The fine print: charter school facilities funding in Texas

Yesterday’s post about Houston ISD bond election needs clarification. So, how do Texas charter schools raise money for facilities? Here is the fine print. For a summary, check the score card for Texas at the National Alliance for Public Charter Schools.

No local property tax revenue. Unlike Houston ISD, charter schools do not have the power to raise money from local property taxes. All money for charter schools comes from the state — or philanthropy.

Charter schools receive less funding overall. It’s about 10% less per student, according to the National Alliance for Public Charter Schools. For more detail about the funding formula, see this report at the Texas Charter Schools Association. Another wrinkle: charter schools qualify for the Texas Education Agency’s New Instructional Facility Allotment (NIFA) but not other categories of facilities funding (Instructional Facilities Allotment (IFA) and Existing Debt Allotment (EDA)).

Charter schools can issue bonds, but the interest rates are higher. In 2011, a bill passed to allow charter schools with good financial stability to borrow at lower interest rates with backing from the Permanent School Fund“Day 20: Lawmakers Help Texas Charter Schools Build, Expand”, Thanh Tan, Texas Tribune, August 20, 2011. However, no bond guarantees have yet been issued to charter schools. The bond guarantee program has requested an IRS ruling on whether guaranteeing charter school bonds would affect the Fund’s tax exempt status. The program has also requested updated letters from credit rating agencies to make sure that adding charter school bonds would not lower the overall credit rating. “Certification of the Permanent School Fund’s Bond Guarantee Program for Fiscal Year 2011”, John Keel, State Auditor’s Office, April 24, 2012. It may take another year for this to get sorted out.

The Texas Public Finance Authority Charter School Finance Corporation is authorized to issue bonds and lend the money to charter schools for facilities. Twelve charter schools have participated, including KIPPHarmony, and IDEA.

Also, the Texas Credit Enhancement Program for Charter Schools creates reserve funds for charter schools that are issuing municipal bonds to buy or renovate facilities. However, the program’s summary shows how small it is, and there were no grants at all in 2012.

Charter schools pay hidden property taxes. Landlords who lease facilities to charter schools still have to pay property taxes; they do not qualify for the private school tax exemption (unless the landlord has its own non-profit status, e.g., if the landlord is a church). “State Board of Education Considers Renting to Charters”, Brian Thevenot, Texas Tribune, June 24, 2010.

No access to unused ISD facilities. As I wrote about in an earlier post, last year, Dallas ISD closed nine campuses, and chose to simply leave the buildings vacant.

Share with friends:


A nonprofit that helps parents to research school options and become advocates for high quality education.