Venturesome Capital- State Charter School Finance Systems

Many school districts funded charter schools at 105

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Unformatted text preview: surance and risk management. This amount was not automatically included in per-pupil operating revenue, the basis of charter school funding. Many school districts funded charter schools at 105 percent, an amount that incorporates per-pupil operating and capital outlay funding. Charter schools operating their own facilities were more likely to get 105 percent funding. The 1999 legislature raised per pupil funding to a minimum of 95 percent of per pupil revenue (PPR), a figure that includes funding for capital outlay, insurance and risk management. Approximately 25 percent of Colorado charter schools are housed in school district facilities (Caldwell and Arrington, 2000). The charter school law requires districts to provide vacant facilities to charter schools free of charge. Partly because of this provision, about 25 percent of Colorado charter schools are housed in school district facilities. Charter schools are not entitled to proceeds of the local bond redemption fund mill levies of school districts used to pay off debt incurred for constructing school facilities. In rapidly growing Jefferson county, for example, charter Appendix 111 Venturesome Capital: State Charter School Finance Systems schools do not receive the $717 per student raised through the levy (Caldwell and Arrington, 2000). The Colorado Educational and Cultural Facilities Authority (CECFA) serves as a “conduit” for obtaining tax-exempt financing for organizations that “provide an educational program pursuant to a charter from a school district.” CECFA issues the bonds and loans the proceeds to the charter school after charging transaction fees of $20,000 to $30,000. The bonds issued are “non-course” to CECFA, which means that responsibility for repayment is limited to the charter school and investors will focus on creditworthiness of the charter school rather than the CECFA. Six charter schools have already obtained tax-exempt financing to refinance, purchase or build facilities (Caldwell and Arrington, 2000) Together, the six schools raised over $23 million in financing at an interest rate between 6 percent and 7 percent, cutting borrowing costs in half compared to commercial lenders. Administrative Fees: Administrative fees are allowed and specified in the charter. Uniform Financial Reporting: Charter school financial reporting is blended with the district’s reporting, but the reporting is not uniform. State officials expect to provide some comparable charter school data for the 1998-99 school year. Auditing Practices: Charter schools are required to describe the manner in which an annual audit of financial and administrative operations is conducted. Most charter schools appear as an entity in the school district’s audit. Responsibility for Debt and Disposition of Assets: School districts are responsible for charter school debt. Some districts allow charter schools to form nonprofit corporations that can acquire debt and purchase property. Other school districts allow no debt. Issues about the disposition of assets...
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This note was uploaded on 02/11/2013 for the course ECON 101 taught by Professor Smith during the Spring '09 term at Harvard.

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