The U.S. Department of Education is accepting applications for its Credit Enhancement for Charter School Facilities program. This is primarily a finance program, not an education program, and grantees will provide financial services to charter schools. A notice inviting applications for new awards for fiscal year 2003 was published in the Federal Register on April 3. The notice and application can be downloaded from the Department's Web site at http://www.ed.gov/GrantApps/#84.354A. The deadline for applications is June 3, 2003.

Despite the popularity of charter schools with parents, teachers and the public, these distinctive public schools face barriers. A high percentage of new charter schools point out that inadequate facilities have impeded the implementation of their charters. Unlike traditional local education agencies, charter schools generally lack the ability to issue general obligation bonds backed by property taxes, and they are often considered to be credit risks by lending institutions. The Credit Enhancement for Charter School Facilities program aims to reduce this perceived financial risk by leveraging a modest amount of federal dollars to encourage private lenders, investors and landlords to help them acquire, construct or renovate school facilities.

Under this program, the Department can award competitive grants to nonprofit and public entities or a consortium of these types of entities. Grantees deposit their grants in a reserve account and then use the funds for a number of purposes, including guaranteeing debt used to finance charter school facilities, guaranteeing and insuring property; identifying and encouraging private lending sources; and providing technical assistance.

The Department expects to award 3 to 5 grants with average awards estimated to be between $2.5 and $10 million. Approximately $25 million is available for the 2003 program.

###

Top

Back to April 2003