Shapiros Senate Education Committee to Address Allowing the Permanent School Fund to Back Charter School Bonds
By Josie Duckett
Texas Insider Report: AUSTIN Texas Senate Education Committee Chair Florence Shapiros legislation - SB 597 - would extend the states Permanent School Fund bond guarantee program to academically & financially sound charter schools.
SB 597 is the perfect example of how solid public education policy can be the unexpected and occasionally brilliant upshot of a state budget crisis. The bill is a win-win-win it saves taxpayer money comes with a small price tag and helps public charter schools construct public school buildings.
Charter schools are public schools that were created by the Texas Legislature more than 15 years ago. Over 120000 Texas students are currently enrolled in a charter school across 463 campuses last school year.
Over 56000 Texas students on charter school waiting lists. Demand is there
facilities are not.
Charter schools are public schools with no access to a local tax base to pay for school buildings and no eligibility for the Instructional Facilities Allotment and the Existing Debt Allotment - two state programs that help traditional public schools meet the cost of providing facilities. Also charter schools cannot access the
Permanent School Fund bond guaranty which is available to traditional school districts.
If SB 597 becomes law charter schools will have state backing for their bonds allowing them to achieve AAA bond ratings and in turn will save substantial money on interest rates and issuance costs.
For example KIPP Houston issued a bond package last year for $68 million with a BBB rating. With a AAA rating they would have saved $1.5 million a year in interest alone. Public school spending should go directly to the classroom
not to private banking institutions.
The financial strength of the PSF is tremendous and should stand to benefit all Texas students and families. Last month
as Senator Shapiro filed SB 597 the Texas Education Agency (TEA) released great news.
The Permanent School Fund rebounded to a value of $25 billion making it the second largest educational endowment in the country behind only Harvard University."
Created in 1854 and overseen by the State Board of Education the PSF benefits all public schools by helping to pay for some basic education costs textbooks and other instructional materials.
SB 597 makes it clear that not all charters will be able to participate; the bar will be purposefully set high. Any charter school under consideration must be rated as investment grade by a nationally recognized investment firm.
Standard & Poors rating methodology for both school districts and charter schools includes a review of the:
- Charter Schools Framework
- Demand for the School
- Finances
- Management & Administration
- Debt
- Capital Planning
- Expansion Risk and
- Demographics
Under SB 597 charter schools only get the piece of PSF pie they deserve. Charter schools will have access to available capacity of the guaranteed bond programs in direct correlation with the percentage of public school students they collectively serve currently around 2.
As the charter school movement grows to meet the vast demand from students and parents the level of access will continually correlate with percentage enrolled in open-enrollment charter schools in this state compared to the total number of students enrolled in all public schools in this state.
The proportionate logic of SB 597 is fair and will not negatively impact independent school districts. The idea of extending the PSF bond guarantee to charters was discussed during an interim hearing on charter schools in March 2010.
TEA Deputy Associate Commissioner for School Finance Lisa Dawn-Fisher said
that the capacity of the PSF fund to handle the addition of charter schools was not a problem saying it would have minimal impact on the rest of the school districts." (Dallas Morning News 3/29/10)
Texas continues to be a leader in public education even in the toughest budget times because of elected officials like
Senator Shapiro who form strong policy that balances common sense with constant advancement.
Josie Duckett is Vice President of Public & Government Relations for the Texas Charter Schools Association. She welcomes your feedback via email at jduckett@txcharterschools.org
