April 7, 2021

Proof that Charters Can Work Exactly as Envisioned
As the 30th anniversary of the passage of the nation’s first charter school law approaches, a city that was in dire educational straits for decades is demonstrating that the original concept for charter schools is sound. Innovators believed charters schools would create competition for district schools, thus forcing all schools to improve. Now, a new report by independent researchers at Stanford’s Center for Research on Education Outcomes (CREDO) shows that this is exactly what has happened in Newark, New Jersey.  After New Jersey earned a spot at the top of national rankings for public education, CREDO compared student learning growth in Newark’s district, charter and magnet schools to New Jersey’s statewide average. They found that Newark’s mix of public school models collectively boosted student learning at a pace that was “significantly” faster than the New Jersey average in reading in all three years studied, and one year in math. Newark’s public charter school sector–expected to reach near 40 percent of the city’s student population next year–also performed exceptionally well, in fact, better than nearly any other sector in any city CREDO has studied:

Laura Waters, Analysis: New Data Show Newark’s Educators Are Driving Learning Gains That Outpace New Jersey’s Best-in-the-Nation Schools, The 74 Million, March 29, 2021

Charter Schools' Class Action Lawsuit Certified. 
A class-action lawsuit — Reyes et al. v. State of California et al. — filed by three public charter schools and thirteen students has now been certified to represent 308 public charter schools in the state. The lawsuit challenges California’s failure to fund students at those public charter schools. That failure, the charter schools say, ignores the shift in student enrollment from traditional public schools to charter schools as the result of the pandemic. These public charter schools provide a range of options from a hybrid of on-campus and at-home learning, to virtual teaching and learning. They contend that the state has refused to disburse at least $20.9 million in funding for newly enrolled charter school students, many of whom had switched their enrollment from traditional public schools. “The move by the court to grant class-action status to our suit is a first in California for public charter schools,” said Paul Minney, legal counsel to the plaintiffs. “We now carry the weight of 308 schools, which represents 29 percent of all charter public schools in the state.” The class action certification “validates the needs they all have for access to constitutionally guaranteed funding.” The court must hear the case by July 2 of this year. Don Long, Charter Schools’ Lawsuit Versus State Certified as Class Action, Escondido Times Advocate, April 3, 2021

Governor Signs Charter School Funding Increase
South Carolina’s two charter school “districts” also saw a huge increase in enrollment during the pandemic, but they won’t have to sue the state to get a corresponding funding increase. Governor Henry McMaster recently signed into law a bill providing a $9 million funding increase for the Public Charter School District and the Charter Institute at Erskine for this school year. The charter schools collectively saw a 25 percent increase in enrollment during the pandemic, and have a 41,000 student waiting list that is equal to their current enrollment. The increased funding is dedicated to teacher salaries to meet the needs of the new students. In a Tweet announcing the bill signing, Governor McMaster praised South Carolina’s charter schools for meeting students’ needs during the pandemic, and for quickly getting them back to the classroom for in-person learning. Joseph Bustos, Money for SC Teacher Pay Bumps, Charter Schools Head to McMaster’s Desk, The State, March 10, 2021
General Assembly Increases Charter School Funding
Senate Bill 59 is now headed to Governor Brian Kemp’s desk. It increases Georgia’s charter school allocations by about $100 per student. It also secures an equal portion of federal funding for public charter schools and gives their teachers and staff more access to the State Health Plan.

School-choice advocates say the measure will ensure equitable funding and resources, which are more crucial than ever during the pandemic, for Georgia's 70,000 public charter school students. The General Assembly also set aside an additional $1 million for charter school facilities in the state's 2022 fiscal year budget, which also is awaiting the governor's approval. Nyamekye Daniel, Charter School Funding Boost Heads to Kemp, The Center Square, April 2, 2021
North Carolina Gets Tough With Delinquent Districts
North Carolina’s House Education K-12 Committee needed less than 10 minutes last week to unanimously approve a “Timely Payments to Charter Schools” bill. The bill would require a school system to pay a five percent penalty if it fails to transfer funds owed to a public charter school in its district within 30 days of an invoice. It would also allow charter schools to collect interest from a district on delinquent payments after 30 days. The state representative who sponsored this bill noted that charter schools usually don’t have a lot of money in their reserves to “float” delinquent payments from districts. Staff, Bill Would Give NC School Systems Financial Incentive to Pay Charter Schools on Time, Chatham Journal Newspaper, March 30, 2021

"The Next Thirty Years"
 "I think I’ll take a moment, celebrate my age
The ending of an era, and the turning of a page
Now it’s time to focus in on where I go from here
Lord, have mercy on my next 30 years"

-Tim McGraw, “My Next Thirty Years
We started this edition with mention of the impending charter school law anniversary, so we may as well end with it as well. Thirty years ago this June, Minnesota became the first state to authorize charter schools.  Today, 7,500 charter schools educate 3.3 million students, according to the National Alliance of Public Charter Schools. About $30 billion of charter school bonds have been issued to finance the construction and expansion of charter schools and CMOs around the country.  What lies ahead for charter school bonds for the next thirty years?  A mix of more transparency, greater social impact and fairer pricing.
More Transparency: Required disclosures for material events on the SEC’s Electronic Municipal Market Access (EMMA) website have improved in their organization and completeness – a trend that will continue.  With charter schools and trustee banks often ill-equipped to aggregate this essential data in the proper format, dissemination agents like School Improvement Partnership help ensure that the everything from current enrollment to quarterly financial performance to leadership changes is filed on a complete and timely basis.  The challenge over the next thirty years for charter school bond investors: finding, aggregating and sorting data from the various sources, including EMMA – much of which is locked in PDFs.  The School Improvement Partnership Database contains financial, operating and academic data on every charter school – and every charter school borrower – in the country.  Since the data can be exported into Excel and is continually updated, the SIP Database has value for charter school bond investors and analysts alike.  Easily accessible data over the next thirty years means more transparency.
Greater Social Impact:  More investors are concerned with doing well – while doing good.  According to Bloomberg, the amount of Social Bonds increased seven-fold in 2020 to $147.7 billion.  Less than $200 million were Social Bonds benefitting charter schools.  Unlike Social Bonds for environmentally sustainable purposes, there is no widely accepted verification system for determining whether a tax-exempt municipal bond for a charter school or CMO is a Social Bond, until now.
School Improvement Partnership offers Second Party Opinions in connection with charter schools bonds furthering the Sustainable Development Goals of the United Nations as endorsed by the International Capital Markets Association. The SIP Database allows for the annual recertification of social bond status through the tracking of key data metrics. Everything from the percentage of economically disadvantaged students served to academic performance among BIPOC students is measured. The interest rate paid on a Social Bond can be lower than the interest rate paid on a non-Social Bond due to demand from social impact investors.  Over the next thirty years, charter school bonds will be incentivized to have an impact in communities where the need is greatest.
Fairer Pricing:  One challenge charter school bond investors face is determining the fair value of their bonds when they are lightly traded.  With a buy-and-hold strategy, institutional investors can be subject to factors having little effect on the ability of a charter school borrower to pay its debt service and educate its students.  Pricing services that focus solely on recent trades of similar charter school bonds are helpful only if there is a trade in the charter school bond in question.  On December 3, 2000, the SEC adopted Rule 2a-5 setting forth the basis for good faith determinations of fair value of a security such as a lightly-traded charter school bond under the Investment Company Act of 1940.  Also adopted was SEC Rule 31a-4, requiring the funds and their advisors maintain appropriate documentation to support fair value determinations. The SIP Database, with current financial, operating and academic metrics on each charter school, will play a key role in satisfying these SEC requirements over the next thirty years. Learn more here. 
"My next 30 years I’m gonna settle all the scores
Cry a little less, laugh a little more
Find a world of happiness without the hate and fear
Figure out just what I’m doing here, in my next 30 years"
School Improvement Partnership improves transparency and accountability in the charter school bond market. As continuing disclosure agent for more than 40 schools in six states, we enhance the form and content of secondary market information for charter school bond investors. On behalf of such investors, School Improvement Partnership performs comprehensive evaluations of charter school borrowers in transition - both pre-investment and post-investment. Please view our website or call us at 215.854.6322.
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