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Texas Charter Schools Still Seeking to Tap PSF

DALLAS — A proposal to invest up to $100 million of Texas Permanent School Fund money in charter schools is still alive, even though the Texas Education Agency sidelined the idea in a meeting Thursday.

The proposal from Texas Education Agency board member David Bradley, who chairs the board’s PSF committee, surfaced as the TEA board met Thursday to discuss the long-term investment strategy for the fund. The PSF provides annual payments to public schools and serves as the bond guarantor for local school districts.

Bradley has discussed the funding proposal for the past year, most recently at a committee meeting Wednesday. They decided to keep the plan on hold, but include it as a possibility in the long-term PSF investment strategy adopted by the board.

The idea is to treat the charter school funding as an investment that would bring a gain or loss to the $23 billion fund. The state does not currently fund public charter-school facilities, which forces them to redevelop structures ranging from warehouses to churches and former retail stores.

Charter schools receive about $1,200 less per pupil than traditional public schools due to the lack of facility funds.

Treating charter schools as investments could be risky, according to board member Bob Craig. “I just don’t see this as a good investment,” he said at a meeting of the TEA board’s committee on the PSF on Wednesday.

Charter schools have a checkered financial history, with few attaining investment-grade credit ratings. The charter schools that do have the financial sway to issue bonds typically earn ratings at the lowest rung of investment grade.

The state’s 460 independent charter schools, which receive $6,500 per pupil under the TEA formula, are eagerly seeking more financial help.  The schools now serve about 120,000 students at all grade levels.

Charter school operators include for-profit and nonprofit corporations.  Some schools are started by educators or school districts, while others can be created by groups of parents.  All have to be chartered by the TEA to receive state funding.

Texas Education Agency counsel David Anderson said in May that bonds backed by the PSF must be issued by school districts under the state constitution, which would seem to exclude charter schools.

TEA deputy associate commissioner Lisa Dawn Fisher noted that charter schools have access to a credit enhancement program through the Texas Public Finance Authority, which issues bonds on their behalf.

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