The State Board of Education took a step further this week in its support of charter schools, as it established guidelines for a bond program expected to save charters millions of dollars.
The board wrestled with policies for its Bond Guarantee Program for Charter Schools, which was created earlier this year under House Bill 885. Under that law, charter schools, if approved, will have certain bonds guaranteed by the state and its Permanent School Fund, a $28 billion endowment for public schools.
Bonds help charters build and improve their facilities, which many say is one of their biggest challenges to date. Lawmakers gave charter schools limited access to a bond program in 2011. The new law expands that access, by guaranteeing refinanced bonds and allowing certain bond money to be returned to charter schools for instructional purposes.
Bonds backed by the state will now have a AAA+ rating, meaning schools will have to pay less interest on them over time. Charter schools claim they have been forced to pay high interest rates in order to build and maintain facilities because they did not have the backing of the state .
Mike Feinberg, co-founder of the KIPP charter schools, said access to affordable facilities is the biggest challenge he and his schools face in meeting their demands.
“I can’t understate how important this new law is for our schools,” Feinberg said. “Not only does it create equity for charter schools under the program, but it redirects tax dollars toward our classrooms and away from debt service payments.”
KIPP has $93 million in bonds outstanding. A survey of charters by the Texas Charter School Association found that 35 charters have issued $1.1 billion in bonds.
Charter schools must apply to and be approved by the Texas Education Agency and the Commissioner of Education in order to have their bonds backed by the state. The schools must have also been in operation for at least three years and have an accreditation rating of Acceptable or higher by the state.
They must also be financially sound in order to qualify. Once they have received approval by the TEA, charter schools have six months to sell their bonds, which must then be approved by the Attorney General.
The Commissioner of Education may sue the charter schools if they default repeatedly. The state board will discuss the program once more and is expected to adopt changes on Friday.