Office to centralize charter-school financing

By Tiffany Erickson
Deseret Morning News
Published: Sunday, Aug. 19, 2007 12:15 a.m. MDT
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Charter schools will soon have an easier way to bond for a school building once the Charter School Financing Authority, a newly established office at the state, gets the application processed finalized next month.

Unlike traditional public schools, charter schools don't get money from property taxes for school buildings. So if they want to purchase or build a facility, they have to find funding themselves or have bonds issued through a city or county.

But according to charter leaders the new financing authority will create a centralized process that will make the sticky job of establishing a charter school a little easier.

"Charters needed someone to issue bonds for them, and some of the cities and counties have balked at that and are tired of messing with something that is not their charge," said Larry Newton, state director of school finance who is on the charter-school financing authority board.

In recent years charter schools had begun to approach municipalities and counties to ask if they could get a government-rated bond to secure a facility. That would mean a lower interest rate and would make long-term financing a lot more reasonable, said Greg Hughes, R-Draper, who was the original sponsor of the bill that set up the charter financing authority.

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A handful of schools in the state have been able to reach such agreements, but since charter schools are a relatively new animal in Utah, a lot of municipalities are kind of wary, Hughes said.

"It is something that charter schools are already doing, but doing it on a statewide level allows all charters the opportunity to do it and you're not stuck with the whims and concerns of every city council or county government and there is one jurisdiction that they can go to now and get that government-rated bond," he said.

Critics of the idea last session were concerned that it could result in negatively affecting the state's bond rating. But state leaders say that not only will it leave that rating untouched but the state will have no liability should a school default on the bond.

The governor-appointed board is nearly finished creating the application process, and a number of charters are already lining up.

"We imagine that it will make the whole process easier and it gives schools the autonomy to go out and find agreeable financing — it's going to be a great tool for schools to take advantage of and they will be owned by the taxpayers," Hughes said.

E-mail: terickson@desnews.com

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