U.S. Department of Education’s Credit Enhancement for School Facilities (CE) Program
The CSLC supports strengthening the Credit Enhancement program, which has been instrumental in expanding available sources of facility financing for early stage and established public charter schools. The Credit Enhancement Program was authorized under No Child Left Behind (Public Law 107-110) to assist public and nonprofit entities to leverage non-Federal funds that help charter schools obtain school facilities through purchase, lease, renovation, and construction. In keeping with the intent of the authorizing committees in the 114th Congress, 12.5% of overall Charter School Program funding should be set aside for facilities aid, of which no less than 65% should be dedicated to the Credit Enhancement program. Through FY 2014, more than 500 schools in 33 states and the District of Columbia have benefited from the Credit Enhancement Program, which has historically leveraged nearly 15 private dollars for each public dollar of investment. Assuming $500 million for the Charter School Program account, there should be no less than $62.5 million for facilities aid, of which $40.6 million should be dedicated the Credit Enhancement Program. Learn more here.
U.S. Department of the Treasury’s New Markets Tax Credit (NMTC) Program
The CSLC supports permanently extending the New Markets Tax Credit program at an increased allocation authority of $5 billion per year. The New Markets Tax Credit was established in the Community Renewal Tax Relief Act of 2000 (Public Law 106-554) in an effort to stimulate private investment and economic growth in low-income communities that lack access to the patient capital needed to support and grow businesses, create jobs, and sustain healthy local economies. The NMTC enables community development entities (CDEs) to raise private capital to acquire, construct, renovate, or lease academic facilities in partnership with charter school operators, helping alleviate facilities financing difficulties. In particular, the seven-year structure of the NMTC is an ideal fit for charter school facilities financing, as it allows charter schools to significantly reduce their debt service in the critical years of early operation. According to data from FY 2003 – FY 2016, NMTC investments in charter schools totaled $1.99 billion, supporting academic space for 200 public charter schools. Learn more here.
U.S. Department of the Treasury’s CDFI Bond Guarantee Program (BGP)
The CSLC supports $1 billion in aggregate guarantee authority per year for the Department of the Treasury’s Community Development Financial Institutions Bond Guarantee Program. The CDFI Bond Guarantee Program was established in the Small Business Jobs Act of 2010 (Public Law 111-240) to create a source of 30-year capital for CDFIs to support lending and investment for projects in low-income communities, including public charter schools. Charter schools could greatly benefit from the long-term financing, as less than 8% of charter schools across the country have accessed 30-year capital through the bond market. CDFIs would be able to lend to charter schools for 30-year terms, which would make facilities financing much more affordable for those schools. Learn more here.
The CSLC would like to have improved access to the long-term, tax-advantaged bond financing available for public school facilities, including Qualified School Construction Bonds and Qualified Zone Academy Bonds, or Q-Bonds. The CSLC would like this type of financing reauthorized and made permanent.
Creating Quality Educational Opportunities in Low-Income Communities
The CSLC will also support legislation that broadly advances the ability of quality charter schools in low-income communities to grow and secure facility financing. In addition to the above priorities, the CSLC will: (1) work to facilitate charter school access to vacant and underutilized public school buildings; (2) promote the replication and expansion of high-performing charter schools where they are needed most; and (3) advance the development of environmentally sustainable, high performing charter school facilities.