In 1991, Minnesota passed the first charter school statute in the nation and started the first charter schools in 1992. In 1996, the Minnesota Legislature appropriated funds for a charter school lease aid grant program.
Lease aid grant statute
Minnesota law (Statute 124D.11, subdivision 4) allows charter schools to apply to the Minnesota Department of Education (MDE) for building lease aid when a charter school has insufficient total operating capital revenue (as defined under section 126C.10, subdivision 13). The MDE must review and either approve or deny a lease aid application using the following criteria:
- the reasonableness of the price based on current market values;
- the extent to which the lease conforms to applicable state laws and rules; and
- the appropriateness of the proposed lease in the context of the space needs and financial circumstances of the charter school.
The State distributes these lease aid funds on a per-pupil basis. The amount of funds per- pupil unit served for a charter school for any year may not exceed the lesser of
- 90 percent of the approved per-pupil cost or
- the greater of (1) the charter school's building lease aid per-pupil for fiscal year 2003, (excluding the adjustments under Laws 2002, chapter 392, article 6, section 4; this may not exceed $1,500 for these grandfathered schools) or (2) $1,200, generally for newer charter schools.
The requirement that charter schools pay at least 10 percent of their facility costs helps ensure that schools will lease appropriate and reasonable facilities. The building lease aid may not be used for custodial, maintenance service, utility, or other operating costs. Charter schools make up the difference between state aid and actual rent by spending general aid funds.
The process for obtaining facility aid includes the following steps:
- Charter schools determine that their facility complies with health and safety regulations, local building codes and provisions for persons with disabilities.
- The charter school then submits its lease contract to MDE for review on the basis of reasonableness and appropriateness. If the lease is satisfactory, MDE approves the lease facility aid. If building modifications are necessary and appropriate, those are often subsumed into lease payments over several years.
- The MDE makes lease aid payments to charter schools on a monthly basis.
State funding and Federal grant
For fiscal year 2004, $17,768,623 was appropriated in state lease aid funding and the total facilities lease aid appropriation for fiscal year 2005 is $22,236,119.
Minnesota is one of four grant recipients under the State Charter School Facilities Incentive Grants Program. Minnesota will use its Federal grant to enhance its charter school facility initiative by making building improvement grants, augmenting state appropriations for lease aid, providing technical assistance in selecting appropriate charter school facilities and disseminating information about best use of facilities.