Innovations in Education: Making Charter School Facilities More Affordable: State-driven Policy Approaches
December 2008
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As noted in the introduction to this guide, paying for appropriate facilities has been a persistent challenge for charter schools. Many schools have had little choice but to cover their capital costs by diverting funds from already stretched operating budgets, thus eating into monies intended for instruction. Most charter schools also engage in complicated searches for facilities funding from a variety of sources.

Many jurisdictions have been dedicating substantial effort to easing this burden, as evidenced by the creative and sophisticated policy interventions profiled in this guide. For policymakers and charter school stakeholders interested in implementing or adding to the array of models presented here, it may be helpful to consider the following.

  • Context is key. In thinking about what strategies might be most sensible for a particular jurisdiction, start by assessing available resources (including money and space) and identifying key change agents, that is, those in different branches of government who have the political will and capacity to promote or enact new strategies. Also consider what types of support or expertise are needed to ease and optimize implementation of any new form of assistance for charter schools' facilities.

    Different circumstances suggest different approaches. For example, in times when state economies are strapped, opening up or broadening charter schools' access to tax-exempt bonds and tax credits like the Qualified Zone Academy Bonds (QZABs) may be more realistic than introducing new charter school facilities grant programs (or making major increases to existing programs). Similarly, introducing policies that encourage districts to provide facilities to charter schools may be more effective in areas facing declining enrollment.

  • Policy remedies are evolving and can be interdependent. The whole charter school movement has developed incrementally, with growing interest and acceptance over the years. Similarly, developing policy solutions to the charter facilities dilemma appears to be a gradual process. For example, the experiences of many of the sites profiled in this guide suggest that charter school financing markets appear to take time to develop. But as more deals are secured, with few if any defaults, investors gain confidence, which, in turn, promotes further growth.

    Sometimes development in one area of support leads naturally to progress in another. For instance, the stable source of revenue provided by even relatively low per-pupil facilities aid grants can provide the security that lenders need in order to feel comfortable investing. Similarly, maturation of a traditional lending market for charter school facilities may encourage a bond market to emerge in this arena.

  • The current environment presents questions about the extent to which charter schools should be in the real estate business. From a policy standpoint, two fundamental and competing issues are whether facilities ownership is a good idea for charter schools and whether charter operators should be freed from the burden of finding suitable facilities. Overall, the current climate of funding and financing for charter schools provides market-based incentives for school operators to be efficient in their facility decisions.
    On the other hand, one can argue that as public schools, charter schools should be provided the same resources (e.g., existing public facilities or land, tax, or bond revenues) in the same way that these resources are offered to other public schools. There are no simple answers, as such policy judgments weigh whether charter schools should be brought into the fold of the traditional district system or whether there should be a separate system for the charter sector. Some argue that, just as charter schools pursue innovative approaches to instructional programs or school governance, they also should pursue innovative models of facilities financing, pursuing broader goals, such as creating links with community resources, holding down overall facilities costs, and conserving energy. A potential intermediate approach could involve a system that puts charter schools in direct relationship with the state, rather than districts, for their financing arrangements.

  • Challenges remain and innovative solutions are needed. Even if all of the strategies mentioned in this guide were widely adopted and perfectly implemented, some charter schools would still struggle to find appropriate facilities. For example, some may be well positioned to take advantage of exemplary policies that make financing more affordable, but be unable to locate suitable space. Another vexing challenge is that newer and less well-heeled charter schools often do not meet the requisite credit criteria to access lower-cost financing options. Parents considering charter schools need assurance that there will be a safe and appropriate setting for their children to learn—and many want to know where a school is going to be located before they are willing to sign up their children. Therefore, policymakers and charter school stakeholders who want to foster the continued growth of this sector need to continue to think beyond the models that are presented in this book and look, especially, at how to design options that support schools in the start-up phase.

  • Policy decisions touch on equity and costeffectiveness. The underlying driver for policymakers as they examine all options and make their decisions will always be the need to ensure that as much money and as many resources as possible are going where they are most needed—the classroom. After all, the lack of available funding and the ensuing effort that charter school operators expend on finding and funding facilities means that resources are diverted from teaching and learning. Furthermore, given that charter schools have no tax base, grappling with the facilities dilemma presents an opportunity to pioneer policies that disentangle school funding from local prosperity, which could, in turn, have ramifications for public education in general. Keeping in mind that many charter schools serve low-income student populations, the goal of introducing more equitable approaches is particularly salient.

By considering the models presented in this guide, adapting them to local contexts, and generating new ones, states across the nation can lay the groundwork for offering all public school students the facilities needed to reach their education goals.

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Last Modified: 02/05/2009