TO: Coalition of Idaho Charter School Families & Charter School Stakeholders
House Bill #309 - the Public Charter School Debt Reserve passed the House Education Committee unanimously on Thursday, March 26 and just passed the full House this morning. It now needs to pass the SENATE. Senators need to hear from charter school stakeholders to know they support this!
Idaho’s public charter schools struggle to afford facilities and many tools for traditional public schools are not available to public charter schools. House Bill #309 creates a debt reserve to help qualifying public charter schools obtain lower interest rates on loans in a manner similar to what is already available to traditional public schools.
When public charter schools purchase or improve facilities, they begin by borrowing from private lenders. However, they generally have little equity or collateral to offer. As a result, the interest rates on their loans are generally high. With the creation of a debt reserve, qualifying charter schools could point to the fund as assurance to the lender that, in the event of default, monthly payments could be made out of the fund for a limited period of time. With this backstop, the bank will offer lower interest rates on loans. Schools would have to be approved by the Idaho housing and finance association to rely on the fund, and only those that demonstrate strong financials – and thus a low-likelihood of defaulting on the loan – would qualify.
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