Venturesome Capital- State Charter School Finance Systems

Start up funding issues are probably more of an

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Unformatted text preview: ter schools to acquire external support as evidence of their viability (Millot and Lake, 1997). Start-up funding issues are probably more of an obstacle to one-of-a-kind charter schools started by teachers, parents or community groups than for better-financed private management companies. One reason for the growth of management companies is the ability to finance school start-up. State Start-up Assistance Some states provide start-up funding or assistance. During the first two years of operation, Minnesota charter schools are eligible for aid to pay start-up costs and additional operating costs in the amount of $500 per pupil, with a minimum of $50,000 per school. In Arizona, the charter school stimulus fund provided assistance for both start-up costs and the renovation of facilities. With the availability of federal start-up funding, however, the legislature appropriated no funding for 1999-2000. Pennsylvania rolls state funding into the federal start-up grants for charter schools. Pennsylvania also awards additional funding to charter schools as their enrollment grows. This strategy allows charter schools to start small and grow at an efficient pace, avoiding the incentive to front-load enrollment in order to receive maximum start-up grants. Rhode Island provides start-up assistance if no federal money is available. 55 Venturesome Capital: State Charter School Finance Systems TABLE 14 State Start-up Funding Yes No 1 1 Arizona, California, Connecticut, Illinois, Louisiana,1 Massachusetts,1 Minnesota, Pennsylvania, Rhode Island Alaska, Colorado, Delaware, District of Columbia, Florida, Georgia, Hawaii, Kansas, Michigan, Milwaukee, New Jersey, New Mexico, North Carolina, South Carolina, Texas, Wisconsin 1 Some assistance with cash flow problems through loans and/or advance aid payments. Other states established low- or no-interest lines of credit. In Louisiana, start-up funds could be provided through a revolving loan fund. This fund, however, has been unsuccessful in attracting applicants, in part, because it is privately managed, and charter holders have to provide detailed background information and collateral for some types of funding. In Illinois, the charter school law authorizes a $500,000 revolving loan fund, but the fund is not yet in operation. On its own, the Chicago school district established a $2 million revolving loan fund administered through the Illinois Facility Fund, a nonprofit community development loan institution. California also has a $5.5 million revolving loan fund offering loans up to $50,000 per school. Another way that states have attempted to deal with cash flow problems is to advance the schedule of payments to first-year charter schools, a topic addressed fully in Chapter 6. Federal Start-up Grants The Federal Public Charter School Program (ESEA Title X, Part C) provides federal funding to assist with costs for opening and starting a charter school. Usually awarded through a competitive process, individual charter school develope...
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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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