The Capital Needs of Educational Entrepreneurs

Charter school operators often note the barriers to accessing affordable and suitable facilities. Although they are public schools, charter schools often do not have access to school district buildings, nor do they generally have the ability to participate in school facility bond programs operated by local authorities. The lack of a property tax base with which to guarantee the public charter school’s repayment of debt is often exacerbated by lower per-pupil funding compared to traditional public schools. Moreover, the reauthorization risk of a typical five-year term of a public charter school makes long-term financing very difficult.

Demand for public charter schools is at an all-time high, as states across the country continue to establish and strengthen charter school laws. According to the National Alliance for Public Charter Schools, approximately 2.9 million children attended a charter school during the 2015-2016 school year, representing a 76 percent increase in student enrollment over the past five years. Given the unique funding challenges faced by public charter schools, they cannot grow in quantity and improve in quality without solving for the facilities problem.