Venturesome Capital- State Charter School Finance Systems

2 horace mann schools may also acquire debt with

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Unformatted text preview: ith school district’s permission. Another important financial issue related to debt is whether school districts or state education agencies, rather than charter schools, are ultimately responsible for charter schools’ fiscal decisions. Ability to incur debt brings freedom and flexibility to charter schools, but lenders probably prefer that the state or a school district have responsibility for charter school debt. The table below indicates whether the charter school or the school district is responsible for the debt. 65 Venturesome Capital: State Charter School Finance Systems TABLE 20 Responsibility for Charter School Debt School District or State Charter School Corporation or Board Not No Debt Allowed Addressed Alaska,1 Massachusetts1 Arizona, California, Colorado,2 Connecticut, Delaware, District of Columbia, Florida, Illinois, Massachusetts, Michigan, Milwaukee, Minnesota, North Carolina, Pennsylvania, South Carolina, Rhode Island, Texas Hawaii, Kansas, New Mexico, Wisconsin Georgia, Louisiana, New Jersey 1 School districts are responsible for any debt incurred by Horace Mann charter schools in Massachusetts and Alaskan charter schools. 2 School districts may voluntarily acquire responsibility for debt. Only two of the states allowing charter school debt also make the school district or state responsible for this debt. Like churches, community organizations and most other nonprofit organizations, the charter school’s governing board is responsible for debt in most cases. Ownership and Disposition of Assets Including Fund Balances Some analysts portray the closure of charter schools for educational and economic reasons as the ultimate measure of accountability. So far, charter schools have closed in a relatively small number of cases. Nevertheless, the disposition of assets of closed charter schools represents an issue not clearly addressed in a number of the charter school laws. School districts do not go out of business, which is one reason school districts can borrow money at low interest rates, but charter schools can dissolve like any other small business. One school of thought holds that as public schools, charter schools’ assets purchased with public funds belong to the public. Donated facilities and equipment remain the property of the nonprofit corporation. Florida operates this way, and the state requires charter school property records that clearly identify property purchased with public funds. Another school of thought contends that asset ownership is essential for charter school independence and flexibility. Public funding belongs to charter schools whether directly expended on instruction or invested in physical assets such as textbooks, buildings or equipment. Some charter schools also express a fear that if their assets revert to a school district in the event of closure, an incentive exists for school districts to sabotage or close their school to get the resources. 66 Charter School Financial Structure and Accountability TABLE 21 Ownership of Assets Purchased with Public Funds of Closed Charter Schools Revert to School District or State Unclear, Not Addressed, or Left to Charter School Charter School Does Not Have Assets Alaska, Colorado, Delaware, Florida,1 Illinois,2 Massachusetts, Minnesota,1 New Jersey, North Carolina, Pennsylvania Arizona, California, Connecticut, District of Columbia, Georgia, Louisiana,3 Michigan, Milwaukee, South Carolina, Texas Hawaii, Kansas, New Mexico, Wisconsin 1 Asse...
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