Matthew Joseph is a Senior Policy Advisor at ExcelinEd.
Finding affordable facilities for their classrooms is one of the biggest challenges facing charter schools across the country. Traditional districts raise local taxes to pay for their school buildings. Charter schools almost never get any of those local funds. Instead, they must use their operating funding, which is intended to pay for student instruction and which is already lower than what other public schools receive.
Policymakers in some states use a variety of strategies to help charter schools meet their facility needs. These include direct state funding, access to surplus public buildings and affordable financing to buy or build a school.
In Idaho, ExcelinEd and our partner, Bluum, looked at on-the-ground impact of these various policies. Using our Charter School Facility Index, we found that the state is currently helping Idaho’s charter schools with 30 percent of their facility needs. This means that a typical charter school in Idaho, which averages about 400 students, is giving up nine teachers in order to pay for their facilities. Yet in five years, the number of lost teachers in each charter school will grow to 16, as charter school enrollment grows statewide but state policy remains unchanged.
Fortunately, Idaho policymakers this year took some important and innovative steps to better meet the facility needs of charter schools. Their specific focus was on reducing the cost for charter schools to build or buy their own schools. Normally, banks charge exorbitant interest to charter schools, creating real financial obstacles in creating or expanding these schools. However, with some state support, the cost of facility financing can drop considerably. Consider these strategies now in place:
First, Idaho is providing informal backing to charter school bond financing. This “moral obligation” means that the state will consider, but is not obligated to, paying back investors if a charter school cannot repay—which rarely happens. As a result of this backing, investors charge a lower interest rate to charter schools.
Second, the state created a revolving loan fund, which allows charter schools to take out small, no-interest loans. With these loans secured and matched by a local foundation, banks are willing to lend the remainder at a lower interest rate. After a few years, charter schools can use the state’s moral obligation program to refinance at even further savings and pay back the fund so that other schools can use it.
Together, these two changes will save charter schools in Idaho nearly $300 per student, which means three additional teachers in each school. This is important progress. However, there is still more to do so that charter schools can devote more of their resources to instruction and to expanding high-quality school options for Idaho’s families.
Working with partners, ExcelinEd has used its Charter School Facility Index in four states—Idaho, Indiana, Ohio and Tennessee–to determine how well a state is meeting its charter school facility needs. The Index provides a current assessment as well as a projected one in five years as a way to explore cost-effective strategies for improvement. Armed with this important information, policymakers in all four states have taken action and made significant changes that ultimately support their students.
To help illuminate the scale of the facility financing inequities in Idaho, and most importantly to offer up solutions, especially for public charter schools, Bluum partnered ExcelinEd to generate a policy brief, Building for Success in Idaho. One key takeaway from the brief is that because of the facility gap, “an average-sized charter school in Idaho must operate on average with nine fewer teachers, diverting funding intended for student instruction to pay for facilities.”
