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Credit Enhancement Initiatives to Assist Charter School Facility Acquisition, Construction, and Renovation (V-B-2)


Charter schools, in general, are newly created organizations. These new schools face considerable financial burdens to obtain facilities for providing educational services. Most charter schools rent space and older charter schools are beginning to buy and renovate buildings. In both cases, district and state allocations generally do not cover facilities costs. Even when these costs are covered, charter schools rarely receive funding commensurate with the support provided for traditional public schools. This program helps charter schools with the costs of acquiring, constructing, and renovating facilities through innovative credit enhancement initiatives.

WHAT'S NEW--The No Child Left Behind Act

Empowers Parents

  • Increases choice among public schools. This program aims to increase the number of charter schools and increase the capacity of existing charter schools to meet the demand of parents seeking alternate public schools.

Reduces Bureaucracy and Increases Flexibility

  • Extends the eligibility for grants. The new legislation differs from the previous Charter Schools Facilities Financing Demonstration program in that it no longer requires "one-time" grants.

How It Works

The U.S. Department of Education awards grants to defray the cost of acquiring, constructing, and renovating facilities through a competitive process to private, nonprofit organizations, public entities, or consortia including both types of entities. State education agencies may apply as a public entity or enter into a consortium with a nonprofit entity or another public entity. Grantees may reserve one-quarter of 1 percent of the grant for administrative costs. The remainder must be deposited in a reserve account and used to guarantee or insure debt used to finance charter school facilities, to guarantee and insure leases of personal and real property, and assists charter schools facilities financing through such activities such as identifying potential lending sources and encouraging private lending. It facilitates bond issues by charter schools or other public entities for the benefit of charter schools.

The grant recipients are expected to identify charter schools that will benefit from leveraged grant funds, either before or after receiving the award.

Key Requirements

Grant recipients must:

  • Identify the activities proposed, including how the eligible entity will determine which charter schools will receive assistance, and how much and what types of assistance charter schools will receive;
  • Describe the involvement of charter schools in the application's development and the design of the proposed activities;
  • Document the applicant's expertise in capital market financing;
  • Describe how the proposed activities will leverage the maximum amount of private-sector financing relative to the amount of government funding, and enhance credit available to charter schools;
  • Document that the applicant possesses sufficient expertise in education to evaluate the likelihood of success of the charter school program for which facilities financing is sought; and
  • In the case of an application submitted by a state government agency, describe the actions that it will take to ensure that charter schools within the state receive the funding needed for adequate facilities.

How Performance Is Measured

Grant recipients are required to submit annual financial and progress reports to the U.S. Department of Education. The Department may revoke funds if grantees fail to make substantial progress in carrying out the grant purposes.

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Last Modified: 09/14/2007