Author Archives: Kelly Robson Foster

Why Is It So Hard for Charter Schools to Tap Into Local Infrastructure and Secure New Facilities? “Infrastructure Insights: Financing Charter School Facilities” Series

Photo courtesy of Mary Taylor for Pexels

As the Biden administration’s historic infusion of federal education funds are spent in states, coupled with a potential $1 trillion bipartisan infrastructure package making its way through Congress — a package that could include money for K-12 building safety and technology upgrades — we must ensure that charter school facilities are included in the policy debate. Join us in an “Infrastructure Insights: Financing Charter School Facilities” weeklong series, where Bellwether Education Partners will share insights into a range of issues facing charter school facilities.

Yesterday, we launched a new series, “Infrastructure Insights: Financing Charter School Facilities.” To dig deeper, today’s post unpacks specific facilities barriers that charter schools face compared to traditional district schools. Although it varies in each state, the big barriers we’ve seen across the country include:

Access to public funding: In most states, charter schools lack access to the state and local funding that district schools rely on for facilities investments and ongoing maintenance and operations (M&O). While some states have implemented programs to support charter schools in accessing facilities funding (e.g., direct per-pupil facilities funds, state bond or loan programs), these programs tend to be insufficient to offset the full costs of school facilities. 

Access to private financing: Traditional lenders are often hesitant to lend to charter schools for a number of reasons. First, because charter schools operate on time-bound contracts and can be closed for poor performance, there’s a perception that they are unstable, leading lenders to shy away from investing in them. Second, the relatively low funding that charter schools receive — due to the fact that state funding is lower than that of traditional public schools and, in many cases, it cannot be supplemented by local levies — often raises questions regarding the ability of charter schools to make loan payments. New charter schools face an even bigger uphill battle, as they lack a track record of student attendance to demonstrate academic results or financial health. Charter schools operating in a young sector are often in an even tougher position given that they reside in an ecosystem in which traditional lenders aren’t yet familiar with charter schools and don’t yet know how to accurately evaluate their risk.

Terms of private financing: Charter schools that do receive private financing are often only offered short-term loans, as lenders tend to match loan periods to charter reauthorization cycles. And so while a charter school would almost always prefer the long-term security and reduced refinancing requirements that come with a 20-year loan, sometimes it can only access 3- or 5-year loans. A bank may find it too risky to hand out a 20-year loan to a school that may be ordered to close in a few years.

This can leave charter schools in the unwieldy situation of holding several short-term loans, which isn’t ideal given the administrative burden on the school leadership and the risk of receiving a higher interest rate when refinancing. Nonprofits such as the Equitable Facilities Fund,* a former Bellwether client, are changing this by offering long-term (30-year), low-cost fixed-rate loans to high-performing charter schools. 

Ability to save for a down payment: Without a public funding source (such as annual per-pupil facilities allowance or facilities grants), it can be incredibly difficult for charter schools to have the cash on hand needed for a down payment to finance their facility project cost. Charter schools in this position have two options: acquire philanthropy to cover some or all of the equity they need or slowly save money from their operating budget. Those following the second approach often open in temporary facilities and stay there for a few years until they 1) have saved enough money for a down payment, and 2) have a track record that can allow them to access philanthropy and/or affordable debt. Nearly half of charter schools surveyed by The Charter Schools Facilities Initiative in 2017 were in school buildings that could not accommodate their anticipated enrollment in the upcoming five years.

Technical assistance: Charter leaders often lack the specialized expertise required to manage complex facilities projects. As a result, they end up diverting time away from school leadership to do the facilities work, whereas school leaders in traditional district schools benefit from central office staff’s expertise and support systems. This is especially true for leaders in standalone charter schools (as charter schools that are part of networks may have some support from the network’s central or home office staff). 

Access to buildings below market cost: In some cases, charter schools are able to partner with their neighboring school district to rent or purchase a vacant district building for minimal cost. However, these partnerships are limited, as state policies that give charter schools access to district buildings are often vague, lack teeth, and leave decision making to districts, which have few incentives to provide this support to charter schools that compete with the district for students and resources (learn more about this in CRPE’s 2017 report). 

Lower per-pupil funding in general: In addition to the discrepancies mentioned above, charter schools in general receive lower state per-pupil funding versus traditional district schools. A 2018 University of Arkansas report found that, across cities with large charter sectors, charter schools receive an average of $6,000 less in public funding per student than district schools. Higher annual per-pupil funding could be used to pay for annual M&O costs or could be saved over time and for use as equity on a future facility project.   

Stay tuned for more in our weeklong “Infrastructure Insights: Financing Charter School Facilities” series. Up next, the four key ingredients of a healthy charter facilities ecosystem.

(*Some organizations listed include past or present clients or funders of Bellwether.)

How Much Does a Charter School’s Facility Cost? Introducing the “Infrastructure Insights: Financing Charter School Facilities” Series

Photo courtesy of Caleb Oquendo for Pexels

As the Biden administration’s historic infusion of federal education funds are spent in states, coupled with a potential $1 trillion bipartisan infrastructure package making its way through Congress — a package that could include money for K-12 building safety and technology upgrades — we must ensure that charter school facilities are included in the policy debate. Join us in an “Infrastructure Insights: Financing Charter School Facilities” weeklong series, where Bellwether Education Partners will share insights into a range of issues facing charter school facilities.

Charter schools and charter school networks face a considerable array of challenges when it comes to finding and financing facilities. These challenges often prevent them from expanding their impact. In Bellwether’s work with charter schools, we’ve found that many tend to spend time and money on facilities that could instead be spent on core programming (e.g., staff salaries, instructional supplies, and field trips). We’ve also seen schools settle for less-expensive, smaller, or shared facilities, which can limit the range of programming offered. 

The National Alliance for Public Charter Schools* reports that 17% of the 650 charter schools it surveyed from 2014 to 2017 had to delay their opening date by one or more years due to facilities barriers. When charter schools do find facilities, they’re often less-than-ideal. For example, our research in Idaho found that while most charter schools had a computer lab and cafeteria, less than half had a gym, library, or auditorium. 

It’s a problem that deserves a spotlight as the national debate swirls on investments in infrastructure. This week, my colleagues and I are rolling out a series of blog posts that will:

  • Help policymakers, charter advocates, prospective school leaders, and others understand the facilities barriers that charter schools face.
  • Provide an overview of the ecosystem of private and philanthropic strategies for addressing these barriers.
  • Review state and federal policy levers that can support facility access and affordability.
  • Provide a description of a particularly promising solution — charter school loan funds — and what charter school leaders should know about them. 

Today, let’s get started with charter facilities 101:

How much does a school building typically cost?

If you’re planning to own your building, there are two primary categories of facilities costs: project costs and maintenance and operations (M&O).

Project cost consists of the cost of acquiring land and/or an existing building as well as the work done to the site. The work done to the site includes “hard” costs (e.g., construction) and “soft” costs (e.g., management, permits, and appraisals).

Project cost is significant and depends on factors such as the local real estate market, building/lot size, and amenities such as science labs and playgrounds. National facilities support providers such as Building Hope and ExEd suggest $20,000 per student (with a reasonable 100 square feet of space per student) as a rule of thumb for newly constructed charter school buildings, which results in a $10M project cost for a school that serves 500 students. As you can imagine, location (particularly urban versus rural) has a significant impact: Project costs for several buildings we’ve seen lately that are located in cities are closer to $40,000 per student and more than $20M in total. 

And while purchasing and renovating an existing building might seem like it would be more cost effective than new construction, it’s often just as expensive. The buildings that are available for charter schools to purchase tend to be former grocery stores, warehouses, office spaces, or churches — not former schools. That means there’s significant retrofitting and renovating that must happen before the building can be safe for use as a school. 

Ongoing facilities M&O is what it costs to maintain the school building each year (e.g., expenses such as janitorial, utilities, insurance, and routine or small-scale maintenance and repairs). This is essentially all of the annual facilities cost except for the mortgage (also known as debt service). M&O varies by factors such as building size but is typically a much smaller expense relative to what one pays for the building itself. For context, the 21st Century Fund looked at M&O expenditures across state public schools in FY2017 and saw a range of ~$700-$1500 per pupil, with an average of $1,128.

How do schools pay for this?

The diagram shown below, called the “capital stack,” illustrates the mix of financing sources used to fund a facility project. Schools may use a mix of upfront cash known as “equity” and loans (a.k.a. “debt”) to pay for their often multi-million dollar project costs. A typical capital stack may look something like this:

Capital stack diagram illustrating how charter schools pay for a facilities project cost

The equity at the bottom of the stack is similar to the 10-20% down payment that is often required when you purchase a home. This is upfront cash that the charter school must provide in order to obtain debt (the other two parts of the stack) at reasonable interest rates. Charter schools often acquire this money from philanthropy and/or build up their own savings over time. Even when providing the upfront equity, access to affordable debt (i.e., getting loans at reasonable interest rates) can be a major barrier for charter schools, but more on that later.

The other type of cost, M&O, is typically paid for via general operating budgets such as the per-pupil funding charter schools receive.

Now that you have a sense of scope in charter facility costs, up next in our weeklong “Infrastructure Insights: Financing Charter School Facilities” series, we’ll focus on challenges charter schools face in securing new facilities. 

(*Some organizations listed include past or present clients or funders of Bellwether.)

Business Organizations Play a Key Role in Education Advocacy Post-COVID

Questions about when and how to reopen schools will have ripple effects for the business sector and broader economy. If schools cannot open at all, or open only part-time or for small groups of students on a rotating basis, adults cannot return to work. Without a workforce, businesses cannot reopen and the economy remains shuttered. As a result, the business community has an especially important role to play in current deliberations about whether and how to reopen schools.

Business advocacy organizations, such as chambers of commerce and business roundtables, are well-suited to engage in these deliberations. These organizations advocate on behalf of policies that ensure students gain the skills, knowledge, and experiences they need to be successful in the current and future economy. This can look like helping to pass legislation requiring computer science coursework or successfully advocating for legislation to improve access to industry-recognized credentials and work-based learning experiences. In light of the current pandemic, business advocacy organizations bring an important voice to the conversation about what schooling could and should look like in the near future.  

What makes these organizations well-suited to engage in these conversations? While there’s limited research examining how the most successful organizations work, my colleagues and I recently completed a report that uncovered three key strengths that the most successful have in common. 

First, business advocacy organizations have a deep understanding of the advocacy landscape in their state and understand how to bring diverse groups — such as Republicans and Democrats or business and labor — together for a common cause. In Washington State, for example, the Washington Roundtable coordinates the College Promise Coalition, which includes stakeholders from public and private two- and four-year colleges and universities, students, families, alumni, education advocates, education leaders, and business leaders. As part of its advocacy to improve enrollment and completion rates in the state’s postsecondary institutions, the coalition’s broad base demonstrated widespread support for the Workforce Education Investment Act, which ultimately passed. Coordinating community-wide efforts like these will be imperative as regions work to repair their business, economic, and education sectors in a post-COVID world.  Continue reading

How Autonomous Schools Should Be Held Accountable — It’s Complicated

Across the country, many states and local districts are establishing autonomous school policies, which delegate to principals and school leaders significant authority over school operational decisions that are traditionally held by district central offices. This theory reflects part of the charter school theory of action, which relies on granting increased autonomy in exchange for increased accountability. 

However, the accountability side of this bargain is much murkier for autonomous schools and so are the outcomes, raising questions about the extent to which these policies are able to capitalize on lessons learned from successful charter sectors. 

cover of Bellwether report "Staking out the Middle Ground: Policy Design for Autonomous Schools from Feb 2020, features graphic of three school buildings with different but overlapping colors

The strongest charter sectors have pretty clear and consistent approaches to accountability: charters are managed to a performance contract that has specific goals for outcomes. They are subject to periodic renewal based on a data-based assessment of progress on those goals. The consequences for not meeting those goals are clear, often culminating in non-renewal or closure.

Autonomous school policies vary significantly from place to place, and even sometimes within the same city, in ways that create thorny questions about the best structures for holding schools accountable. There tend to be two ways that districts keep autonomous schools accountable to high performance, as we outline in our new report

  1. Autonomous schools are subject to the same accountability structure as every other district-run school
  2. Autonomous schools are subject to possible revocation of autonomy if they fail to meet the expectations outlined in their school plans

Continue reading

Bleak Pictures of Rural Communities Are Not the Full Story

From lobsters to bikes to HBCUs, Bellwether has covered a breadth of topics tied to rural education over the last six years. While we are by no means the first group to do in-depth research on rural schools and communities, we were among the first in the education reform community to begin thinking critically about policy solutions for rural schools. And as more and more of our peers have turned their attention to the rural context, we’ve realized that there’s a lack of basic understanding of the facts about rural schools and communities. 

To help address that problem, we’ve put together a new resource: “Wide Open Spaces: Schooling in Rural America Today.”

This deck pulls together data and research on education, economic development, and more into a coherent fact base to explain the current state of rural communities and schools. It begins with an overview of the variation of communities within the rural designation in terms of their locations, economies, strengths, and challenges. For example, resort communities like Eagle County (Vail), Colorado and impoverished communities like many along the Mississippi Delta are both considered rural but have dramatically different geographic, economic, educational, and social contexts. Continue reading