Education Week takes a close look at LISC's recent study on charter schools and their efforts to finance new school facilities to meet skyrocketing demand. Many are struggling to find capital they need to build, expand and upgrade schools, which primarily serve disadvantaged students and low-income communities. States like Colorado, Texas and Utah have responded with innovative programs that leverage their states' credit ratings to boost charter school bond issuance. Schools that qualify can spend less on interest payments and more on classroom instruction.
The excerpt below is from:
"Financing a Hurdle in Charters' Hunt for Space, Says Report"
by Arianna Prothero, Education Week
Federal, state, and private financing for charter school facilities is not keeping up with demand for the publicly funded but largely independent schools, says a report released this month by a nonprofit group.
Facilities have been a perennial issue for the nation's growing charter sector. Federal and state initiatives aimed at helping these public schools get access to financing for buildings or renovations have either declined or remained mostly flat over the last decade, while the number of charter schools has doubled, according to the report from the Local Initiatives Support Corporation, or LISC, a New York City-based organization that facilitates financial investment in distressed neighborhoods.
Even though some charter-friendly changes in state policies, and private, nonprofit organizations have provided $2 billion in financing for charter school facilities since the 1990s, it's still not enough to meet the growing need, the report says.
"There's more and more capital that's flowing to charters, but the demand has increased for charter school seats and we're not keeping up with that demand," said Reena V. Abraham, the organization's vice president of education programs and one of the authors on the report.
The report is the first update on charter financing and facilities since 2010 from the group, which has been tracking the issue since the mid-2000s. During the last 10 years, the charter sector has grown from 2,959 schools to just over 6,000, and the National Alliance for Public Charter Schools estimates more than 1 million students are on charter school wait lists.
However, the report highlights one little-known but promising financing innovation that is starting to get attention. With that mechanism, called a credit-enhancement program, a state basically extends its superior bond rating to a charter school, and that in turn helps boost the school's rating. Continued[+]...