California has enacted several laws that help charter schools obtain school facilities. These laws use different approaches in assisting charter schools with this need, including lending programs, grant programs, and a mandate for school districts to provide facilities to charter schools.
Lending Programs for Charter Schools - Revolving Loan Program and the Charter School Facilities Program
California has two lending programs for charter schools - a revolving loan program and a bond-initiative (see descriptions below).
California's Charter School Revolving Loan Program (CSRLP) helps meet the objectives established in a school's charter, such as leasing facilities, making necessary improvements to facilities, purchasing instructional materials and equipment, and expanding programs. This program provides loans for up to $250,000 per school to non-conversion charter schools that have been numbered by the California State Board of Education, but have not been in operation for more than five years or had their charters renewed. The loans must be repaid within five years, beginning with the first fiscal year after receipt of the loan. Loans shall be made at the interest rate earned by the money in the Pooled Money Investment Account (PMIA) as of the date of disbursement of the funds to the charter school. The PMIA Rate varies but is typically three to five percentage points below the rate that would be available for a loan from a private lender. (The PMIA Rate is the rate earned on various pooled funds in the State Treasury.)
A loan request must be submitted by
- the school district or county office of education that authorized the charter jointly with the charter school or
- a charter school directly if the charter school is incorporated (charter schools that are incorporated have the option to apply directly or jointly with the chartering entity).
The Superintendent of Public Instruction of the California Department of Education (CDE) must approve all loans. The CDE may consider the following when determining whether to approve a school's loan application:
- soundness of the charter school's financial business plans;
- availability of other sources of funding for the charter school;
- geographic distribution of loans made from the Charter School Revolving Loan Fund;
- the impact the receipt of these funds will have on the charter school's receipt of other private and public financing;
- plans for creative uses of the funds received, such as loan guarantees or other types of credit enhancements;
- financial needs of the charter school; and
- startup costs for new charter schools, which is a priority for loans.
Since the program's inception in FY 2001, CSRLP has underwritten 93 loans totaling over $20 million in funding. The statute enacting this program is Senate Bill 1759, (SB 1759, Chapter 586, Statutes of 2000) and can be accessed at: http://www.leginfo.ca.gov/bilinfo.html [search site] (1999-2000 session).
Charter School Facilities Program (CSFP or Program) The Program is funded from proceeds of two state bond measures - $100 million from Proposition 47 (November 2002) and $300 million from Proposition 55 (March 2004). California School Finance Authority (CSFA) staff and Office of Public School Construction (OPSC) staff jointly administer the Program.
The CSFP provides site-based charter schools with new construction or renovation funding. The Program funds 50 percent of project costs as a grant, and the charter school is responsible for paying the 50 percent balance through either a lump sum payment or through payments due on a long-term lease obligation. The school district in which the project is located retains ownership of the project for the benefit of the public education system.
When an application for funding is initially filed with CSFA and OPSC, the applicant is not expected to have designed the project, acquired a school site, etc. Therefore, the Program is set up to provide charter schools with a reservation of funding known as a Preliminary Apportionment, which is sized using a project cost estimate prepared by OPSC. Charter schools that are awarded funding have four years to design the project, acquire a site, receive approvals from the necessary agencies and file a funding application with the OPSC to convert the Preliminary Apportionment to a Final Apportionment.
In July 2003, 26 applications requesting a total of over $438 million were received for the $100 million in Proposition 47 funds. Six charter schools received Preliminary Apportionments from Proposition 47 funds in January 2004. All six awardees selected the lease-payment option to satisfy the 50 percent local share requirement.
CSFA staff is finalizing its recommendations to its board regarding the financial soundness of 40 program applications for the $300 million in Proposition 55 funds. In late January 2005, the State Allocation Board will determine which charter schools will receive Preliminary Apportionments from Proposition 55 funds. The Program was established in 2002 pursuant to the California Education Code Sections 17078.52 through 17078.66. Sections of the California Education Code that pertain to the program can be found through the following link: http://www.leginfo.ca.gov/.
California was one of four grant recipients of the State Charter School Facilities Incentive Grants Program. With a first year grant amount of $9,850,000, California will use its Federal grant to provide cash grants to CSFP recipients in addition to the grants they receive under the CSFP.
Charter School Facility Grant Program - Reimbursement for Rental or Lease Costs
California enacted the Charter School Facility Grant Program in 2002 to provide per-pupil facilities funding to reimburse for charter school rental and lease costs in low-income areas. This program is targeted toward schools and communities with high proportions of economically disadvantaged students. Charter schools are eligible to receive these funds if they either.
- enroll a student population where 70 percent or more of the students are eligible for free or reduced price meals; or
- are physically located in the attendance area of a public elementary school in which 70 percent or more of the students enrolled are eligible for free or reduced price meals.
Eligible charter schools may receive reimbursement for facilities rent and lease costs in an amount of up to $750 per unit of average daily attendance. However, the total amount of funds provided to a school may not exceed 75 percent of its total annual facilities rent costs.
In the last three fiscal years, the program has awarded approximately $20.9 million to charter schools throughout California. For 2003-2004, the program provided $7.7 million to 119 schools based on an estimated 16,123 students in average daily attendance. The Charter School Facility Grant Program was restricted to three years by law and ended in 2003-04. A description of the Charter School Facility Grant Program can be found in the California Education Code Section 47614.5 accessible via: http://www.leginfo.ca.gov/.
Proposition 39 - Mandate For Districts to assist Charter Schools with Facility Needs
Proposition 39, which passed in November 2000 and went into effect in 2003, requires school districts to provide to each charter school having a projected average daily attendance of at least 80 or more students from that district with "facilities sufficient to accommodate the charter school's needs." Districts can provide charter schools with existing facilities; use discretionary funds; or use other revenues, such as local school bonds, to satisfy this requirement. The school district may charge the charter school a pro rata share of the district's facilities costs which are paid with unrestricted general fund revenues, based upon the ratio of space the charter school uses divided by the total space of the district.
Since 2003, an estimated 50 charter schools have received facilities from school districts under the terms of these laws. The text of Section Six in Proposition 39 may be viewed at vote2000.sos.ca.gov/. Details on the requirements under Proposition 39 can be found in the California Education Code Section 47614 and the California Code of Regulations, Title 5, 11969.1-11969.9.