CHICAGO - An expanded number of Indianapolis-based charter schools would be allowed to issue bonds through the Indianapolis Local Public Improvement Bond Bank under a bill winding its way through the Indiana Senate.

Under current state law, only Indianapolis charter schools that have been established by the city's mayor are eligible to borrow through the bond bank. Mayor Greg Ballard is the only mayor in the country with the direct authority to establish charter schools.

The proposed legislation, sponsored by a sponsor of the 2001 state law allowing charter schools in Indiana, would enable all Indianapolis charter schools to borrow through the bond bank. That would increase the number of eligible schools to 21 from 17. The city's four non-mayor-sponsored charter schools were all established by Ball State University, which has an Office of Charter Schools.

Republican Sen. Teresa Lubbers, who represents the city, worked with the Charter School Association of Indiana to craft the bill, which would also allow charter schools to receive funding for technology and preschool programs from the state. The measure is now in the Committee on Education and Career Development.

"She has always done a lot of work with charter schools and she's gotten support on several different fronts," said Kristin Casper, Lubbers' legislative aide.

As elementary or secondary schools that receive public funds but operate without many of the regulations governing public schools, charter schools nationally have attracted both critics and proponents. State Rep. Vernon Smith, D-Gary, has said this session he would push for a statewide moratorium on new charter schools. Indianapolis Public Schools reportedly supports the moratorium. Lubbers has said she would fight the effort.

Charter school proponents, led by Ballard, last week touted a report citing academic gains by the city's 17 mayor-sponsored charter schools. The report showed that charter school students outperformed state and national peers in reading and language, but also revealed some financial problems plaguing some of the schools.

For the bond bank, the charter school program is small but important, said executive director Kevin Taylor.

"It's important, but in dollar size it's not big," he said. "Each one is sort of a story, and some of them are very creative and successful in finding capital and operating funds above and beyond the state's support. So for some charter schools there is no need for any type of assistance from the bond bank."

The bond bank has roughly $3.5 million of outstanding facility bonds issued on behalf of a mayor-sponsored charter school in 2007, according to Deron Kitner, the bond bank's deputy director and general counsel. The bank is currently considering a borrowing request by another school.

Last year the bank loaned a handful of mayor-sponsored charter schools about $1 million of 30-day notes to help cover cash-flow deficits as the schools waited for property tax revenue to flow in, Kitner said. The program was effectively discontinued after the schools paid back the debt, as under a new Indiana law all schools' general funds will now be funded by the state and not by property taxes.

Neither Taylor nor Kitner said they were familiar with Lubber's bill on expanding the charter school financing program. Taylor said the bond bank was approached last year by a few charter schools that were established outside Indianapolis and considering setting up shop in the city. "But if they're not chartered by the mayor, we're not authorized to assist them with capital or operations through our program," he said.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.