A building need: charter schools in search of good homes - Feature

Education Next, Spring, 2004 by Kim Smith, James Willcox, Julie Landry

[ILLUSTRATION OMITTED]

The David and Lucile Packard Foundation's Affordable Buildings for Children's Development (ABCD) initiative is a useful model. ABCD is a loan pool, funded by Packard and others, to be used in building preschool facilities. Charter schools could benefit from a similar structure, and in fact represent less risky investments than preschools, since they are funded by the state rather than by individual families.

Public Resources for Public Schools

Loan guarantees and access to low-cost financing are welcome reforms, but they fail to solve the fundamental problem. Even making the payments on a low-interest loan is a heavy burden for many charter schools--a burden that detracts from their ability to offer a high-quality education.

As public schools, charter schools deserve access to the public resources that traditional public schools make use of, including tax revenues, state bond proceeds, and existing educational facilities. Among the states, Minnesota (home of the nation's first charter law), Florida, and California allocate some financial assistance for lease payments to charter schools on a per-pupil basis, similar to the way in which operating funds are distributed. Making state bond funds available to charter schools is an uphill battle, but California recently allocated to charter schools $100 million of an $11.4 billion bond package for K-12 education facilities. However, this represents less than 1 percent of the bond package, when charter schools account for 4.5 percent of California's public schools and serve about 2.5 percent of the state's K-12 public school students.

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

States are also requiring school districts to make more creative use of their facilities to accommodate the growth of charter schools. In California, districts must provide charter schools in their area with facilities that are "contiguous, furnished, and equipped" and "reasonably equivalent" to those of the public schools run by the district--and can charge charter schools rent for that space. In New York, both the state and districts must release a list of vacant or unused public buildings for charter schools to pursue.

In the coming years, federal policy may compel more of this activity. The No Child Left Behind Act requires that students in schools that fail to make "adequate yearly progress" for two years in a row be given the opportunity to transfer to another public school. Consequently, districts may be more willing to provide space to promising charter school operators who can provide a high-quality option for these students.

[ILLUSTRATION OMITTED]

Exiting the Facilities Business

A more comprehensive approach would take charter schools out of the facilities business altogether. After all, real-estate development is not, and should not be, the core competency of charter school leaders.

One potential solution is to establish the nonprofit equivalent of private-sector real-estate investment trusts, or REITs. REITs take a pool of investment capital and use it to develop and manage a group of commercial and residential properties. The nonprofit analogue, which Paul Hill of the University of Washington has proposed as a solution to the facilities challenges of all public schools, would aggregate financing for charter school facilities and develop sites for a "portfolio" of schools. Thus it would spread the cost of an expert team of developers over many more facility deals and could afford to hire people with financing expertise, construction management skills, contractor relationships, and experience in legal and government approvals.