A proposal to allow the Dormitory Authority of the State of New York to sell bonds for charter schools died last week along with proposed legislation to increase the state’s cap on the number of charter schools.

Gov. David Paterson had sought the changes to bolster an application for $700 million of education funds under the federal “Race to the Top” program. New York submitted its application to the federal government last week even though the Legislature did not pass the governor’s program bill.

In the past, the state’s industrial development agencies have sold tax-exempt bonds on behalf of charter schools, but the law authorizing such deals expired two years ago. The DASNY provision had been removed from the governor’s most recent bill in an effort to streamline it and focus on raising the charter cap to 430 from 200. 

“We are hopeful that we will still receive funds in round one — it’s just not as strong as it would have been with that legislation,” said Paterson spokesman Marissa Shorenstein.

The state plans to submit an application to a second round of funding in June.

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