Matt Paul, executive director of Public Charter Schools of New Mexico, told the Finance Oversight Committee that House Bill 43 of the 2022 Legislature improved access to lease assistance and created a $10,000,000 revolving loan fund to help charter schools finance facilities — but that the new tools have not yet resolved the sector’s long-standing facility-financing problems.

"Lease assistance should go up by inflation each year," Paul said, summarizing one statutory change in HB 43 designed to make funding more consistent. He and NMFA staff said the bill also authorized a path to use the state’s Public Project Revolving Fund (PPRF) and a separate charter revolving loan fund administered by the New Mexico Finance Authority to keep more public dollars in-state when schools finance construction or refinance foundation debt.

The nut graf: Lawmakers and NMFA staff said the problem that remains is less about a single financing product than about structural differences between charter schools and traditional districts: charters cannot carry conventional long-term debt, most receive less per-pupil operating revenue than districts, and many small or rural charters cannot generate the local match or collateral levels credit underwriters require. The result: several charter campuses continue to rely on private foundations or high-interest private loans and cannot yet access low-cost, tax-exempt financing on favorable terms.

Marquita Russell of the New Mexico Finance Authority said NMFA implemented rules and policies after HB 43 and created a program structure that can lend for construction through a revolving construction loan approach and then refinance completed projects through the PPRF. NMFA and technical consultant Elise Ramos (Plan Forward) told the committee the authority looked first to use the PPRF for permanent financing but found limitations: a charter school’s lease-purchase arrangement can be cancelled annually and that cancellation risk, plus uncertain resale value for rural school buildings, reduced NMFA’s underwriting comfort.

"The problem is what the schools need and can provide and what we are becoming more comfortable with," Russell said. NMFA staff outlined credit standards they used in initial applications: typical targets included a maximum charter-fund loan size (about $5 million), a 75% loan-to-value target for standalone charter borrowers (80% if the authorizing district is the tenant), and a fixed interest-rate approach with the expectation that construction loans would be refinanced into the PPRF when complete.

Charter operators and consultants described their immediate financing needs. Michael Ogas, superintendent of School of Dreams Academy in Los Lunas, said his school has worked for years to move from a storefront and portable classrooms onto a permanent campus. The school has raised plan-and-design money and holds a state-approved lease-purchase agreement, but Ogas and others said limits in current lending rules, loan-to-value demands and match requirements left some projects without a feasible path to completion. "We have a $1,000,000 for plan and design of a new facility," Ogas said, "but we're not exactly sure where to start without getting ahead of ourselves."

Consultant Robert Apodaca and other charter leaders asked the committee for three near-term fixes: larger capital in the charter revolving loan fund, legislative changes to the lease-purchase statute and PSCOC match rules to ease the local match burden, and clearer pathways so NMFA can refinance private foundation debt into lower-cost, tax-exempt long-term financing.

Ending: NMFA staff and charter representatives asked the oversight committee for more legislative discussion and more capital for the revolving fund. Committee members said they want additional comparative data (charter vs. district salary levels; average local-match rates by district) and recommended follow-up briefings that include PSFA and PED/PED representatives for a cross-agency review of statutory barriers and pilot options for co-location or district-charter facility transfers.


Sources and attribution: Quotations and program details in this article come from testimony by Matt Paul (Public Charter Schools of New Mexico), Marquita Russell (New Mexico Finance Authority), Elise Ramos (Plan Forward), Michael Ogas (School of Dreams Academy), Miguel (Dean of Students, School of Dreams) and consultant Robert Apodaca during the oversight committee session.