. Moreover, the facts and circumstances relating to your particular project may result in material changes in the processes, outcomes, and expenses described herein. Consult with your own professional advisors, including your financial advisors, accountants, and attorneys, before attempting to consummate any transaction described in this material.