Charter School Financing Group Receives Close to $10 Million Grant

WASHINGTON — Earlier this year, U.S. Secretary of Education Arne Duncan announced a $9.98 million grant awarded to Local Initiatives Support Corp. (LISC) to support facilities financing to charter schools throughout the country.

The grants program, part of the Department of Education’s Credit Enhancement for Charter School Facilities program, aims to help charter schools meet their facility financing needs. Funds are provided on a competitive basis to public and nonprofit entities to improve the charter schools’ credit as a way to improve their access to school facility financing. LISC is the only grantee in this year’s competition.

The program aims to improve educational options for students and parents by targeting funds to areas with the greatest need for public school choice. Including this year’s award, the department has given out 31 grants totaling $2.3 billion to 19 organizations since 2002.

LISC is a four-time recipient of the grant, bringing its awards total to more than $36 million, which has leveraged more than $400 million in financing for 72 schools. It uses grant funds to help charter schools access financing needed to acquire, build, construct or renovate facilities.

“You cannot create a healthy, sustainable community without making sure families have access to a quality education for their children,” said the corporation’s president and CEO Michael Rubinger.

“Schools are fundamental. When they are deteriorating, crime-ridden and failing, it is almost impossible for students to succeed. Our goal is to support innovative alternatives that respond to local need and give kids the best chance to thrive and grow.”

This year’s grant will be used to create a two-strategy program, with a credit-enhanced fund to provide direct lending to charter schools or a charter school guaranty fund that directly credit enhances tax-exempt municipal bonds, mortgages, and leasehold improvement loans for charter school facilities.

“This grant will go a long way in helping to serve more children and families looking for educational options,” said Reena Bhatia, director of LISC’s Education Programs. “The difficult lending environment has severely impacted the availability of low-cost capital for charter facilities and our flexible resources can help alleviate some of those constraints.”

Currently, 5,300 public schools operate under charters and educate approximately 1.7 million children nationally, with more than 400,000 children on waiting lists. Lack of access to appropriate public facilities or to public funding for facilities continues to be a major obstacle for these school operators, Bhatia said.

Department officials said a high percentage of new charter schools report that inadequate facilities impeded the implementation of their charters.

“Unlike traditional local education agencies, charter schools generally lack the ability to issue general obligation bonds backed by property taxes, and they are often perceived to be credit risks by lenders,” officials said.

Bhatia said developing charter facilities could have a far-reaching impact on communities.

“In addition to the schools, it creates jobs, improves streetscapes and contributes to broader community revitalization efforts,” she said.

At the federal level, the U.S. House of Representatives will consider the Empowering Parents through Quality Charter Schools Act, HR 2218, an amendment of the charter school program under the Elementary and Secondary Education Act of 1965. Sponsored by Rep. Duncan Hunter (R-CA), the legislation aims to help more students gain access to a “quality education,” by aiding in the development of high-performing charter schools.