CCSA Answers: Charter School Facility Funding

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January 5, 2015

Question: How do Charter schools pay for their facilities? Are they able to access bond funds?

Answer: California charter schools have access to various state, local, federal, and private funding sources to pay for their school facilities. For example, one of the more widely utilized facilities funding sources is California's Charter School Facilities Grant Program (often referred to as "SB740"). Under this program, charter schools which lease privately owned school facilities are eligible for certain per pupil facility funds for the reimbursement of leasing costs. However, schools are only able to receive up to 75% of their costs, and only if the school serves a high percentage of disadvantaged students, or is located in an attendance area of a district elementary school which serves a high percentage of disadvantaged students. Other state programs include the Charter School Facility Program (sometimes referred to as the "State Bond Program"), which provides grants and loans for the acquisition or construction of charter school facilities, and Proposition 39, which does not provide facilities funding directly to charter schools, but requires school districts to make district owned school facilities available to eligible charter schools upon request, with certain limitations on the fees that charters are required to pay for the use of these facilities.

Federal sources of facilities funding include the New Markets Tax Credit Program, as well as other finance programs such as Qualified School Construction Bonds and Qualified Zone Academy Bonds.

Local facilities funding is sometimes made available for charter schools by school districts. These funds are typically generated through the sale of general obligation bonds pursuant to voter approved school bond ballot measures. CCSA has advocated for the inclusion of charter school funding in district bond programs, and has been successful in these efforts in districts such as Los Angeles Unified and San Diego Unified.

Unfortunately, all of the money currently allocated to these state, federal, and local programs is insufficient to provide adequate facilities funding for all of California's charter schools. Charter schools which are unable to access these programs must rely on general revenues provided by the state through the Local Control Funding Formula (LCFF)--money that would be better spent directly on classroom instruction---or seek out private facilities finance options such as loans from Community Development Finance Institutions (CDFI's) or other banking institutions. In addition to loans for the acquisition, construction, or renovation of charter school facilities, some charter schools have been able to borrow facilities financing generated by the issuance of private activity, tax exempt bonds. The process required for schools to access this type of bond financing is long and complex and generates significant fees. As a result, relatively few California charter schools have utilized this type of facilities financing.

The lack of access to affordable facilities funding continues to be a major obstacle facing many of California's charter schools. CCSA will continue to advocate at the federal, state, and local level for the expansion of existing, successful charter facilities funding programs as well as the creation of new programs to meet this critical need.