Study to Senate panel: Idaho financing tools cut charter-school facility costs, free funds for teachers

Matthew Joseph, a senior policy adviser at the nonprofit AccelinEd, told the Idaho Senate Education Committee that state-designed financing supports have sharply reduced charter-school facility costs and freed operating dollars for instruction. Joseph said the measures have produced an estimated $113,000,000 in total savings and, when annualized, allow the average charter school in Idaho to retain the equivalent of 10 teachers per year.

Joseph framed the issue around three ways states commonly help charter schools with facilities: direct funding, access to surplus district buildings, and financing support. "What states including Idaho are doing is they're doing a variety of things," Joseph said. He said Idaho combines a short-term revolving loan fund for new schools with a long-term "credit enhancement" program described in the presentation as a moral-obligation backstop that lowers interest rates when charters refinance into long-term debt.

Why it matters: Joseph said charter schools typically cannot access local levy revenues and so must pay facility costs from operations, reducing money available for teachers and instruction. He summarized findings from a study his group conducted comparing Idaho charter schools that used the state's programs with comparable schools in states without the same combination of supports. "The state so far has spent $0 to do this," Joseph said, explaining the revolving loans are repaid and there have been no defaults under the credit-enhancement approach to date.

Joseph gave concrete figures from the AccelinEd analysis: the average Idaho charter school was spending $1,857 per student on facilities before supports; with state programs the remaining operating-side burden was estimated at $1,294 per student (a gap he said is still large relative to other states). He said the financing programs' combined effect amounts to roughly $113 million in avoided costs over a 15-year span when compared to similar schools that did not receive the same supports.

He described two phases of the state approach. In the start-up phase, new charters use a revolving loan fund for short-term financing until they establish an operating track record. Then schools can access long-term private-market financing at lower interest rates because the state provides credit enhancement. Joseph characterized the state's moral-obligation program as a reserve/credit enhancement that has reduced long-term rates without requiring the state to front immediate cash, noting that the governor and legislature would be asked only in a future default to provide funds.

Joseph cited local examples he said his team had interviewed: Sage International School in Middleton, Idaho Novus Classical Academy in Avenor and Elevate Academy in Caldwell. He said those schools used combinations of revolving loans, philanthropic matches and the state credit enhancement to reduce costs so they could hire teachers and, in one case, operate specialized career-technical programs. Joseph also credited private partners and philanthropy — he named the Albertson Foundation and an organization he identified as Building Hope — for matching and managing financing transitions.

Joseph warned that high demand has pushed parts of the program up against a statutory or program cap: "this moral obligation program is so successful in Idaho that it's hit its limit," he said, adding that the cap would likely need to be raised to meet additional demand while keeping credit criteria strict.

Committee reaction and next steps: After the presentation, committee leadership thanked Joseph; no committee questions were recorded in the transcript. Joseph told the committee Marcus (Marcos) Lopez at AccelinEd would be a continuing point of contact. The committee did not take action during the meeting on the financing topic.

Sources and evidence: Joseph presented the analysis during the committee's meeting and explicitly described the study's methodology as a comparison of Idaho charter schools using state financing supports with similar schools in other states that lacked the same combination of supports.