BESE approves multiple charter contract amendments; attorney explains Charter Schools USA tax-exempt bond change

The State Board of Elementary and Secondary Education voted to approve a set of amendments to types 2, 4 and 5 charter contracts, including grade-range and location changes and an amendment to a management agreement involving Charter Schools USA and tax-exempt bond financing.

The items approved, presented as agenda 2.1 A–E, included: ACE expanding to grades 6–8; GeoPrep Mid City seeking a second campus in Baton Rouge; Louisiana Key Academy proposing to stop serving grades 9–12 and to add kindergarten; a school identified as Lise requesting a change of physical location; and Lafayette Renaissance seeking to increase enrollment. Board member Miss Holloway moved the package and Mr. Appel seconded the motion. Board materials recommended approval “as outlined,” and the motion passed without recorded objection.

The board took extra time on the amendment that would revise the management agreement tied to Lafayette Charter Foundation’s facilities financing. Gary McGoughin, representing Lafayette Charter Foundation, said the foundation and a companion nonprofit, Friends of Lafayette Charter Foundation, are pursuing a complex tax-exempt bond transaction that would allow the nonprofit to acquire more than $260 million in school facilities currently held under long-term leases with Red Apple Development. McGoughin said the bonds would be structured for roughly 35 years and that annual debt service on the facilities already constructed would be about $3.9 million per year under the bond structure, versus a higher and escalating cost under the existing 20-year lease arrangement.

“By doing this, we have incorporated the Friends of Lafayette Charter Foundation,” McGoughin said, adding the plan would keep funds in Lafayette and free money for classroom use. He also explained how Internal Revenue Service rules for tax-exempt bonds require a fee schedule and that the material amendment would remove an existing practice of forgiving shortfalls in the management fee. Under the proposed change, if the management fee could not be paid in a given year, the charter organization would sign a promissory note and agree to repay the amount, with interest, within five years. “If the student enrollment declines over time … the management fee would have to be adjusted,” McGoughin said, while stressing that bond payments would have priority.

Public commenters on the item included supporters and opponents. Joy DeFatto registered support and spoke; Charisma Lewis registered opposition and wished to speak but the board approved the package nonetheless.

The amendments approved will be reflected in updated charters and management documents; the board’s approval included the unusual management-agreement revision tied to the bond financing and the IRS compliance steps explained at the meeting.

Board action: motion by Miss Holloway, second by Mr. Appel; recorded as approved on voice vote (no roll call recorded).