Bill May Boost Bond Rating for Charter Schools

The Senate approved a bill today that would help charter schools borrow money by allowing them to use the state’s Permanent School Fund as a bond guarantee. The measure will now move to the House. 

Without a tax base, charter schools do not usually have very high bond ratings, says Sen. Florence Shapiro, R-Plano, author of the bill. The fund's backing would allow charters to borrow money at lower interest rates, translating to a savings of millions for some. Currently, only the state's traditional public schools can receive the guarantee of the fund.

If a charter school uses the Permanent School Fund as a bond guarantee and then defaults — a fear held by traditional districts that have opposed the proposal in the past — the bill sets up rules for how the state will “pay the maturing or matured principal or interest.” 

According to the bill analysis, only charter schools that show “both academic and financial integrity” would be able to use the state’s bond rating.