Study presented to Idaho Senate: state financing programs cut charter facility costs, save about $113 million over 15 years

BOISE — Matthew Joseph, senior policy advisor for education funding at the nonprofit AccelinEd, told the Idaho Senate Education Committee that state policies to lower charter school facility costs have produced substantial savings and kept more money in classrooms.

Joseph said Idaho’s approach — a short‑term revolving loan fund for start‑up financing plus a long‑term “moral obligation” credit enhancement that lowers bond interest rates — has cost the state essentially nothing so far and produced an aggregate savings the study valued at about $113,000,000 over 15 years. "The state so far has spent $0 to do this," Joseph said. "A hundred and $13,000,000 is being saved." He said that, when annualized and converted into educator payroll, the savings equal roughly 10 teachers per charter school each year.

Why it matters: Charter schools generally must pay for facilities from operating dollars that otherwise fund instruction. By reducing financing costs, Joseph said, Idaho’s policies allow charters to keep more instructional funding and, in some cases, expand programs that require additional staff or specialized equipment.

Joseph laid out how the program works. New charters with limited credit histories can borrow from a state‑backed revolving loan fund at low or no interest during the start‑up period (generally the first three to five years). After they establish a track record, schools can obtain long‑term financing in the private bond market at lower interest rates because the state provides credit enhancement — the so‑called moral obligation. That enhancement is not an automatic state guarantee, Joseph said; in the event of a default the governor would request legislative action to cover losses but no such requests have occurred.

Joseph cited specific school examples he interviewed to illustrate impact. He said Sage International School in Middleton used credit enhancement to lower long‑term financing costs, enabling expansion of its International Baccalaureate program. He said Idaho Novus Classical Academy used the revolving fund plus a philanthropic match to reduce near‑term borrowing and access lower bank rates for the remainder, and that Elevate Academy in Caldwell used savings to staff career‑technical coursework that requires specialized equipment and smaller class sizes. Joseph said some schools likely would not have opened or would have had materially smaller programs without the financing supports.

Joseph also described multiplier effects he attributed to private partners: philanthropic matching (he cited the Albertson Foundation) and the nonprofit Building Hope, which helps manage transitions from short‑term to long‑term financing and negotiates more favorable buyout treatments so schools capture appreciation rather than being forced to borrow the full appraised increase.

He warned that the moral‑obligation program has hit a statutory or program cap on total support because demand has risen faster than supply; he recommended raising the cap while keeping underwriting criteria strict. Joseph said his team compared Idaho charter interest costs to those of similar charters in states without both tools and modeled the aggregate savings.

Committee response and next steps: The committee did not ask substantive policy questions after the presentation. Joseph invited committee members to follow up and attend AccelinEd’s national summit. He also noted his colleague Marcos Lopez as a continuing resource for Idaho matters.

Ending: Committee members thanked Joseph for the presentation and did not take action at the meeting. Joseph’s study and the examples he cited provide a basis for legislators and staff who may consider changes to the size or structure of the programs he described.