Better School Facilities, Better Schools
Challenges Facing Public Charter Schools
- Challenges Facing Public Charter Schools
- What is the Building Equity Initiative?
- Building Equity Initiative Partners
- What is the Equitable Facilities Fund?
- What is the Facilities Investment Fund?
- What is the Spark Opportunity Grant Program?
- Early planning: market study, site search, financial capacity and affordability
- Pre-construction and pre-development: site due diligence, feasibility study, architectural planning and design
- Financing and construction: zoning, permits, financial modeling of financial and investment scenarios
According to the National Alliance of Public Charter Schools, public charter schools spend on average 10% of all funding on facility or facility-related costs, an estimate that does not include untold staffing hours and resources spent addressing these issues.
Despite the fact that public charter schools serve students across 44 states and the District of Columbia, only 29 states offer funding for facilities. Charter schools rarely have access to taxpayer-funded facilities, even when they’re vacant. And when the schools do find an affordable facility option, loans come with an estimated interest rate 1.5 percentage points higher, on average, than district schools.
This all results in more money being spent on classrooms instead of inside them.
State Policy Snapshot: Facilities Funding for Public Charter Schools, June 2019
Mark Madema, “Charter Schools are an Opportunity for Impact Investors”
“Strengthening Federal Investment in Charter School Facilities,” February 2018
In 2016 we launched the Building Equity Initiative (BEI), an unprecedented effort to make it easier and more affordable for public charter schools to find, secure and renovate facilities. The goal is to alleviate the time and energy educators spend finding and securing buildings so more resources can go directly to students and teachers.
Public charter schools are rooted in their communities and grounded in the needs of their students, which include proper facilities. With these community leaders driving change, the Building Equity Initiative supports system-wide improvements in how high-performing public charter schools access facilities financing.
Through the Building Equity Initiative, there is now a large network of real estate experts, lenders, financiers, technical assistance providers and more resources available to help public charter schools when financing and securing facilities.
The Walton Family Foundation launched the Building Equity Initiative with three core partners, and we have expanded this network of advisers to 13 national and regional organizations working across the country. These organizations offer customized support to community-serving schools and their leaders, ranging from identifying demand, performing landscape surveys to assistance in preparing project projections, developing budgets and timelines and highlighting capital sources.
The Equitable Facilities Fund (EFF) launched in 2018 with $200 million in seed funding and big goals - for every $1 in philanthropic seed capital, EFF would seek to raise $3 from new investors to help more quality schools open and expand.
After receiving an investment grade “A” rating from Standard & Poor’s, the EFF’s first bond offering closed with a sale of over $111 million, exceeding initial projections. More than half of bond purchasers were making their first substantial investment in charter schools. To date, EFF has raised $130 million via a public bond issuance.
Due to the low interest rates of EFF loans, schools typically save $100,000 to $200,000 per year. By the end of 2019, EFF expects to make roughly $150 million in low-interest loans so more than 20,000 students in 41 schools can have the buildings they deserve.
The Facilities Investment Fund (FIF) loan product is designed for maximum impact for charter schools and nonprofit charter developers: five-year low-cost fixed-rate loans for renovation and new construction projects up to $20 million with special consideration for standalone schools and emerging charter operators. Each FIF loan investment aims to lower facilities costs to maximize the resources - both time and energy - that education leaders can focus on their students, their teachers and their classrooms.
In 2020, the Facilities Investment Fund will expand its circle of impact, seeking to support new partners and work with dedicated community leaders and educators to build inspiring schools and ensure more children have access to high-quality education.
Spark Opportunity grants support high-quality public charter schools, serving students in economically distressed communities, in obtaining appropriate and permanent facilities. In 2020, 26 schools were named inaugural winners, using their grants to pay for technical experts to evaluate their resource needs and develop a strategic plan for their facilities. The vast majority of schools are located in Opportunity Zones and are demonstrating how investments in education can yield social and financial returns, and be a critical part of community-driven revitalization efforts.
Eligible uses of Spark grant dollars include: