We try to use every available dollar on student learning, but we have to pay for our great new school buildings too.
Dallas, TX (PRWEB) October 07, 2013
Elementary students at Uplift Triumph Preparatory School in Dallas will start using tablet computers for the first time in October. The tablets were purchased with funds provided by an Uplift Education donor, but without the gift, the northeast Dallas elementary school would most likely have had to pass on mobile e-learning.
“Our budgets are really tight at all of our schools,” said Yasmin Bhatia, Uplift CEO. “We try to use every available dollar on student learning, but we have to pay for our great new school buildings too. We make sure we have computers available to our students, but it’s hard to introduce new strategies. It’s one of the challenges of a growing network.”
Managing debt is a key concern at the North Texas charter network, where enrollment has increased from 1,500 scholars to nearly 10,000 in eight years. Uplift relies heavily on bonds to renovate and build its schools. Debt service, which can run as much as $1,300 per student, eats into what can be spent in the classroom. That number is also more than $400 higher than what many local school districts are paying on their debt service.
But thanks to two new Texas laws and a recent ruling by the IRS, that situation is about to change. Just like traditional ISDs, Texas charter schools will now have access to the $29 billion Permanent School Fund (PSF) to guarantee new financing and refinance existing debt. The fund, managed by Texas’ Land Office, is the primary source public schools have used to secure guarantees for capital improvement projects not covered by operating expenses.
Ms. Bhatia is encouraged by the support state legislators threw behind the new laws in the last two sessions.
“This was uncharted territory for everyone involved a few years ago. We are a public entity serving our state’s children with no access to public funds for buildings. Most people saw the logic behind making resources available to us so we can build the schools we need to educate our scholars. Legislators did have important concerns about who should have access to the funds, but once they got their questions answered, they were ready to support this idea,” she said.
The first bill (SB1) passed in 2011. It allowed charters with investment grade ratings (BBB- or better) to use the PSF to guarantee their bond issues. The second bill (HB 885) passed in the 2013 session and allowed charter management organizations to refinance their existing debt.
But support from the Texas legislature and Gov. Rick Perry was not enough to get the guarantees flowing. Many skeptical leaders wondered how the laws would affect the status of the bonds the PSF already backed. No guarantees would be made without final approval from the IRS.
Uplift CFO Bill Mays has been waiting for three years for an answer to this question.
“We needed to have the IRS’ approval. With no answer from them until now, we’ve had to issue our bonds without support from the Fund. We were fortunate to get some great rates this year, but rates are unpredictable, and we always want to improve our position,” Mr. Mays said.
Finally at the end of September, the IRS cleared the way for charter schools to begin using Texas’ Permanent School Fund (PSF) by issuing new guidelines.
Uplift will see immediate benefits now that it has access to the PSF. Uplift currently carries an investment bond rating of BBB-. With its next bond sale, that rating will go to a AAA, which is the State of Texas’ rating. Mr. Mays says for new financing, that move could represent a saving of 1-2 points over Uplift’s current rates.
“This is an important step for us. Bonds and philanthropy are the only means we have of building new schools, and at the rate we’re growing, we’ll be selling bonds on a fairly regular schedule. It will allow us to market to investors who have historically not invested in charter schools. They won’t need to do as much work to understand the charter sector. The state’s bond rating speaks for itself,” he said.
The Texas Education Agency is currently working on guidelines for accessing the PSF and expects to release those rules in February, which Mr. Mays says is just in time for Uplift’s next entry into the bond market in the spring of 2014.
About Uplift Education
Uplift Education is a is a 501(c)(3) nonprofit organization operating a network of 28 tuition-free, college preparatory, public charter schools in Dallas, Fort Worth, Arlington and Irving on 13 campuses. Uplift Education schools provide a rigorous, multidisciplinary curriculum, with an emphasis on college preparation – 100% of graduates are accepted to college. Uplift Education educates almost 10,000 students, with the majority being low-income and minority students who will be the first in their family to attend college. Uplift schools are public schools -- students are selected by a blind lottery with no information collected on their past academic performance. For more information, visit http://www.uplifteducation.org or http://www.facebook.com/uplifteducation.
Mike Terry, Director of Communications
Sara Ortega, Public Relations Coordinator