U.S. Department of Education

Implementation of the 

Credit Enhancement for 

Charter School Facilities 

Program

Final Report
Implementation of the Credit Enhancement for 

Charter School Facilities Program 

By: 

Kenneth Temkin 

Grace Hong 

Laurel Davis 

Optimal Solutions Group, LLC 

Baltimore, Md. 

William Bavin 

Education Capital Group 

Washington, D.C. 

Prepared for: 

U.S. Department of Education 

Office of Planning, Evaluation and Policy Development 

Policy and Program Studies Service 

2008 
This report was prepared for the U.S. Department of Education under GS10F0586N; Order No.: ED05DO0056 with 

Optimal Solutions Group. Patricia Butler served as the contracting officer’s representative. The views expressed 

herein do not necessarily represent the positions or policies of the U.S. Department of Education. No official 

endorsement by the U.S. Department of Education is intended or should be inferred. 

U.S. Department of Education 

Margaret Spellings 

Secretary 

Office of Planning, Evaluation and Policy Development 

Bill Evers 

Assistant Secretary 

Policy and Program Studies Service 

Alan Ginsburg 

Director 

Program and Analytic Studies Division 

David Goodwin 

Director 

April 2008 

This report is in the public domain. Authorization to reproduce it in whole or in part is granted. While permission to 

reprint this publication is not necessary, the suggested citation is: U.S. Department of Education, Office of Planning, 

Evaluation and Policy Development, Policy and Program Studies Service, Implementation of the Credit 

Enhancement for Charter School Facilities Program, Washington, D.C., 2008. 

Copies of this report may be ordered in the following ways: 

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U.S. Department of Education 

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• Alternate formats. Upon request, this publication is available in alternate formats such as Braille, large print, 

or computer diskette. For more information, please contact the Department’s Alternate Format Center at 

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iii 

Contents 

LIST OF EXHIBITS .....................................................................................................................v 

ACKNOWLEDGMENTS ........................................................................................................... ix 

EXECUTIVE SUMMARY ......................................................................................................... xi 

Key Findings...................................................................................................................... xi 

Program Description ......................................................................................................... xii

Data Sources and Analysis Strategy ................................................................................. xii 

Findings............................................................................................................................ xiv 

CHAPTER 1: INTRODUCTION.................................................................................................1 

CHAPTER 2: PROGRAM DESCRIPTION...............................................................................3 

CHAPTER 3: THE GRANTEES .................................................................................................5 

Models of service used by Grantees to implement the Program .........................................9 

CHAPTER 4: METHODOLOGY..............................................................................................13 

Data sources.......................................................................................................................13 

Grantee applications and annual performance reports...........................................13 

Interviews...............................................................................................................14 

Secondary data.......................................................................................................15 

Limitations of the study .........................................................................................15 

CHAPTER 5: FINDINGS ...........................................................................................................17 

Does the Program, as implemented, provide for improved access of charter 

schools to capital markets for facilities?............................................................................17 

Overall charter school lending market...................................................................19 

Are grantees supporting higher volumes of lending compared with their 

lending volumes prior to the Program?..................................................................20 

Are unsuccessful Program applicants able to support lending without the 

support of the Program?.........................................................................................21 

Assisted schools’ ability to qualify for loans before the Program.........................23 

Does the Program bring new lenders and intermediaries into the charter 

school lending market? ..........................................................................................24 

Do Grantees offer products or support new types of transactions? .......................25 

Do schools assisted under the Program exhibit higher levels of credit loss 

risk to lenders? .......................................................................................................25 

Does technical assistance provided by Grantees improve charter schools’ 

abilities to secure financing?..................................................................................27 

Does the Program, as implemented, provide for better rates and terms on 

financing than would otherwise be available?...................................................................27 

Are rates and terms offered by the Grantees after implementation of the 

Program different from what they were before implementation of the 

Program?................................................................................................................28 
iv 

Contents (cont'd.) 

How do the rates and terms of the loans supported by the Program 

compare with benchmarks?....................................................................................29 

How do rates and terms of Directly Enhanced loans compare with those 

without Program-funded loans?.............................................................................31 

What is the relative efficiency of different models of service used by Grantees?.............31 

What are the differences in lending volume and risk of schools assisted 

between different types of models of service?.......................................................32 

Is the Program serving communities with the greatest need for public school 

choice? ...............................................................................................................................38 

Proposed Grantee selection criteria for choosing schools to assist........................39 

Demographic characteristics of assisted schools ...................................................45 

Social and economic characteristics of counties containing assisted 

schools....................................................................................................................47 

Use of loan funds by assisted schools....................................................................53 

What is the evidence of innovative methods?....................................................................62 

Direct borrowing on the private market.................................................................62 

Cost-saving solutions such as space sharing..........................................................63 

New forms of organizational arrangements such as real estate trusts and 

intermediaries.........................................................................................................63 

What are the major issues with Program implementation? ...............................................64 

How Grantees view the Program ...........................................................................64 

How assisted schools view the Program................................................................65 

REFERENCES.............................................................................................................................67 

APPENDIX A: GLOSSARY OF TERMS USED IN THIS REPORT ...................................69 

APPENDIX B: INTERVIEWS CONDUCTED ........................................................................73 

APPENDIX C: DISCUSSION GUIDES....................................................................................77 

APPENDIX D: CHARACTERISTICS OF CENSUS TRACTS AND COUNTIES IN 

WHICH SCHOOLS ASSISTED BY GRANTEES BETWEEN FY 2003 AND FY 

2005 WERE LOCATED .......................................................................................................91 

APPENDIX E: PROGRAM GRANT RECIPIENTS: FY 2002–FY 2007............................101 
v 

Exhibits 

Exhibit ES-1 Racial and ethnic composition of students enrolled in schools assisted 

under the Program between FY 2003 and FY 2005, all charter schools, 

and all U.S. public schools................................................................................. xviii

Exhibit ES-2 Selected characteristics of Census tracts and counties, as of the 2000 

U.S. Census, with schools assisted by Grantees between FY 2003 and 

FY 2005 ............................................................................................................... xix

Exhibit 3-1 Program awards: FY 2002 to FY 2004 ($ in Millions)............................................5

Exhibit 3-2 Organizational summary of Grantees ......................................................................6

Exhibit 3-3 Description of Vertically Integrated and Fully Distributed models of 

service ....................................................................................................................10

Exhibit 4-1 Crosswalk of research questions and data sources ................................................16

Exhibit 5-1 Grantees’ Directly Enhanced loan volume by type of loan between FY 

2003 and FY 2005..................................................................................................20

Exhibit 5-2 Comparative analysis of Grantee lending volume in the year preceding 

receiving a Program grant to Directly Enhanced lending volume in the 

year following receiving a Program grant .............................................................21

Exhibit 5-3 Comparison of proposed and actual Directly Enhanced lending volume 

between FY 2003 and FY 2005 for four unsuccessful Program 

applicants and Grantees .........................................................................................22

Exhibit 5-4 Weighted average spread and weighted average coupon of Directly 

Enhanced acquisition and construction and leasehold improvement loans 

supported by Grantees between FY 2003 and FY 2005 ........................................30

Exhibit 5-5 Efficiency measures for Directly Enhanced loans supported by Grantees 

by model of service between FY 2003 and FY 2005.............................................33

Exhibit 5-6: Assisted schools’ mean number of months in operation, number of startup schools, number of assisted schools, mean enrollment of schools 

assisted by Grantees between FY 2003 and FY 2005............................................34

Exhibit 5-7 Weighted average spread and coupon for Directly Enhanced acquisition 

and construction loans supported by Grantees between FY 2003 and FY 

2005 by Grantee model of service .........................................................................36

Exhibit 5-8 Weighted average spread and coupon for Directly Enhanced leasehold 

improvement loans supported by Grantees between FY 2003 and FY 

2005 by Grantee model of service .........................................................................37
vi 

Exhibit 5-9 Summary of Grantee selection criteria for Directly Enhanced loans ....................40

Exhibit 5-10 Number of assisted schools, enrollment, and percent of students eligible 

for free and reduced-price lunches by state ...........................................................45

Exhibit 5-11 Racial and ethnic composition of students enrolled in schools assisted 

under the Program between FY 2003 and FY 2005, all charter schools, 

and all U.S. public schools.....................................................................................46

Exhibit 5-12 The median household income, as of 2000, for Los Angeles County 

Census tracts, the location of schools assisted by Grantees between FY 

2003 and FY 2005, all charter schools, and all public schools..............................48

Exhibit 5-13 The median household income, as of 2000, for Hennepin County and 

Ramsey County Census tracts, the location of schools assisted by 

Grantees between FY 2003 and FY 2005, all charter schools, and all 

public schools.........................................................................................................49

Exhibit 5-14 The median household income, as of 2000, for Philadelphia County 

Census tracts, the location of schools assisted by Grantees between FY 

2003 and FY 2005, all charter schools, and all public schools..............................50

Exhibit 5-15 The median household income, as of 2000, for Washington, D.C., 

Census tracts, the location of schools assisted by Grantees between FY 

2003 and FY 2005, all charter schools, and all public schools..............................51

Exhibit 5-16 Selected characteristics of Census tracts and counties, as of the 2000 

U.S. Census, with schools assisted by Grantees between FY 2003 and 

FY 2005 .................................................................................................................52

Exhibit D-1 Median household income, as of 2000, in tracts and counties with 

schools assisted by Grantees between FY 2003 and FY 2005...............................92

Exhibit D-2 Poverty rates, as of 2000, in tracts and counties with schools assisted by 

Grantees between FY 2003 and FY 2005..............................................................93

Exhibit D-3 Proportion of population aged 18 and under, as of 2000, in tracts and 

counties with schools assisted by Grantees between FY 2003 and FY 

2005........................................................................................................................94

Exhibit D-4 Percent of households receiving public assistance, as of 2000, in tracts 

and counties with schools assisted by Grantees between FY 2003 and 

FY 2005 .................................................................................................................95

Exhibit D-5 Percentage white residents, as of 2000, in tracts and counties with 

schools assisted by Grantees between FY 2003 and FY 2005...............................96

Exhibit D-6 Percentage black residents, as of 2000, in tracts and counties with 

schools assisted by Grantees between FY 2003 and FY 2005...............................97
vii 

Exhibit D-7 Percentage American Indian residents, as of 2000, in tracts and counties 

with schools assisted by Grantees between FY 2003 and FY 2005 ......................98

Exhibit D-8 Percentage of other race residents, as of 2000, in tracts and counties with 

schools assisted by Grantees between FY 2003 and FY 2005...............................99

Exhibit D-9 Percentage of Hispanic residents, as of 2000, in tracts and counties with 

schools assisted by Grantees between FY 2003 and FY 2005.............................100
viii 
ix 

Acknowledgments 

The authors received invaluable assistance from numerous people to complete this study. The 

Working Group (TWG) members: Frederic Cooper, president, Community Development 

Concepts Advisory Services; John Kinghorn, vice president, Social Investments, Prudential 

Financial, Inc.; Eva Rainer, who served as vice president of the City First Bank of D.C. and is 

currently deputy director, the Educational Facilities Financing Center of Local Initiatives 

Support Corporation; and Linda Sorden, director, National Trust Loan Funds, National Trust for 

Historic Preservation, provided insightful comments on the overall research approach and helped 

identify industry participants for research team members to interview. Patricia Butler, Policy and 

Program Studies Service, and Jim Houser, Office of Innovation and Improvement, both of the 

U.S. Department of Education, have been important sources of information and have sharpened 

the project’s research focus and methods. Research team members conducted interviews with 

many industry participants, including representatives of assisted schools, grantees, unsuccessful 

program applicants, lenders, investment banks, and rating agencies and are grateful to each 

interviewee for his or her time and for sharing insights about the charter school lending market. 

Although the authors could not have completed this study without this help, any errors or 

omissions are solely the authors’ responsibility. 
x 
xi 

Executive Summary 

Since the first charter school began operating in 1991 in Minnesota, the number of charter 

schools has grown rapidly from 250 in 1995 to about 4,000 by 2007. Charter schools now enroll 

more than 1.1 million students in the United States (National Alliance for Public Charter Schools 

2007). Charter schools face many challenges when they attempt to purchase or lease permanent 

facilities and frequently operate in temporary space that is poorly suited for delivering 

educational services (Dolan, Murray, and Walsh 1998). Unlike regular public schools, they 

typically do not have separate facilities funding from their school districts. Moreover, charter 

schools generally cannot issue bonds backed by property taxes to finance facilities. Finally, since 

charter schools often lack tangible assets and an operating history that could be used to support a 

loan application, securing facilities financing is particularly problematic (Dolan, Murray, and 

Walsh 1998). 

In response to this problem, the U.S. Department of Education (ED) established, in 2001, the 

Credit Enhancement for Charter School Facilities Program (the Program). The Program makes 

available grants on a competitive basis to eligible entities—state or local government, private 

nonprofits, or consortia—which use Program funds for credit enhancements so that lenders will 

make loans for the following two purposes: 

• The acquisition (by purchase, lease, donation, or otherwise) of an interest (including an 

interest held by a third party for the benefit of a charter school) in improved or 

unimproved real property that is necessary to commence or continue the operation of a 

charter school; and 

• The construction of new facilities, or the renovation, repair, or alteration of existing 

facilities, necessary to commence or continue the operation of a charter school (Title V, 

Part B, Subpart 2, §5224 of the Elementary and Secondary Education Act of 1965, as 

amended by the No Child Left Behind Act).

Key Findings 

• The nine organizations that received Program grants in FY 2002 through FY 2004 

(the Grantees) supported a total of $168 million worth of Directly Enhanced loans to 

84 schools between FY 2003 and FY 2005;1

• Many of the assisted schools,2 according to Grantee3, commercial lender, investment 

bank, and rating agency representatives, would not have received facility loans at 

any price before the Program, because lenders believed that these schools reflected a 

prohibitively high level of risk; and 

 

1

 Grantees support charter school lending by making loans directly to charter schools or by providing credit 

enhancements for loans made by third parties. Both types of loans are defined in this report as Directly Enhanced 

loans. 

2

 Schools that received Directly Enhanced loans are defined herein as assisted schools, or as schools assisted by 

Grantees. 

3

 The nine organizations are referred to herein as the Grantees and, individually as a Grantee. 
xii 

• Over 23,000 students are enrolled in the 84 charter schools assisted under the 

Program by the Grantees during FY 2003 and FY 2005. These students are more 

likely to be low-income and minority compared with students enrolled in all charter 

schools and all U.S. public schools. 

Program Description 

Recipients of Program grants must establish reserve accounts in which Program funds are 

deposited. These funds must be invested in obligations issued or guaranteed by the United States 

or a state, or in other similarly low-risk securities. Any earnings on these funds received must be 

deposited in the reserve account and used in accordance with the Program’s following allowable 

activities (Title V, Part B, Subpart 2, §5225 of the Elementary and Secondary Education Act of 

1965, as amended by the No Child Left Behind Act): 

• Guaranteeing, insuring, and reinsuring bonds, notes, evidences of debt, loans, and 

interests therein; 

• Guaranteeing and insuring leases of personal and real property; 

• Facilitating financing by identifying potential lending sources, encouraging private 

lending, and other similar activities that directly promote lending to, or for the benefit of, 

charter schools; and 

• Facilitating the issuance of bonds by charter schools, or by other public entities for the 

benefit of charter schools, by providing technical, administrative, and other appropriate 

assistance (including the recruitment of bond counsel, underwriters, and potential 

investors and the consolidation of multiple charter school projects within a single bond 

issue). 

Between FY 2002 and FY 2007, ED awarded $197 million to 18 recipients. Through FY 2006, 

the recipients assisted a total of 138 schools and leveraged over $407 million worth of financing 

for charter schools so that they could acquire or renovate their facilities, according to ED. As the 

activities supported by the grants progress over their 10- to 20-year life span, ED anticipates that 

the benefits they produce will continue to grow. 

Data Sources and Analysis Strategy 

The findings presented below are based on analyses of organizations that received awards in the 

first three years of the Program between FY 2002 and FY 2004. During this period, ED made a 

total of $87 million of awards to the following Grantees: 

• America’s Charter School Finance Corporation (America’s Charter); 

• Center for Community Self-Help (Self-Help); 

• Charter Schools Development Corporation (CSDC); 

• District of Columbia Office of the State Superintendent of Education (OSSE); 
xiii 

• Local Initiatives Support Corporation (LISC); 

• Low Income Investment Fund Inc. (LIIF); 

• Massachusetts Development Finance Agency (MassDevelopment); 

• NCB Capital Impact (NCBCI); and 

• Raza Development Fund Inc. (RDF). 

The Grantees between FY 2003 and FY 2005 supported $168 million worth of Directly 

Enhanced loans to 84 schools. These schools, located in 21 states (including Washington, D.C.), 

enrolled 23,162 students at the time they received their Directly Enhanced loan. The unpaid 

principal balance for the Directly Enhanced loans, as of Sept. 30, 2005, was $155.5 million. 

The purposes of this study are to describe how the Grantees implemented their activities, as 

outlined in their Program document. Our analysis will address the following research questions: 

1. How does the Program achieve its legislative purpose? 

a. Does the Program, as implemented, provide for improved access of charter 

schools to capital markets for facilities? 

b. Does the Program, as implemented, provide for better rates and terms on 

financing than would otherwise be available for the charter schools served by the 

Program Grantees? 

2. What is the relative efficiency of Grantees’ models of service? 

3. What is the evidence of innovative method use? 

4. Is the Program serving the communities with the greatest need for public school choice? 

5. What are the major issues with Program implementation? Do Grantees and charter 

schools served by the Grantees have insights into how the Program might be improved? 

The analyses were conducted with data collected from three sources: (1) Grantee-provided 

information in their Program applications and Annual Performance Reports submitted to ED in 

FY 2003, FY 2004, and FY 2005; (2) secondary data sources including the U.S. Census, the 

National Center for Education Statistics’ (NCES) Common Core of Data (CCD), and the U.S. 

Treasury Web site; and (3) interviews with representatives of Grantees, assisted schools, 

unsuccessful Program applicants, commercial lenders, rating agencies, educational management 

organizations (EMOs), developers and investment banks. With these sources of information, the 

research team analyzed the characteristics of Directly Enhanced loans supported by Grantees, the 

location of assisted schools, the characteristics of students enrolled in assisted schools, and the 

types of solutions used by Grantees to facilitate charter school loans. 
xiv 

Findings 

1a. Does the Program, as implemented, provide for improved access of charter 

schools to capital markets for facilities? 

Yes. Many charter schools are unable to qualify for loans that could be used for facilitiesrelated purposes because lenders perceive them to be too great a risk. The credit 

enhancements funded by the Program reduce lenders’ exposure to losses in the event that a 

charter school defaults on its loan. As a result, the Program has improved charter schools’ 

access to capital markets, resulting in more lending than would have occurred without the 

Program.

Some of the increased lending volume generated by the Program came from organizations that 

made loans directly to charter schools before the Program. These lenders increased their charter 

school loan volume because of the credit enhancements available under the Program. In addition, 

the Program attracted new lenders who either supported a modest number or no charter school 

loans before the Program. These conclusions are based on the following findings: 

• Grantees that made loans directly to charter schools before participating in the Program 

increased their lending volume after receiving their grants. The six Grantees that made 

loans directly to charter schools before receiving their award supported a total of $5.3 

million in charter school facility loans in the year before they received their awards. 

These same six organizations supported a total of $27.7 million of Directly Enhanced 

loans in the year after receiving their grants. According to Grantee representatives, this 

increase would not have been possible without Program funds. Despite the higher risks 

associated with schools receiving loans under the Program, only one loan has required a 

Grantee to make use of its Program funds because of a loan delinquency during the 

study’s timeframe. 

• Representatives of assisted schools interviewed for this study indicated that they were 

often told by commercial lenders, before the Program, not to submit a loan application, 

because the lender would likely deny the loan request without a credit enhancement. 

• Commercial lenders and Grantee representatives indicated that, due to the Program, new 

lenders supported loans to charter schools and invested in loan pools credit enhanced by 

Grantees. Grantees used the funds provided by investors to finance charter school 

facilities loans. 

1b. Does the Program, as implemented, provide for better rates and terms on 

financing than would otherwise be available for the charter schools served by the 

Program Grantees? 

Yes. Many of the assisted schools, according to representatives of Grantees, commercial 

lenders, investment banks, and rating agencies, would not have received facility loans at 

any price before the Program, because lenders believed that these schools reflected a 

prohibitively high level of risk. With the credit enhancements made available by the 
xv 

Program, assisted schools received loans with rates and terms that were better than would 

otherwise be available. 

This conclusion is based on the following findings: 

• According to the Grantees that made loans directly to charter school loans before 

receiving an award, the rates and terms for Directly Enhanced loans they supported were 

at least the same, and in some cases better than the loans offered by the Grantees before 

they received Program funds. Moreover, some of the Grantees used the Program funds to 

offer more flexible underwriting standards, which allowed schools to be approved for 

loans that, before the Program, they would not have received. 

• In the debt markets, loans typically are priced relative to the prevailing risk-free rate of 

interest on a comparable term loan. The financial markets call the difference between the 

nominal interest rate on a loan and the risk-free rate of interest the “spread.” The risk-free 

rate is measured by the yields on U.S. Treasury securities, because they are considered to 

have nearly assured returns (and so have no credit risk) and can be easily sold by their 

owners (and thereby have no liquidity risk). The spread typically reflects the level of risk 

that a lender believes is evidenced by a particular borrower. 

The average spread for Directly Enhanced acquisition and construction loans was 2.42 

percentage points greater than comparable term Treasury yields, and the average spread 

for Directly Enhanced leasehold improvement loans supported by Grantees was 3.23 

percentage points greater than comparable term Treasury yields. The spreads for Directly 

Enhanced acquisition and construction loans and leasehold improvement loans were 

slightly higher than those for commercial real estate mortgages made during the same 

period. This difference, according to representatives of Grantees, commercial lenders, 

and rating agencies, is appropriate, because Directly Enhanced loans were made to more 

risky charter schools. 

2. What is the relative efficiency of the models of service being used by Grantees 

of the Program? 

Grantees are categorized into one of three broad types of models of service: 

• Vertically Integrated. Four Grantees (Vertically Integrated Grantees) are using a 

variant of this model of service in which they take the lead in evaluating 

applications and making charter school loans. 

• Fully Distributed. Two Grantees (Fully Distributed Grantees) are using a variant of 

this model of service in which they use the Program funds to enhance charter school 

loans already approved by third-party lenders. 

• Mixed. Two Grantees are using this model of service in which they make loans 

directly to charter schools and also provide credit enhancements for loans made by 

third-party lenders. 
xvi 

Because the two Grantees using a Mixed model of service are using a variety of dissimilar 

strategies rather than a core set of common strategies, the efficiency analysis is restricted to 

Grantees using either a Vertically Integrated or a Fully Distributed model of service. 

As detailed below, the Vertically Integrated and Fully Distributed methods of service may 

provide a trade-off in terms of start-up time to support loans and the types of charter 

schools that receive Directly Enhanced loans. After receiving their grant, Fully Distributed 

Grantees support loans more quickly than Vertically Integrated Grantees but serve less 

risky charter schools than Vertically Integrated Grantees. 

Pros and Cons Associated with the Vertically Integrated and Fully Distributed Methods of 

Service 

Grantees that use a Vertically Integrated model of service generally must identify and negotiate 

with lenders and investors, given the available credit enhancement. Based on the observations of 

the Grantees and commercial lenders, these negotiations take time, because different investors 

have to agree on a standard set of underwriting requirements that the Grantee can use when 

evaluating charter school loan applications. Furthermore, each investor may add an underwriting 

criterion, resulting in cumulative criteria that few charter schools can meet. Alternatively, 

investors may agree to underwriting standards for loans supported by the Grantee that were more 

flexible than those used for loans directly made by the lender because the lender’s risk is spread 

out over a pool of loans made to charter schools. 

Grantees that use a Fully Distributed model of service do not have to work with lenders and 

investors to agree to underwriting standards in advance of making loans. Rather, Grantees using 

a Fully Distributed model of service, according to Grantee representatives, try to allocate their 

funds on an as-needed basis to make charter schools “bankable” to commercial lenders or bond 

investors by enhancing loans that were already approved by banks, subject to a credit 

enhancement. Grantees using the Fully Distributed model of service may be able to move more 

quickly once receiving their Program grant funds to close transactions, as compared to Grantees 

that use a Vertically Integrated model of service. 

The two models of service have resulted in different types of lending outcomes and efficiency 

measures. This conclusion is based on the following findings: 

• Based on data for Directly Enhanced loans supported by Grantees between FY 2003 and 

FY 2005,4

 it appears that Grantees that use the Fully Distributed model of service were 

able to support charter schools relatively quickly, because they use the enhancement for 

loans that have already been negotiated by charter schools with their lenders. The initial 

lending volume for Grantees that use a Vertically Integrated model of service was 

relatively slower, perhaps because of the complexities involved in establishing the terms 

and conditions associated with loan pools started by these Grantees, with the exception of 

one such Grantee using this model and lending with its own assets. 

• The lending volume to date may be lower for Grantees using a Vertically Integrated 

model of service, but they appear more willing to serve slightly more risky charter 

 

4

 One Grantee did not make any Directly Enhanced loans between FY 2003 and FY 2005. 
xvii 

schools than those supported by the credit enhancements provided by Grantees using a 

Fully Distributed model of service. The reason may be due, in part, to the more rigorous 

underwriting standards used by commercial lenders that make loans to charter schools 

with credit enhancements from Fully Distributed Grantees. 

The results regarding the differences between the two models of service are preliminary. The 

analysis does not provide conclusive evidence that favors one model over another. Rather, the 

data suggest that both models of service play a significant role in facilitating capital investment 

in charter schools that otherwise would not be able to secure conventional financing. 

3. Is the Program serving the communities with the greatest need for public 

school choice? 

The research team evaluated whether Grantees used selection criteria to choose assisted schools 

that include the following three factors ED uses to evaluate Program applications: 

• The extent to which the applicant selects geographic service areas in which a large 

proportion or number of public schools have been identified for improvement, corrective 

action, or restructuring under Title I of the Elementary and Secondary Education Act of 

1965, as amended by the No Child Left Behind Act; 

• The extent to which the applicant selects geographic service areas in which a large 

proportion of students perform below proficient on state academic assessments; and 

• The extent to which the applicant selected communities to serve with large proportions of 

low-income students. 

The analysis of the extent to which Grantees selected service areas in need of school choice 

contained two parts. In the first part, the research team examined the types of criteria Grantees 

used to select charter schools, and compared these criteria with the same factors that ED uses to 

evaluate Program applications. 

To determine whether the Grantees made decisions to assist schools that were consistent with 

their selection criteria, the research team, in the second part, examined the demographic 

characteristics of students enrolled in the 84 assisted schools and compared these characteristics 

to students enrolled in charter schools and the overall U.S. K–12 student population. Finally, the 

analysis included a comparison of the economic and demographic characteristics of the Census 

tracts in which assisted charter schools were located relative to the characteristics of the county 

in which the assisted school was located. 

All but one of the Grantees used selection criteria that took into account whether an area 

requires school choice. Furthermore, Directly Enhanced loans, on average, were made to 

charter schools in which lower income and minority students comprised a larger share of 

enrollment as compared to all charter schools and all U.S. public schools. 

All but one of the Grantees used selection criteria that took into account at least one of the 

following factors: (1) academic performance of schools in an area; (2) academic performance of 

students in an area; or (3) income of families in an area. The remaining grantee proposed to 
xviii 

match program priorities with the overall national characteristics of charter schools. The 

characteristics of the students enrolled in the assisted schools and the Census tracts in which the 

assisted schools were located suggest that the Grantees made decisions based on their selection 

criteria. 

Fifty-nine percent of the 23,162 students enrolled in assisted charter schools were eligible for 

free or reduced price lunches, compared to 39 percent of all U.S. students in public schools and 

44 percent of all charter school students. Minority students accounted for a larger share of 

students in schools assisted by Grantees between FY 2003 and FY 2005 compared to students 

enrolled in all charter schools and all U.S. public schools. The proportion of white students in 

schools assisted by Grantees between FY 2003 and FY 2005 was 24 percent, the proportion of 

such students in all charter schools was 42 percent, and in all public schools was 58 percent 

(exhibit ES-1). 

Exhibit ES-1: Racial and ethnic composition of students enrolled in schools assisted under 

the Program between FY 2003 and FY 2005, all charter schools, and all U.S. public schools 

21.6 19.4

44.9

30.9

17.1

24.1

41.5

57.7

28.8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Schools assisted by

Grantees between FY

03 and FY 05

All Charter Schools All Public Schools

Type of School

Percentage of Enrollment

White

African-American

Hispanic

Other

2.2 4.6 5.7

Exhibit Reads: The proportion of white students in schools assisted by Grantees between FY 2003 and FY 2005 

was 24 percent, the proportion of such students in all charter schools was 42 percent, and in all public schools was 

58 percent. 

Sources: 1. Information related to assisted schools: Grantee Annual Performance Reports. 

2. Information related to all charter and public schools in United States: Common Core of Data (CCD), 

“Public Elementary/Secondary School Universe Survey,” 2004–05 (Preliminary) at 

http://nces.ed.gov/ccd/bat 
xix 

Finally, the assisted charter schools themselves were located in Census tracts with lower 

median household incomes and a larger share of minority residents than the counties in 

which the schools were located. As of 2000, the average median household income for tracts 

that contained assisted schools was $36,000, or 83 percent of the average $43,000 median 

household income of all assisted schools’ counties. Whites accounted for 69 percent of residents 

in counties in which assisted schools were located, compared to 52 percent of residents in Census 

tracts in which assisted schools were located (exhibit ES-2). 

Exhibit ES-2: Selected characteristics of Census tracts and counties, as of the 2000 U.S. 

Census, with schools assisted by Grantees between FY 2003 and FY 2005 

20.6%

26.1%

6.7%

18.3%

20.3%

29.8%

51.9%

13.8%

26.5%

4.2%

18.4%

15.8%

16.4%

68.7%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Percent of households below poverty rate

Percent of Population Age 18 and Under

Percent of Households Receiving Public

Assistance

Percent other race

Percent Hispanic

Percent African-American

Percent White

Percent

Counties with assisted schools

Tracts with assisted schools

Exhibit Reads: Whites accounted for 69 percent of county residents in which assisted schools were located, 

compared to 52 percent of residents in tracts where assisted schools were located. 

Note: The data used to prepare the information in this exhibit are presented in appendix D. 

Sources: 1. Location of schools: Grantee Annual Performance Reports geocoded by the authors. 

2. Characteristics of Census tracts and counties in which assisted schools were located: U.S. Census 

2000. 

4. What is the evidence of innovative method use? 

The Program emphasizes that organizations that receive grants use innovative methods to 

facilitate loans to charter schools. There is no industry standard as to what constitutes an 

“innovative” method. Hassel and Esser (2004) identified the following types of innovative 

methods that could be used to generate charter schools facilities financing: 

• Direct borrowing on the private market; 
xx 

• Sale or lease of existing facilities; 

• Cost-saving solutions, such as space sharing with community agencies and higher education 

institutions; 

• New uses of community resources by education students through off-campus internships, 

service learning projects or field research or use of distance education; and 

• New forms of organizational arrangements, such as establishing real estate trusts and 

intermediaries. 

Based on a review of loan-level data and information provided by Grantees and assisted 

schools, there was evidence that Grantees are using innovative methods, especially related 

to helping charter schools borrow directly from private lenders. 

This conclusion is based on the following findings: 

• Charter schools receiving loans under the Program were smaller and in operation for a 

fewer number of years than charter schools receiving loans from commercial banks or 

through the bond market. Therefore, schools assisted by the Program were able to tap into 

sources of funds for smaller and newer charter schools that were previously not available. 

• Grantees that operate a Fully Distributed model provide credit enhancements to loans 

made by third party lenders, oftentimes commercial banks. As a result, charter schools 

assisted by such Grantees were able to borrow directly from the private market. Grantees 

and assisted school representatives that received such loans indicated that these assisted 

schools did not have the sufficient down payment or operating history to meet private 

lenders’ underwriting standards. 

• In some cases Grantees have used innovative real estate solutions that created 

opportunities for charter schools to share space until they could purchase a building. A 

Grantee negotiated an agreement to purchase a 23,500 square-foot facility and obtained 

the necessary $2.4 million to renovate the building and turn it into classrooms, 

administrative offices, and multipurpose space for two charter schools that operated in 

the building. One school moved into its own facility, and the other school will purchase 

the property. 

• As a result of the lending volume facilitated by Grantees, investment bankers and other 

industry participants are now examining the potential for creating a secondary market for 

Directly Enhanced loans. Such a market would allow Grantees and other lenders to sell 

loans and use the proceeds from such sales to fund additional charter school lending. If 

successful, a secondary market for charter school loans could, as with residential and 

commercial mortgages, provide a significant and efficient source of money for charter 

school loans in the future. 
xxi 

5. What are the major issues with Program implementation? Do Grantees and 

charter schools served have insights into how the Program might be improved? 

Overall, the Grantees and assisted schools were highly positive about the Program and 

believe that it is making a difference in the market. In response to open-ended questions 

regarding implementation challenges they face and areas in which the Program could be 

improved, Grantee representatives indicated that the combination of the one-time allocation 

equal to one-quarter of 1 percent of the grant amount (e.g., $25,000 for a $10 million grant) for 

administrative expenses provided for in the Program’s statute and the income earned from fees 

and interest rate spreads was not sufficient to cover the costs associated with complying with the 

reporting requirements, some of which are specified in the Program’s statute. Some Grantee 

representatives indicated that they had to find other sources of funds to cover administrative 

costs or, in some cases, reduce services to assisted schools as a cost-savings measure. 

The Grantee’s responses should be taken in the context of their expressed overall level of 

satisfaction with the Program. Additional research, beyond the scope of this study, would be 

required to (1) assess the extent of this perceived problem; (2) identify potential changes, if any, 

to the reporting requirements that would reduce costs to Program grant recipients and still 

provide ED with information needed for effective oversight; and (3) evaluate the potential 

benefits of increasing the administrative fee provided by the Program’s statute. 

In addition to changing the statute’s administrative cap, which was recommended by all 

Grantees, a Grantee indicated that it could earn more income if it could use Program funds as a 

source of charter school loans, rather than being restricted to placing these funds in a reserve 

fund. Another Grantee indicated that the Program should be changed so that Grantees could 

support predevelopment loans, which many charter schools need to establish plans to acquire or 

rehabilitate facilities. Predevelopment loans are loans that a school might obtain to pay for the 

cost of determining whether a site is suitable for development, such as a study to determine 

whether a site is contaminated with environmental hazards. 

Assisted schools did not mention many challenges. Only one assisted school expressed any 

criticism or concern during the interviews. This representative indicated that Grantees could 

provide information about fees on a timelier basis. 
xxii 
1 

Chapter 1: Introduction 

The purpose of this study is twofold: (1) describe the implementation of the Credit Enhancement 

for Charter School Facilities program (the Program); and (2) document the Program’s lendingrelated outcomes for charter schools in its first three years of operation. The study analyzes the 

activities of the eight organizations that received grants (the Grantees) in FY 2002 through FY 

2004 to address the following research questions:5

 

1. How does the Program work in achieving its legislative purpose? 

a. Does the Program, as implemented, provide for improved access of charter 

schools to capital markets for facilities financing? 

b. Does the Program, as implemented, provide for better rates and terms on 

financing than would otherwise be available for the charter schools served by the 

Program Grantees? 

2. What is the relative efficiency of service models being used by Grantees of the 

 Program? 

3. Is the Program serving the communities with the greatest need for public school choice? 

4. What is the evidence of innovative method use? 

5. What are the major issues with Program implementation? Do Grantees and charter 

schools served have insights into how the Program might be improved? 

Since the first charter school began operating in 1991 in Minnesota, the number of charter 

schools has grown rapidly from 250 in 1995 to about 4,000 by 2007. Charter schools now enroll 

more than 1.1 million students in the United States (National Alliance for Public Charter Schools 

2007). Charter schools face many challenges when they attempt to purchase or lease permanent 

facilities and frequently operate in temporary space that is poorly suited for delivering 

educational services (Dolan, Murray, and Walsh 1998). Charter schools, unlike traditional public 

schools, typically do not have separate facilities funding from their school districts. Moreover, 

these schools generally cannot issue bonds backed by property taxes to finance facilities. Finally, 

because charter schools often lack tangible assets and an operating history that could be used to 

support a loan application, securing facilities financing is particularly problematic (Dolan, 

Murray, and Walsh 1998). 

A recent study of charter school finance summarized the challenges of securing facilities funding 

as follows: 

 

5

 Nine organizations received grants in the first three years of the Program. One of these Grantees had not made any 

Directly Enhanced loans through FY 2005, and so the analyses do not include that organization. 
2 

“Facilities can be a problem for several reasons. Rarely is a vacant school 

building available in good condition and in a suitable location. Often a space must 

be adapted or upgraded, which adds to the expense. Some charter schools have 

benefactors to help pay for a facility or even donate one, but most, especially in 

lower-income areas, do not.... Low-cost, charity-rate loans and mortgages for 

large amounts are scarce. And on the conventional market, charter schools tend to 

encounter additional charges rather than discounts. Lenders and landlords, in 

dealing with an unfamiliar type of applicant, may naturally try to cover the 

perceived risk by asking for extra loan guarantees, security deposits, and/or 

premium rates—which the schools, in many cases, cannot afford” (The Ewing 

Marion Kauffman Foundation 2005, pp. 2–3). 

 

In addition to the financial risks presented by charter schools, lenders face a “renewal risk,” in 

which the charter school that takes out a loan may not have its charter renewed before a loan 

matures, thereby leaving the school with no revenue to pay its loan. Recognizing these risks, the 

Program was established so that grant recipients could make credit enhancements available to 

lenders. These credit enhancements, by providing some level of guaranteed loan payments or 

recoveries in the event of a foreclosure, reduce the financial and renewal risks associated with 

charter school facility loans, thereby increasing the likelihood that lenders will make such loans. 

Federal credit programs, including credit enhancement programs, exist because they have the 

potential to benefit many customers and can potentially cost less than providing direct cash aid to 

the same number of customers. Charter school facilities can be expensive. Some of them cost 

$20 million or more. If a charter school facilities program were designed to provide direct cash 

grants and received between $25 million and $37 million a year in funding, the program would 

not serve many charter schools. The credit enhancement approach allows Grantees to leverage 

their funds, since the credit enhancements under this Program do not typically guarantee 100 

percent of a given loan amount for the duration of the loan. Rather, the typical credit 

enhancement guarantees only a portion of the loan, and so the dollar volume of loans credit 

enhanced by the Program is greater than the amount of Program funds used to support the loans. 

The following chapter presents background information about the Program. Chapter 3 describes 

the Program and is followed, in Chapter 4, by a discussion of the research methodology. The 

report concludes, in Chapter 5, with a presentation of the study’s findings to each research 

question. 
3 

Chapter 2: Program Description 

This chapter describes the Program’s purposes, allowable activities and administrative 

requirements. The Program makes available grants on a competitive basis to eligible entities, 

including state or local governments, private nonprofits, or consortia. These entities, in turn, use 

Program funds for credit enhancements so that lenders will make loans for the following two 

purposes: 

• The acquisition (by purchase, lease, donation, or otherwise) of an interest (including an 

interest held by a third party for the benefit of a charter school) in improved or 

unimproved real property that is necessary to commence or continue the operation of a 

charter school; 

• The construction of new facilities, or the renovation, repair, or alteration of existing 

facilities, necessary to commence or continue the operation of a charter school (Title V, 

Part B, Subpart 2, §5224 of the Elementary and Secondary Education Act of 1965, as 

amended by the No Child Left Behind Act). 

Eligible entities’ applications are evaluated according to criteria set forth in regulation (34 CFR 

Part 225, §225.11). Recipients of Program grants must establish reserve accounts in which grant 

funds are deposited. These funds must be invested in obligations issued or guaranteed by the 

U.S. government, a state government, or in other similar low-risk securities. Any earnings on 

these funds received must be deposited in the reserve account and used in accordance with the 

Program’s following allowable activities (Title V, Part B, Subpart 2, §5225 of the Elementary 

and Secondary Education Act of 1965, as amended by the No Child Left Behind Act): 

• Guaranteeing, insuring, and reinsuring bonds, notes, evidences of debt, loans, and 

interests therein; 

• Guaranteeing and insuring leases of personal and real property; 

• Facilitating financing by identifying potential lending sources, encouraging private 

lending, and other similar activities that directly promote lending to, or for the benefit of, 

charter schools; and 

• Facilitating the issuance of bonds by charter schools, or by other public entities for the 

benefit of charter schools, by providing technical, administrative, and other appropriate 

assistance (including the recruitment of bond counsel, underwriters, and potential 

investors and the consolidation of multiple charter school projects within a single bond 

issue). 

Most grantees used their grants for the first allowable purpose. 

Once the grant is received, a recipient may draw down funds after signing a Performance 

Agreement acceptable to ED. Performance Agreements include a grantee’s target amount of 

funding that it will leverage for charter schools to acquire, construct, and renovate school 
4 

facilities, and the number of charter schools it will serve. The Performance Agreement also 

describes the ways in which the grantee will accomplish the purposes of the Program. An eligible 

entity may draw down and spend a limited amount of funds prior to reaching an acceptable 

Performance Agreement provided that the Grantee requests to draw down and spend a specific 

amount of funds and ED approves the request in writing (34 CFR Part 225, §225.20). 

Program grant recipients must maintain financial statements in accordance with generally 

accepted accounting principles and are subject to an annual audit by an independent public 

accountant. In addition, Grantees submit to ED an annual report of their operations and activities 

that includes the following (Title V, Part B, Subpart 2, §5227 of the Elementary and Secondary 

Education Act of 1965, as amended by the No Child Left Behind Act): 

• A copy of the most recent financial statements, and any accompanying opinion on such 

statements, prepared by the independent public accountant reviewing the financial 

records of the eligible entity; 

• A copy of any report made on an audit of the financial records of the eligible entity that 

was conducted under subsection (a) during the reporting period; 

• An evaluation by the eligible entity of the effectiveness of its use of the federal funds 

provided under this subpart in leveraging private funds; 

• A listing and description of the charter schools served during the reporting period; 

• A description of the activities carried out by the eligible entity to assist charter schools in 

meeting the Program’s objectives; and 

• A description of the characteristics of lenders and other financial institutions participating 

in the activities undertaken by the eligible entity under this subpart during the reporting 

period. 

Program grant recipients may recover costs associated with conducting activities under the 

Program, including direct personnel expenses tied to the four allowable uses of the reserve 

account. Administrative activities that are not directly tied to these uses are capped at one-quarter 

of 1 percent of the total grant (Title V, Part B, Subpart 2, §5226 of the Elementary and 

Secondary Education Act of 1965, as amended by the No Child Left Behind Act). 

ED must recover all of the funds in a Grantee’s reserve account if the ED secretary determines, 

not earlier than two years after the date on which the grantee first received funds under the 

Program, that the participant has failed to make substantial progress in carrying out the purposes 

of the Program. ED must reclaim all or a portion of the funds in a reserve account established by 

a participant that has permanently ceased to use all or a portion of the funds in such account to 

accomplish any purpose consistent with the Program (Title V, Part B, Subpart 2, §5229 of the 

Elementary and Secondary Education Act of 1965, as amended by the No Child Left Behind Act). 
5 

Chapter 3: The Grantees 

The Credit Enhancement for Charter School Facilities Program has awarded $197 million to 18 

recipients to assist charter schools in obtaining suitable facilities for their operation. Of that 

amount, $87 million was awarded to nine recipients in the first three years of the program, 

between FY 2002 and FY 2004.6 This chapter provides a description of these nine Grantees 

(listed below) and the models of service they used to provide charter school facilities loans 

during the Program’s first three years of operation. (See Appendix E for a full list of recipients 

and award amounts by year.) 

• America’s Charter School Finance Corporation (America’s Charter); 

• Center for Community Self-Help (Self-Help); 

• Charter Schools Development Corporation (CSDC); 

• District of Columbia Office of the State Superintendent of Education (OSSE); 

• Local Initiatives Support Corporation (LISC); 

• Low Income Investment Fund Inc. (LIIF); 

• Massachusetts Development Finance Agency (MassDevelopment); 

• NCB Capital Impact (NCBCI); and 

• Raza Development Fund Inc. (RDF). 

 

NCBCI received the largest amount of funding—$18 million. CSDC, with $15 million, received 

the next largest amount of funds. Three of the Grantees—CSDC, NCBCI, and RDF—received 

two awards in the study period; the remaining six Grantees received only one award during the 

same period (exhibit 3-1). 

Exhibit 3-1: Program awards: FY 2002 to FY 2004 ($ in Millions) 

Program grant amount 

Grantee FY 2002 FY 2003 FY 2004 Total 

America’s Charter $4.96 $4.96 

CSDC $10.00 $5.00 $15.00 

OSSE $5.00 $5.00 

LISC $10.00 $10.00 

LIIF $3.00 $3.00 

MassDevelopment $10.03 $10.03 

NCBCI $10.00 $8.00 $18.00 

RDF $5.00 $7.95 $12.95 

Self-Help $8.00 $8.00 

Total $32.96 $36.03 $17.95 $86.94 

Exhibit reads: ED made $87 million worth of grants in three years, $33 million toward grants originally awarded in 

the first year, $36 million to those awarded in the second year, and $18 million to those awarded in the third year. 

Note: In some cases ED supplemented grants that were made in prior years. The table shows the full amount of these 

funds in the year the grant was originally awarded when this was the case, even if some of the funding came from a 

subsequent year. 

Source: Unpublished tabulation and chart prepared (October 2007) by Office of Innovation and Improvement, U.S. 

Department of Education. 

 

6

 These nine organizations are referred to in this report as the Grantees and individually as a Grantee. 
6 

The Grantees represent a variety of organizations, ranging from nonprofit lenders to relatively 

new organizations that provide credit enhancements for charter school loans (exhibit 3-2). Some 

Grantees made loans directly to charter schools prior to receiving their grant. 

Exhibit 3-2: Organizational summary of Grantees 

Organizational description 

Location of 

Grantee 

Market 

area 

Number 

of schools 

assisted 

(as of the 

end of 

FY2005) 

America’s Charter 

America’s Charter is a nonprofit organization with a 

mission to support the creation and expansion of 

high-quality charter schools throughout the nation by 

providing them with creative and customized 

facilities financing products and services. Founded 

in 2000, America’s Charter offers financing and 

financial counseling services for charter schools. In 

addition, America’s Charter works with private 

sector foundations and companies that are interested 

in education and education reform to increase 

awareness of the difficulties charter schools face in 

finding appropriate and affordable facilities. 

Washington, 

D.C. 

Nationwide 9 

CSDC 

CSDC, a 501 (c)(3) nonprofit organization with 

offices in the Washington, D.C., metropolitan area, 

and Phoenix, Ariz., offers programs to meet the 

facilities needs of public charter schools nationwide. 

Established in 1997, CSDC provides facility 

solutions for charter schools through real estate 

development, financing, and credit enhancement 

services.

Hanover, 

Md. 

Nationwide 29 

LIIF 

Established in 1983, LIIF invests capital and 

provides technical assistance to community 

development organizations in three program areas: 

housing, child care, and education. In 1999, LIIF 

began financing charter schools in response to 

growing demand in low-income neighborhoods. 

San 

Francisco, 

Calif. 

California 6 
7 

Exhibit 3-2: Organizational summary of Grantees (cont.) 

Organizational description 

Location 

of 

Grantee Market area 

Number 

of schools 

assisted 

(as of the 

end of 

FY2005) 

LISC 

LISC has more than 25 years of history. It helps 

resident-led, community-based development 

organizations transform distressed communities and 

neighborhoods into healthy ones—good places to 

live, do business, work, and raise families. By 

providing capital, technical expertise, training, and 

information, LISC supports the development of local 

leadership and the creation of affordable housing; 

commercial, industrial, and community facilities; 

businesses; and jobs. 

New 

York, 

N.Y. 

(National 

Office) 

Nationwide 3 

MassDevelopment 

MassDevelopment provides the financial tools and 

real estate expertise needed to stimulate economic 

growth across the state of Massachusetts. It works 

with businesses and local officials to address 

blighted areas, help create jobs, and address 

overarching issues that affect economic 

development, such as housing affordability. 

Worcester, 

Mass. 

Massachusetts 3 

NCBCI 

NCBCI, formerly known as NCB Development 

Corporation (NCBDC), is the nonprofit affiliate of 

National Consumer Cooperative Bank, a cooperative 

financial service company. NCBCI’s mission is to 

provide solutions based on cooperative principles 

that empower underserved communities to address 

the problems poverty creates in America. Its 

programs cover areas including affordable 

cooperative homeownership, assisted living, 

housing, and services for the frail and elderly, and 

facilities for health care centers and charter schools. 

NCBCI has been a charter school lender for more 

than 11 years. 

Arlington, 

Va. 

Florida, 

Georgia, 

Minnesota, 

Wisconsin, 

and MidAtlantic states 

8 
8 

Exhibit 3-2: Organizational summary of Grantees (cont.) 

Organizational description 

Location 

of 

Grantee Market area 

Number 

of schools 

assisted 

(as of the 

end of 

FY2005) 

RDF 

RDF is a support corporation of the National 

Council of La Raza (NCLR). Established in 1998 

RDF is the community development lending arm of 

NCLR. The mission of RDF’s Hope Fund is to 

provide flexible but high-quality loans, along with 

technical assistance, to entities that provide services 

and opportunities to low-income Latino families, a 

mission that is consistent with and complementary 

to the mission of NCLR. RDF provides capital for a 

wide variety of community development projects, 

including predevelopment, construction, and 

rehabilitation loans; lines of credit; and acquisition 

and mini-permanent loans for charter schools, 

community health centers, program facilities, and 

affordable housing. 

Phoenix, 

Ariz. 

Nationwide 18 

Self-Help 

The nonprofit Center for Community Self-Help, 

with its financing affiliates, Self-Help Credit Union, 

and Self-Help Ventures Fund, is a community 

development financial institution based in Durham, 

N.C. Its mission is to create ownership and 

economic opportunities for minorities, women, rural 

residents, and low-wealth families. Self-Help’s 

Community Facilities Fund serves the nonprofit and 

human services sectors, including adult and child 

day care providers, educational institutions, 

community and religious organizations, supportive 

housing and health care facilities, Head Start 

programs, affordable housing developers, and arts 

organizations. 

Durham, 

N.C. 

North 

Carolina, 

Florida, 

Georgia, 

Tennessee, 

Texas, and 

South 

Carolina 

8 
9 

Models of service used by Grantees to implement the Program 

Grantees were categorized into one of three kinds of models of service detailed below, based on 

how they complete financing, underwriting, marketing, servicing, and technical assistance 

activities, as detailed in exhibit 3-3. 

Vertically Integrated model of service: Grantees that use a Vertically Integrated model of service 

(Vertically Integrated Grantees) have underwriters and other staff with expertise in charter 

school loan production. They take applications, process them, and make credit decisions. Four 

Grantees—Self-Help, RDF, LIIF, and NCBCI—are using a variation of this model of service. 

Three of these Vertically Integrated Grantees (RDF, LIIF, and NCBCI) use their Program funds 

to credit enhance a loan pool that is funded by investors, who commit to finance a set level of 

charter school loans so long as the Grantee uses underwriting standards established in advance 

by the investors. Alternatively, Self-Help uses its credit enhancement to raise funds from 

investors, but does not use these funds to establish a separate loan pool. Instead, the funds raised 

by Self-Help with the credit enhancement are assets on that organization’s balance sheet. 

Fully Distributed model of service: Two Grantees, America’s Charter and CSDC (Fully 

Distributed Grantees) are using a Fully Distributed model of service, in which the lender or bond 

issuer assumes a large share of the underwriting and processing responsibilities. Instead of 

making loans to charter schools, Fully Distributed Grantees work with a lender or bond insurer to 

establish an amount of credit enhancement required by a lender. The lender, with the credit 

enhancement, makes a loan to a charter school. Fully Distributed Grantees typically make credit 

enhancements available to charter schools that have entered into negotiations with a lender. The 

lender, in such cases, has provided the charter school with a term sheet, which has the proposed 

rates and terms associated with the loan subject to the charter school securing an enhancement. 

For example, a lender may provide a charter school with a term sheet subject to the school’s 

ability to raise the lender’s required 20 percent equity. The charter school would then work with 

CSDC or America’s Charter and the lender to secure a 20 percent guarantee for the loan. 

Grantees that use a Fully Distributed model do not have to work with lenders and investors to 

agree to underwriting standards in advance of originating loans. Rather, Fully Distributed 

Grantees, according to Grantee representatives, try to allocate their funds on an as-needed basis 

to make charter schools “bankable” to commercial lenders or bond investors by enhancing loans 

that were already approved by banks, subject to a credit enhancement. Grantees using the Fully 

Distributed model of service may be able to move more quickly once receiving their Program 

grant funds to close transactions, as compared to Grantees that use a Vertically Integrated model 

of service. 
10 

Exhibit 3-3: Description of Vertically Integrated and Fully Distributed models of service 

Program element 

Vertically Integrated model of 

service 

Fully Distributed model of 

service 

Financing: How a Grantee 

raises funds that are used 

for charter school loans. 

• Investors (banks, insurance 

companies, other capital 

sources) provide a Grantee 

with funds that capitalize a 

loan pool for charter school 

facilities. Investors provide 

such funds for a guaranteed 

interest rate for a specified 

term paid by the Grantee. In 

some cases financing is 

provided exclusively by the 

Grantee. 

• The credit enhancement grant 

is used by the Grantee in the 

event that charter school loan 

payments, due to delinquency 

and default, are less than 

payments to investors. 

Investors determine the 

required level of credit 

enhancement, which limits the 

leverage available under the 

Program. 

• Lenders make facility 

loans to charter schools 

directly. The credit 

enhancement grant 

provides mortgage 

insurance that pays the 

lender 100 percent of a 

loan’s unpaid balance in 

the event of default. 

• The Grantee determines 

the expected default rate 

and total unpaid balances 

for such loans; these 

estimates determine the 

total origination volume 

that can be supported 

with the grant. 

Underwriting: The 

guidelines and processes 

used by a Grantee to 

determine whether a charter 

school loan application will 

be approved.

• The Grantee develops 

underwriting guidelines that 

are used to evaluate loan 

applications from charter 

schools. Grantee staff 

underwrite and approve or 

deny loan applications. 

• Individual lenders 

establish their own 

underwriting standards, 

perhaps in consultation 

with the Grantee. 

Lenders underwrite loan 

applications and 

approve/deny individual 

loan applications that 

contain guarantees from 

the Grantee. 

Marketing: The processes a 

Grantee uses to attract 

charter school loan 

applications. 

• The Grantee is responsible for 

marketing the Program to 

charter schools in its coverage 

area. 

• Third parties, such as 

lenders and trade groups, 

market the Program to 

charter schools in the 

coverage area. 
11 

Exhibit 3-3: Description of Vertically Integrated and Fully Distributed models of service 

(cont.) 

Program element 

Vertically Integrated model of 

service 

Fully Distributed model of 

service 

Servicing: The processes a 

Grantee uses to collect 

payments and, in the case of 

a loan delinquency, work 

with a charter school to 

prevent a foreclosure.

• The Grantee is responsible for 

servicing performing loans 

and any workouts for 

delinquent loans. 

• Lenders are responsible 

for servicing performing 

loans and any workouts 

for delinquent loans. 

Lenders may sell 

servicing rights or 

contract with third parties 

to perform servicing 

functions. 

Technical Assistance: The 

services offered to charter 

schools to assist them with 

identifying potential sources 

of financing and completing 

a loan application.

• The Grantee provides 

technical assistance to charter 

schools regarding financing 

alternatives. 

• Lenders provide 

technical assistance to 

charter schools regarding 

financing alternatives. 

In addition to credit enhancing commercial loans made by third parties, America’s Charter and 

CSDC are using grant funds to support bond transactions. Typically, the Grantee guarantees a 

letter of credit provided by commercial banks that can be used to repay bondholders in the event 

of a charter school’s default. In other transactions, the Grantee uses Program funds as a partial 

credit enhancement for the bond, which can be used in the event of a default. 

Mixed model of service: The two remaining Grantees—LISC and MassDevelopment—have 

elements of both models of service.7 LISC is using its grant funds to credit enhance 10 Local 

Facility Funds (LFFs). The LFFs raise money from investors to make charter school loans in 

their communities. MassDevelopment uses its grant funds to guarantee debt issued on behalf of 

charter schools. The proceeds of these bonds can be used by charter schools acquisition, 

construction, renovation, and leasehold improvement of charter school facilities. Most of the 

bonds will be issued by third-party commercial lenders, but MassDevelopment also expects to 

use its grant funds to credit enhance debt issued by the organization itself. 

The LISC and MassDevelopment approaches do not fit neatly into either the Vertically 

Integrated or Fully Distributed models of service. LISC is not a direct lender, but provides credit 

enhancements to help establish loan pools similar to Grantees operating under a Vertically 

Integrated model of service. MassDevelopment makes available credit enhancements to thirdparty lenders, similar to the two Grantees operating under a Fully Distributed model of service, 

but may also be a direct lender. As a result, these two Grantees were categorized as operating a 

Mixed model of service. 

 

7

 One Grantee did not support any Directly Enhanced loans between FY 2003 and FY 2005. As a result, this Grantee 

was not categorized into any model. 
12 
13 

Chapter 4: Methodology 

This chapter describes the data sources and methods used to address the study’s research 

questions. This study uses information from three sources: (1) information provided in Program 

applications and Annual Performance Reports; (2) secondary databases; and (3) results of 

discussions with representatives to answer the five research questions. Exhibit 4-1 summarizes 

the types of information that will be the primary source of data to address each of five research 

questions. 

Data sources 

A range of quantitative and qualitative information from three sources was used to answer each 

research question. This section describes each data source and the data collection methodology 

used for each source. Overall, the following information was collected for each Grantee funded 

in FY 2002 through FY 2004:

• Information provided in Grantee Program applications and Annual Performance Reports 

submitted for FY 2003, FY 2004, and FY 2005; 

• Secondary databases that provide information regarding the demographic or social 

characteristics of neighborhoods in which schools assisted under the Program were 

located; and 

• Interviews with representatives of Grantees, charter schools assisted under the Program, 

unsuccessful Program applicants, commercial lenders, investment bankers, bond insurers, 

educational management organizations and rating agencies. 

Grantee applications and annual performance reports 

 

Applicants provide information that allows ED to evaluate proposals with four categories of 

selection criteria: (1) the quality of the design and potential significance of the proposed grant 

project; (2) the quality of the proposed services; (3) the business and organizational capacity to 

carry out the proposed grant project; and (4) the qualifications of the grant project team. 

Therefore, all of the Program applications include information regarding the Program grant 

recipients’ proposed activities and experience with previous lending programs. 

This application information details specific strategies that the applicant intends to use to 

facilitate charter school facilities lending. In particular, the application provides details about the 

division of specific functions between the organization and third parties. The application also 

specifies the types of credit enhancements that the applicant will support with grant funds. This 

information was used to classify a Grantee as a Fully Distributed, Vertically Integrated or Mixed 

Grantee. The application also outlines the selection criteria that the organization will use when 

choosing a charter school to assist. These criteria can include the characteristics of either 

students enrolled in the school or the residents in the geographic area in which the assisted 

school was located. This information was used to assess how Grantees selected areas that are in 

need of public school choice.
14 

Grantees provide ED with Annual Performance Reports that include a narrative description of 

activities conducted under the Program, including a discussion of the types of credit 

enhancements provided and how those enhancements facilitate each transaction supported by the 

Program. These descriptions were used to identify innovative financial and real estate solutions 

implemented by Grantees. In addition to this narrative discussion of programmatic activities, 

Annual Performance Reports include the assisted schools’ names and detailed information about 

the demographic characteristics of students enrolled. (Schools that received Directly Enhanced 

loans between FY 2003 and FY 2005 are referred to in this report as assisted schools.) This 

information was used to determine the extent to which the Program serves areas in need of public 

school choice. 

In their Annual Performance Reports, Grantees provide loan-level information about the amount, 

interest rate, term, fees and purpose of loans that either are made by a third-party lender with a 

credit enhancement provided by a Grantee with Program funds or are made by a Grantee to a 

charter school from a loan pool that is credit enhanced with Program funds. Both types of loans 

are defined in this study as Directly Enhanced loans. These are the loans that lenders made as a 

direct result of the Program. Moreover, Grantees in many cases do not report information about 

the rates and terms for loans that assisted schools receive but are not credit enhanced by 

Grantees. As a result, it is not possible to compute financial measures that include these loans. 

The loan-level data provided by Grantees about Directly Enhanced loans were used to calculate 

financial and efficiency measures that are calculated for all Grantees by type of loan and by 

model of service. 

Interviews 

The research team conducted interviews with representatives of four groups of organizations: 

Grantees, unsuccessful Program applicants, industry participants, and schools assisted by 

Grantees. The team completed interviews with eight of nine Grantees. (The ninth Grantee did not 

support any Directly Enhanced loans between FY 2003 and FY 2005.) 

Research team members also completed interviews with representatives of five unsuccessful 

Program applicants. The sampled organizations were selected from 15 unsuccessful Program 

applicants who received a score above 45 on their Program applications. 

The sample of assisted schools was selected after grouping all of the assisted schools according 

to the model of service (Vertically Integrated, Fully Distributed, and Mixed) used by the Grantee 

that made the school’s Directly Enhanced loan. The assisted schools selected to be interviewed 

reflects these proportions. The research team contacted 13 assisted schools,8

 and was able to 

complete eight assisted school interviews. 

 

8

 Schools that received Directly Enhanced loans are defined as assisted schools or as schools assisted under the 

Program. 
15 

The 15 industry participants included representatives of commercial lenders, investment banks, 

bond rating agencies, charter school developers, and educational management organizations 

(EMOs). These interviewees provided different perspectives about the Program’s effects. The 

research team selected industry participants to interview with the assistance of Working Group 

members, ED staff, and, in some cases, the interviewees themselves.

Secondary data 

Data from two kinds of secondary sources were used in the study: Census data and public 

databases of financial information. To assess the neighborhood conditions of assisted charter 

schools, geographic information systems were used to geocode the location of schools assisted 

under the Program to the Census tract and county in which the assisted school was located.9

 U.S. 

Census data were used to calculate measures of the socioeconomic conditions of the tracts and 

counties that contain charter schools assisted under the Program. Publicly available databases 

with information about Treasury yields and commercial loan rates were used to complete 

comparative analyses of Program rates and terms to loans available from non-Program sources. 

Limitations of the study 

Overall, the study examined information related to the eight grantees, which assisted a total of 84 

charter schools between FY 2003 and FY 2005. The limited data provides descriptive evidence 

of the program’s implementation and outcome. However, because of the Program’s short history, 

the results of the study were based on a small number of grantees and loans, and must be viewed 

as preliminary. 

 

9

 Washington, D.C., and Philadelphia, both of which are cities, are also county equivalents. In this report they will 

be referred to as counties. 
16 

Exhibit 4 -1: Crosswalk of research questions and data sources 

Interviews with: 

Grantee-provided 

information 

from: S

Grantees 

Assisted 

schools 

Unsuccessful 

program 

applicants 

Annual 

performance 

reports and 

applications 

da

1. How does the Program work in 

achieving its legislative purpose? 

1a. Does the Program, as implemented, 

provide for improved access of charter schools to capital markets for facilities? 

X X X X 

1b. Does the Program, as implemented, 

provide for better rates and terms on financing than would otherwise be available from Grantees? 

X X X X 

2. What is the relative efficiency of the 

models of service being used by Grantees?

 X 

3. Is the Program serving the 

communities with the greatest need for public school choice?

 X X 

4. What is the evidence of Grantees’ 

innovative method use?

X X X 

5. What are the major issues with 

Program implementation? 

X X 
17

Chapter 5: Findings 

This chapter presents findings for each of the study’s research questions. A preliminary 

discussion that includes the methods used to address each study question and a summary of 

findings is presented for each research question. This preliminary discussion is then followed by 

a detailed analysis of each study question. 

Does the Program, as implemented, provide for improved access of 

charter schools to capital markets for facilities? 

To determine whether Grantees increased their lending volume after receiving Program funds, 

the research team calculated, for each Grantee, the changes in lending volume in the year before 

and in the year after the Grantee received its grant. The data regarding a Grantee’s lending 

volume in the year before receiving its grant come from interviews. The lending volume in the 

year after receiving a grant was calculated from data provided by Grantees in their Annual 

Performance Reports. 

Grantees may have been able to increase their lending volume even without the Program, if they 

could find other sources of funds for credit enhancements. To determine whether other sources 

were available, the research team interviewed representatives of unsuccessful Program applicants 

to determine how successful these organizations were in attracting funding from non-Program 

sources to support charter school lending. In addition, the research team used information 

provided by unsuccessful Program applicants in interviews about their lending volume 

subsequent to applying for their grant, and compared this amount to their proposed lending 

volume. 

One way the Program can improve access to capital markets is by making loans to charter 

schools that are more risky than charter schools that receive loans from non-Program sources. To 

determine if Grantees served charter schools that are more risky than charter schools that can 

qualify for non-Program sources of funds (such as standard commercial loans) the research team, 

in interviews with representatives of assisted schools, asked whether their charter school had 

previously been denied a loan. The analysis also includes a comparison of the characteristics of 

assisted schools with those that receive financing from non-Program sources. 

The technical assistance that Grantees provide under the Program may help to make loans more 

accessible to charter schools. To determine the extent to which technical assistance funded by the 

Program had such an effect, the research team interviewed Grantee and assisted school 

representatives about the effects (if any) of technical assistance. 

The above approach used a combination of quantitative and qualitative data to examine the 

Program’s effects on charter schools’ access to facility loans. Overall, the Program improved 

charter schools’ access to facilities’ loans. This conclusion is based on an analysis of the 

following issues: 

• Are Grantees supporting higher volumes of lending compared with their lending volumes 

prior to the Program? The six Grantees that made loans directly to charter schools before 
18

receiving their award made a total of $5.3 million in charter school facility loans in the 

year before they received their awards. These same six organizations supported a total of 

$27.7 million of Directly Enhanced loans in the year after receiving their grant. 

According to Grantee representatives, this increase was not possible without Program 

funds. 

• Does the Program bring new lenders and intermediaries into the charter school lending 

market? Commercial lenders and Grantee representatives indicated that lenders, which 

before the Program made few if any charter school loans, are making loans to charter 

schools or investing in loan pools. These lenders are new to charter school lending 

because of the credit enhancements funded by the Program. 

• Were assisted schools previously denied loans, based on interviews with assisted school 

representatives? One school that received a Directly Enhanced loan applied for a loan 

before the Program, but was rejected. Representatives of the other charter schools that 

received Directly Enhanced loans indicated that, before the Program, they were often told 

by commercial lenders not to submit a loan application, because the lender would likely 

deny the loan request. 

• Do schools assisted under the Program exhibit higher levels of credit loss risk to 

lenders? Compared to charter schools that issued bonds, the assisted schools were more 

risky, because they had smaller enrollments and shorter (or nonexistent, in the case of 

start-ups) operating histories. This finding is consistent with the information provided by 

representatives of Grantees and commercial lenders, who indicated that the assisted 

schools were able to receive loans even though they did not meet standard commercial 

underwriting guidelines related to down payment, debt service coverage ratio, and 

number of years in operation. 

• Do Grantees offer new products or support new types of transactions? Grantees offered 

charter schools loans with longer maturities and for different uses (such as leasehold 

improvements) than available from commercial lenders. 

• Are unsuccessful Program applicants able to support lending without the support of the 

Program? Four unsuccessful Program applicants provided information about proposed 

lending targets. These four organizations proposed to support a total of $594 million 

worth of loans. However, only one of the organizations supported any charter school 

loans at all through the end of FY 2005. This organization, which received a New Market 

Tax Credit allocation, supported $7 million worth of charter school loans during the 

period covered by the study. New Market Tax Credits is a federal program that permits 

taxpayers to receive a credit against federal income taxes for making qualified equity 

investments in Community Development Entities, investment funds that serve low- and 

moderate-income communities. 

• Does technical assistance provided by Grantees improve charter schools’ ability to 

secure financing? The representatives of the eight assisted schools interviewed for this 

study indicated that technical assistance did not play a large role in their ability to obtain 

facility loans. Most of the schools indicated that they had board members who were 
19

familiar with the terms of commercial loans. This knowledge may have assisted them in 

determining whether the rates and terms of loans provided through the program were 

reasonable. It is not possible to generalize these findings to all of the assisted schools. 

Overall charter school lending market 

Grantees supported a total of $168 million worth of Directly Enhanced loans between FY 2003 

and FY 2005 (of which $155.6 million was outstanding as of Sept. 30, 2005).10 The volume of 

Directly Enhanced loans increased every year between FY 2003 and FY 2005, from $37 million 

to $78 million (exhibit 5-1). This pattern likely reflects some start-up time required by Grantees 

to establish loan pools and determine requirements for providing credit enhancements. 

The total volume of loans directly enhanced by grantees during the study period was $168 

million. As a comparison, Standard and Poor’s rated $590.7 million of charter school facilities 

bonds through 2006 (Standard and Poor’s 2006). In addition to rated bonds, charter schools have 

raised funds through issuing nonrated debt and also from commercial loans. Commercial lender, 

investment bank and bond insurer representatives estimated that charter schools, since 1999, 

have raised a total of $1 billion (through bonds or loans) from investors for facilities. Given the 

$1 billion estimated cumulative amount of loans made to charter schools since 1999, Directly 

Enhanced loans account for about 17 percent of all loans received or bonds issued by charter 

schools for facilities since the late 1990s. 

 

10 ED reports that all organizations that have received Program funds have supported a total of $407 million worth of 

loans through the end of FY 2006. 
20

Exhibit 5-1: Grantees’ Directly Enhanced loan volume by type of loan between FY 2003 

and FY 2005 

0

10

20

30

40

50

60

70

80

90

FY 03 FY 04 FY 05

Dollar Volume of Directly Enhanced Loans (in $ millions)

Other loans

Leasehold Improvement loans

Acquisition and Construction loans

$36.9

$53.2

$78.0

$33.0

$2.1

$1.9

$49.2

$1.4 $2.6

$61.1

$11.9

$4.9

Exhibit Reads: Grantees supported $36.9 million worth of Directly Enhanced loans in FY 2003, $53.2 million 

worth of Directly Enhanced loans in FY 2004 and $78.0 million of Directly Enhanced loans in FY 2005. Acquisition 

and construction loans accounted for the largest share of any FY’s total. 

Source: Grantee Annual Performance Reports. 

Are grantees supporting higher volumes of lending compared with their lending 

volumes prior to the Program? 

Six Grantees made loans directly to charter schools before receiving their Program grant. These 

six organizations made a total of $5.3 million worth of loans the year before they received their 

grants (exhibit 5-2). The same organizations supported $27.7 million worth of Directly Enhanced 

loans in the year after they received their grants. Two Grantees did not support any charter 

school loans before they received their grants; these two organizations supported $29 million 

worth of Directly Enhanced loans in the year after they received their grants. All of the Grantee 

representatives indicated that the Program funds were critical in allowing them to increase (or 

start) their school lending activity. As a result, it is likely that the increases shown in exhibit 5-2 

resulted from the Program. 
21

Exhibit 5-2: Comparative analysis of Grantee lending volume in the year preceding 

receiving a Program grant to Directly Enhanced lending volume in the year following 

receiving a Program grant 

$5.3

$27.7

$29.0

0

10

20

30

40

50

60

Loan volume in year before receiving

Program grant

Directly Enhanced loan volume in year after

receiving Program grant

Dollar Volume of Directly Enhanced Loans (in $ millions)

Grantees that did not make loans

prior to the Program

Grantees that made loans prior to

the Program

$56.7

Exhibit Reads: Grantees supported $56.7 million worth of Directly Enhanced loans in the year after they received 

their grant. Of this total, Grantees that made loans directly to charter schools before receiving their grant supported 

$27.7 million worth of Directly Enhanced loans, $22.4 million greater than the amount of charter school loans these 

Grantees made in the year before they received their grant. 

Sources: 1. Grantee interviews. 

 2. Grantee Annual Performance Reports. 

Are unsuccessful Program applicants able to support lending without the support 

of the Program? 

Overall, unsuccessful Program applicants were largely unable to support charter school lending 

without Program funds. Representatives of four of the five unsuccessful Program applications 

indicated that they did not seek funding to support charter school lending from non-Program 

sources because they believed that such sources were unavailable. Only one of the unsuccessful 

Program applicants supported any charter school loans at all through the end of FY 2005. This 

organization, which received a New Market Tax Credit allocation, supported $7 million worth of 

charter school loans during the period covered by the study.11 

 

11 The New Markets Tax Program is a federal program that permits taxpayers to receive a credit against federal 

income taxes for making qualified equity investments in designated Community Development Entities (CDEs). 

Substantially all of the qualified equity investment must in turn be used by the CDE to provide investments in low-
22

Four of the five unsuccessful Program applicants proposed specific lending volume targets in 

their application. Collectively, these four organizations proposed to support a total of $594 

million worth of loans. The volume of lending supported by the sampled unsuccessful Program 

applicants was much lower than the level of lending supported by the Grantees. Between FY 

2003 and FY 2005, the Grantees supported a total of $168 million of Directly Enhanced loans. 

For the same period, the nine Grantees proposed to support a total of $272.5 million worth of 

charter school facility loans. Overall, Grantees supported 62 percent of the Directly Enhanced 

loans (in dollar volume) that they proposed in their applications (exhibit 5-3). 

This relatively low level of charter school lending (both in absolute terms and as a proportion of 

proposed lending volume) supported by unsuccessful Program applicants could be the result of 

differences between the institutional capacity of these organizations and the Grantees. The 

unsuccessful Program applicants were selected in a way to minimize this potential for bias; only 

those unsuccessful Program applicants who received a score of at least 45 when their application 

was evaluated were sampled. Moreover, the unsuccessful Program applicants, even had they 

received a grant, may not have met their relatively ambitious targets. 

Exhibit 5-3: Comparison of proposed and actual Directly Enhanced lending volume 

between FY 2003 and FY 2005 for four unsuccessful Program applicants and Grantees 

Proposed 

lending volumea

Actual lending 

volume between FY 

2003 and FY 2005b Difference 

Percentage of 

actual to 

proposed 

volume 

Four 

unsuccessful 

Program 

applicants $594,000,000 $7,000,000 -$587,000,000 1.0%

Grantees $272,515,000 $168,157,315 -$104,357,685 62.0%

Exhibit Reads: Four organizations that unsuccessfully applied for the Program proposed that they would support 

$594 million worth of loans with their Program funds. Without the Program funds these Grantees supported only $7 

million worth of loans. Grantees proposed to support $272.5 million worth of loans, and actually supported $168.2 

million of Directly Enhanced loans. This suggests that organizations that did not get Program funds were unable to 

find other sources of support for charter school lending. 

Sources: a. For unsuccessful Program applicants: unsuccessful applicant’s proposal. Exhibit shows the total 

proposed amount of lending for the entire grant. Timeframes vary by applicant. For Grantees: 

Performance Agreements. 

b. For unsuccessful Program applicants: unsuccessful Program applicant interview. For Grantees: Annual 

Performance Reports. Exhibit shows the total actual lending volume of directly enhanced loans. 

Nonetheless, the large differences in the amount of lending supported by unsuccessful Program 

applicants and the Grantees suggest that the Program funds provide credit enhancement funding 

that is not readily available from other sources, and so the increased lending supported by the 

Grantees can be attributed to the Program. Of course, this conclusion is subject to the caveat that 

 income communities. The credit provided to the investor totals 39 percent of the cost of the investment and is 

claimed over a seven-year credit allowance period.
23

the experiences of the unsuccessful Program applicants interviewed for this study are similar to 

other organizations that seek funding to support charter school lending. 

Assisted schools’ ability to qualify for loans before the Program 

Assisted school representatives indicated that they were unable to qualify for loans before they 

received their Directly Enhanced loan. As detailed below, one of the assisted schools had its loan 

application denied. More commonly, though, lenders told assisted school representatives that 

they should not apply for a loan because it was unlikely to be approved. 

One of the assisted charter schools interviewed for this study submitted a facilities loan 

application to a commercial lender before applying for a loan from a Grantee. According to that 

interviewee, the school’s staff started discussions with three local lenders in late 2002. Some of 

these lenders indicated that they were interested in making a loan to the school, and subsequently 

the charter school submitted an application to one lender in early 2003. After several months, the 

lender had not made a decision regarding the loan application, despite repeated queries from the 

school. 

Representatives of the other assisted schools interviewed for this study indicated that lenders, 

without the credit enhancements offered under the Program, were unwilling even to consider an 

application for a facilities loan. According to these representatives, their charter school either did 

not approach a lender because they knew that the school could not meet standard commercial 

loan underwriting requirements or was discouraged, after preliminary discussions with a 

commercial lender, from submitting an application. 

One representative of an assisted charter school indicated that the school started to explore 

potential sources of facilities loans around 2000. Given the attitude of commercial lenders in the 

area, this interviewee indicated that the school “did not hold out a lot of hope that a commercial 

bank would [provide] a loan.” The reason, according to this interviewee, was that commercial 

lenders did not understand, as of 2000, how charter schools operated and how they were 

financed. 

Some of the assisted schools initiated preliminary discussions with lenders who expressed an 

interest in making a charter school facilities loan. After these preliminary discussions, however, 

the lenders contacted by these charter schools either discouraged the school from submitting a 

loan application or denied their loan application. One school had a prominent investment banker 

as a board member. This board member, through personal contacts, was able to schedule 

meetings with senior executives of several large commercial banks. These senior executives 

expressed an interest in making a loan to the charter school and referred the charter school’s 

representatives to loan officers, who evaluated the school’s loan application. Despite the referrals 

from senior executives, these loan officers, after examining the financial resources of the school, 

told the school’s representatives that they would not approve an application submitted by the 

school. 

One assisted school initiated discussions with a Grantee that makes loans directly to charter 

schools before the Grantee received a Program grant. This lender’s local representative told the 

charter school that its application was too risky. Once the lender received a grant under the 

Program, however, it made a loan to the school. In another case, an assisted school identified a 
24

local lender who expressed interest in making a loan; however, after further conversations with 

representatives of the charter school, the lender indicated that it would make a loan only if the 

school obtained a 100 percent guarantee. 

The experiences of the eight assisted schools interviewed for this study indicate that they likely 

would not have received a loan from a commercial lender without the credit enhancement funded 

by the Program. In one case an assisted school submitted an application to a local commercial 

lender, but never received a decision. More commonly, local lenders expressed a preliminary 

interest in making a loan to the charter school, but, according to assisted school representatives, 

discouraged the school from submitting an application after these preliminary conversations 

progressed to more detailed discussions of the school’s financial condition. Some of the assisted 

schools did not expect to receive a loan from a commercial lender, and so did not explore the 

possibility of submitting an application. If the experiences of these eight assisted schools were 

common to all of the 84 schools assisted by Grantees between FY 2003 and FY 2005, it suggests 

that the Program improved charter schools’ access to facilities loans. 

Does the Program bring new lenders and intermediaries into the charter school 

lending market? 

The Program, according to commercial lenders and Grantees, attracted lenders that otherwise 

would not have made charter school loans, and encouraged lenders that already were making 

charter school loans to increase their lending volume. A commercial lender, now an investor in a 

multimillion-dollar loan pool started by a Grantee, indicated that her company made only two 

charter school loans through 2002 due to the difficulties associated with evaluating the quality of 

loan applicants' proposed educational plan and the extent to which proposed plans would 

generate the enrollment levels sufficient to support revenue to make loan payments. This lender 

agreed to participate in a loan pool managed by a Grantee that has the expertise to evaluate 

charter school loan applicants’ educational plans. Another commercial lender, now an investor in 

a large loan pool, indicated that his bank did not fund any charter school loans prior to the 

Program because of renewal risks. Due to the credit enhancement funded by the Program, this 

lender is less concerned about renewal risk. 

This commercial lender indicated that charter school loan applications are difficult to evaluate 

because the lender must assess the quality of the proposed educational plan and the extent to 

which the proposed plan will generate the enrollment levels sufficient to support revenue to 

make loan payments. This lender agreed to participate in a loan pool managed by a Grantee that 

has the expertise to evaluate charter school loan applicants’ educational plans. Another 

commercial lender, now an investor in a large loan pool, indicated that his bank did not fund any 

charter school loans prior to the Program because of renewal risks. Due to the credit 

enhancement funded by the Program, this lender is less concerned about renewal risk. 

Another Grantee’s representative indicated that lenders, at the start of the Program, were 

unfamiliar with charter schools, and so the Grantee’s staff spent time meeting with commercial 

lenders to explain how such schools operated, how they were funded, and how the Program 

mitigated risks associated with loans to such schools. In a change from the early years of the 

Program, this Grantee’s representative indicated that more commercial banks are willing to make 
25

loans to charter schools and that these lenders are starting to adjust their underwriting standards, 

especially related to discounting appraisals when they evaluate charter school facility loan 

applications. 

Overall, the observations of Grantees and commercial lenders, and the experiences of assisted 

schools, suggest that the Program has attracted new lenders who would not have funded charter 

school facilities loans without the credit enhancements made available by the Program. 

Do Grantees offer products or support new types of transactions? 

Representatives of Grantees that made charter school loans before receiving their grant indicated 

that the Program allows them to provide larger loans, with longer terms and higher loan-to-value 

ratios. For example, one of the Grantees made charter school loans from a revolving loan fund 

before receiving a Program grant. The weighted average maturity for loans made with this 

revolving fund could not be greater than 3.5 years, but any one loan could be for a longer or 

shorter term. In addition to this restriction on loan terms, the revolving loan fund could not have 

more than $3 million of outstanding loans at a time. Under the Program, this Grantee established 

a $26 million pool that is available for charter school lending. Compared to its original revolving 

loan fund, the loans made from the $26 million pool are for larger amounts and longer terms. 

Another Grantee that made charter school loans prior to receiving Program funds could not make 

loans to start-up schools. The average size of loans made by the Grantee before the Program was 

below $500,000 and was limited to purchases of existing buildings. With Program funds, this 

Grantee can make larger loans, which can be used for leasehold improvements and construction 

financing. Similarly, another Grantee prior to receiving Program funds did not make leasehold 

improvement loans, and required borrowers to provide a guarantee from its management 

organization. In addition, this organization required a 25 percent down payment from its 

borrower before the Program and a debt service coverage ratio of 1.25. This means that 

borrower’s net operating income had to be 25 percent greater than the borrower’s total debt 

payments, including payments required by the new loan. This Grantee now requires only a 10 

percent down payment and approves loans to charter schools with a debt service coverage ratio 

as low as 1.10. 

Do schools assisted under the Program exhibit higher levels of credit loss risk to 

lenders? 

According to investment bankers, commercial lenders, and a rating agency representative, most 

commercial real estate loans (including those made to charter schools) require a borrower to have 

a down payment of 20 percent and a debt service coverage ratio (which is the ratio of a 

company’s net operating income to total debt payments) of at least 1.20. In addition to meeting 

these financial ratios, the commercial lender and the rating agency interviewee indicated that 

commercial lenders and bond underwriters require charter schools to document a stable threeyear cash flow. The schools assisted under the Program, according to Grantees and the 

representatives of the assisted schools typically do not meet these requirements, and so were 

more risky. 

According to Grantees, Program funds were sometimes used when a charter school does not 

have sufficient funds to make a 20 percent down payment. In a $1 million transaction, for 
26

example, a lender would require a charter school to contribute $200,000 as a down payment, and 

would then make an $800,000 loan. With the credit enhancement, the bank makes a $1 million 

loan. A Grantee can use Program funds to guarantee $200,000 of the $1 million loan in the event 

of a foreclosure and loss from the eventual sale of the property. The guarantee acts as a substitute 

for the down payment, thereby providing the lender with the same level of risk exposure as for a 

loan in which a borrower is able to make a 20 percent down payment. 

Grantees also indicated that Program funds were used so that charter schools could meet lenders’ 

debt service reserve requirements. In such cases, a lender may require a school to deposit funds 

into a reserve account so that the account has six months of loan payments. This requirement 

increases the amount of cash a borrower must have on hand (in addition to any down payment 

requirement) at closing. Grantees, rather than the charter school itself, can use Program funds to 

establish such a reserve fund, and thereby bring the assisted charter school into compliance with 

the lender’s underwriting requirements. 

Grantees that make loans directly to charter schools generally use different underwriting 

standards, with respect to the required down payment, debt service coverage ratio, and years in 

operation, from those used by commercial lenders.12 For example, two Grantees require a 

borrower to provide a 10 percent down payment and a debt service coverage ratio of 1.10, rather 

than the down payment of 20 percent and debt service coverage ratio of 1.20 typically required 

by commercial lenders. Another Grantee that acts as a direct lender indicated, “[We] 

intentionally [do] not have strict policies on criteria such as loan-to-value and debt coverage 

ratios. This flexibility has allowed [Grantees] to adapt creatively to the charter school market. As 

a result, [Grantees have] found ways to implement flexible terms, conditions, and pricing, to 

allow for approval of loans that do not meet more standard criteria.” 

Some charter schools have been able to raise funds by issuing bonds rated by Wall Street rating 

agencies. These schools have a median enrollment of 745 students and, on average, started 

operating in 1997; none of the schools were start-ups (Hitchcock and Breeding 2007). The 

schools that issued rated bonds were very different from those that received loans under the 

Program. Fifteen of the 84 schools that received Directly Enhanced loans between FY 2003 and 

FY 2005 (18 percent) were start-ups. The average enrollment for non start-up schools that 

received Directly Enhanced loans was 346 students at the time the schools received their loan, 

less than half of median enrollment for schools that issued a rated bond. 

These differences indicate that, compared to charter schools that issued bonds, the schools that 

received Directly Enhanced loans were more risky. Despite the higher risk, Grantees used their 

Program funds only once because of a loan delinquency during the study period, and the school 

later reimbursed this Grantee. 

 

12 Grantees that make loans do not use their grant funds to finance loans because this use of grant funds is prohibited 

by the Program’s statute. The loans to charter schools are financed from a loan pool (not the grant) that is credit 

enhanced by the Grantee. 
27

Does technical assistance provided by Grantees improve charter schools’ 

abilities to secure financing? 

Representatives of the Grantees and assisted schools had different perspectives about the effects 

of technical assistance on the charter schools' ability to secure facilities loans. Grantee 

representatives indicated that they provide technical assistance to schools on an as-needed basis. 

Sometimes schools do not ask for technical assistance. Nonetheless, Grantee representatives 

indicated that some schools required their help to assess potential financing options. In some 

cases, Grantee representatives indicated that they participated in negotiations between a school 

and the school’s lender. By offering this type of technical assistance, Grantees indicated that they 

made it possible for charter schools to get facility loans with the most favorable terms and 

conditions possible even for schools that do not have financial expertise. 

The representatives of the assisted schools interviewed for this study indicated that they had 

board members who were familiar with the terms of commercial loans. This knowledge may 

have assisted them in determining if the rates and terms of loans provided through the Program 

were reasonable. As a result, the representatives of assisted schools interviewed for this study 

indicated that the technical assistance offered by Grantees did not play a large role in improving 

access to facility loans. It is possible, however, that schools not interviewed for this study 

benefited from technical assistance, and so these results may not be generalizable to all schools 

that received Directly Enhanced loans. 

Does the Program, as implemented, provide for better rates and terms 

on financing than would otherwise be available? 

To answer the above question, the research team analyzed information regarding rates and terms 

provided by Grantees in their Annual Performance Reports and developed a comparative 

analysis of Directly Enhanced loan rates and terms with appropriate benchmark instruments, 

based on loan purpose. This quantitative analysis was supplemented with information provided 

by Grantees regarding the process that they used to set rates and terms for Directly Enhanced 

loans and how this process differs from before receiving Program grant funds. In addition, the 

analysis of this question includes information provided by assisted schools regarding their 

experiences (if any) with applying for loans before receiving a Directly Enhanced loan. These 

analyses support the following conclusions: 

 

• How do rates and terms offered by the Grantees after the implementation of the Program 

differ from before the implementation of the Program? According to the Grantees, 

Directly Enhanced loan rates and terms from Grantees that made charter school loans 

before the Program were at least the same as, and in some cases better than before the 

Program. Some of these Grantees, in addition to providing better rates and terms, make 

Directly Enhanced loans using more flexible underwriting standards, which allow schools 

that could not receive loans from the Grantee before the Program to qualify for such 

loans. 

• How do the rates and terms of the loans supported by the Program compare with 

comparable term treasury yields? The average interest rate for Directly Enhanced loans 

was 2.42 percentage points greater than comparable term, risk-free Treasury yields. The 
28

average interest rate for Directly Enhanced leasehold improvement loans was 3.23 

percentage points greater than comparable term, risk-free Treasury yields. 

• How do the rates and terms of the loans supported by the Program compare with those of 

loans not supported by the Program? The differences in the average interest rate or 

“spreads” between comparable term Treasury yields and the average interest rates for 

Directly Enhanced acquisition and construction loans and leasehold improvement loans 

were slightly higher than for more standard commercial real estate mortgages made 

during the same period. This difference, according to representatives of Grantees, 

commercial lenders, and rating agencies, is appropriate, because Directly Enhanced loans 

were made to assisted schools that usually did not have enough funds to make the down 

payment typically required for a commercial real estate loan. As a result, Directly 

Enhanced loans were usually more risky than commercial mortgages. 

Are rates and terms offered by the Grantees after implementation of the Program 

different from what they were before implementation of the Program? 

Six Grantees made charter school loans before receiving a grant. According to representatives of 

these organizations, the interest rates and fees charged to assisted schools under the Program 

were lower under the Program than the rates and fees they charged to charter schools before 

receiving a grant. 

One Grantee, for example, indicated that the charter school loans it made before receiving a 

grant had higher interest rates than other types of loans it made, due to the higher level of 

expected losses resulting from charter school loans. A representative of this Grantee indicated 

that it charged interest rates for charter school loans, before receiving its grant, at the maximum 

level that a particular project could bear, given its available cash flow. This Grantee used its 

Program funds to enhance a loan pool that made loans available to charter schools with lower 

interest rates than before the Program. 

Another Grantee operated a relatively small loan pool that was funded by investors prior to 

receiving its grant. Loans made from this pool had an interest rate that was 4.00 percentage 

points greater than the Grantee’s cost of capital. With the grant funds, this Grantee established a 

larger loan pool. The loans funded from this pool have longer terms and carry interest rates that 

were 2.00 percentage points lower than those made from the original loan pool.

A third Grantee indicated that before participating in the Program, it set interest rates for charter 

school loans the same way as for conventional commercial loans. Since participating in the 

Program, this Grantee has offered assisted schools a 0.40 percentage point discount to its typical 

commercial rates. In addition, some of the charter school loans made by this Grantee were 

funded through the New Market Tax Credit program. These loans were made with even lower 

interest rates: 1.50 percentage points lower than charter school loans made without New Market 

Tax Credit funds. 
29

How do the rates and terms of the loans supported by the Program compare with 

benchmarks? 

In this analysis, the interest rates and loan-to-value ratios were calculated for all of the Directly 

Enhanced loans supported by Grantees between FY 2003 and FY 2005. The interest rates were 

compared to the Treasury yields, as of the date the loan was made to the school, for the same 

term. For example, if a seven-year loan is made to a school, that interest rate for that loan is 

compared to the seven-year Treasury yield. The difference between the interest rate for the loan 

made to the school and the Treasury yield is the “spread” between the Directly Enhanced loan 

and a risk-free loan. (Treasury yields are considered to be risk-free, because they carry the full 

faith and credit of the U.S. government.) The spread reflects a “risk premium” that charter 

schools pay in the form of higher interest rates, because they represent a higher credit risk than 

U.S. Treasury bonds. 

The risk-premium for a Directly Enhanced loan was calculated as follows. Assume that a charter 

school received a 10-year Directly Enhanced acquisition or construction loan at an interest rate 

of 7 percent during the same week the yield for a 10-year Treasury was 4.5 percent. In this case 

the spread between the Directly Enhanced loan and its comparable term Treasury yield is 2.5 

percentage points. Spreads were calculated separately for Directly Enhanced acquisition or 

construction and leasehold improvement loans, because leasehold improvement loans are more 

risky, because the lender that makes a leasehold improvement loan does not have a lien on the 

property. 

Two loan-level interest rates and spreads were aggregated into a weighted average coupon 

(WAC) and a weighted average spread (WAS). The WAC is the average interest rate for all 

Directly Enhanced loans and the WAS is the average spread between Directly Enhanced loans 

and comparable term Treasury yields. The WAC for the acquisition and construction loans 

(based on the interest rate at origination if the loan carries a variable interest rate) was 6.1 

percent. This means that Directly Enhanced loans supported under the Program between FY 

2003 and FY 2005 had an average interest rate of 6.1 percent (exhibit 5-4). The interest rates for 

Directly Enhanced acquisition and construction loans varied from a low of 3.25 percent to a high 

of 9.75 percent. 

The WAS for Directly Enhanced acquisition and construction loans between FY 2003 and FY 

2005 was 2.4 percentage points higher than a risk-free Treasury yield of the same term. This 

spread varied (exhibit 5-4). In some cases the Directly Enhanced acquisition and construction 

loan had an interest rate lower than the comparable term Treasury yield (as much as 1.43 

percentage points in one case). The highest spread for a Directly Enhanced acquisition and 

construction loans was 6.54 percentage points greater than the comparable term Treasury yield. 

The 6.89 WAC (or average interest rate) for Directly Enhanced leasehold improvement loans 

was higher than the WAC for Directly Enhanced acquisition and construction loans (exhibit 5-4). 

This is not surprising, since leasehold improvement loans, as discussed earlier, reflect a higher 

level of risk to the lender. The range of interest rates for Directly Enhanced leasehold 

improvement loans was narrower (from 4.65 percent to 8.76 percent) as compared to Directly 

Enhanced acquisition and construction loans. 
30

The WAS (or average spread between the interest rate and comparable term Treasury yield) for 

Directly Enhanced leasehold improvement loans was higher than for acquisition and construction 

loans: 3.23 percentage points versus 2.40 percentage points. The higher WAS for leasehold 

improvement loans, as compared to acquisition and construction loans, also is expected, given 

their higher risk. 

Exhibit 5-4: Weighted average spread and weighted average coupon of Directly Enhanced 

acquisition and construction and leasehold improvement loans supported by Grantees 

between FY 2003 and FY 2005 

6.10%

2.40%

6.89%

3.23%

0% 1% 2% 3% 4% 5% 6% 7% 8%

Weighted Average

Coupon

Weighted Average

Spread

Percent

Leasehold Improvement

loans

Acquisition and Construction

loans

Exhibit Reads: The weighted average coupon for Directly Enhanced leasehold improvement loans supported by 

Grantees between FY 2003 and FY 2005 was 6.89 percent; the weighted average coupon for Directly Enhanced 

acquisition and construction loans for the same period was 6.10 percent. 

Source: Grantee Annual Performance Reports. 

Commercial real estate loans typically are made for an amount that is no more than 80 percent of 

a property’s value. To compare this standard, the research team calculated the weighted loan-tovalue ratio (WLTV) for Directly Enhanced acquisition and construction loans.13 The WLTV for 

all of the Directly Enhanced acquisition and construction loans was 81 percent, ranging from a 

low of 21 percent to a high of 219 percent. On average, Directly Enhanced acquisition and 

construction loans provided funds that were 81 percent of the appraised value of the property that 

was built or acquired, which is in line with typical commercial real estate lending practices. But 

in some cases the Directly Enhanced loan amount was more than twice the value of the property 

 

13 Leasehold improvement loans do not have collateral, and so there is no loan-to-value calculation. 
31

that the assisted school either built or acquired. Such loans may result, according to Grantees, 

from appraisals in areas in which there were very few comparable sales that can be used to 

estimate the value of the property either built or acquired by an assisted school. On the other end 

of the scale, some Directly Enhanced acquisition and construction loan amounts were as little as 

20 percent of the value of the property. 

How do rates and terms of Directly Enhanced loans compare with those without 

Program-funded loans? 

The interest rates for Commercial Mortgage Backed Securities (CMBS) is the best available 

proxy for the interest rates for charter school loans made without credit enhancements funded by 

the Program. According to discussions with rating agencies, Grantee representatives, and 

investment bankers interviewed for this study, most charter schools assisted by the Program 

would not be rated as an investment-grade risk with the criteria used by most bond rating 

agencies. At most, these interviewees agreed, some (and by no means all) of the assisted schools

may have received the lowest investment-grade rating, which is BBB minus. For the most part, 

the interviewees believe that a large share of the assisted schools would be classified as below 

investment-grade risk (BB plus or lower). 

Between August 2003 and August 2004, the interest rates for BBB minus CMBS bonds were 

between 1.60 percentage points and 2.20 percentage points higher than comparable U.S. 

Treasury yields (McDonnell Investment 2004). Recall that the weighted average spread for all of 

the Directly Enhanced acquisition and construction loans under the Program between FY 2003 

and FY 2005 was 2.40 percentage points, with the spread ranging from below 0 to a high of 6.54 

percentage points. The relatively small difference between the WAS for Directly Enhanced 

acquisition and construction loans and spread between BBB minus CMBS and U.S. Treasury 

yields suggests that the rates paid by assisted charter schools for acquisition and construction 

loans were better than they would receive without the Program. 

What is the relative efficiency of different models of service used by 

Grantees? 

Grantees, for the purposes of this study, were categorized as using either a Vertically Integrated 

or Fully Distributed model of service. The Grantees using a Vertically Integrated model of 

service (LIIF, NCBCI, RDF and Self-Help, collectively referred to as Vertically Integrated 

Grantees) typically make loans directly to charter schools with funds from investors. The 

Grantees using a Fully Distributed model of service (America’s Charter and CSDC are 

collectively referred to as Fully Distributed Grantees) use their Program funds to credit enhance 

a loan made by a lender or a bond purchased by an investor. LISC and MassDevelopment use 

elements of both the Vertically Integrated and Fully Distributed models of service, and are 

defined as Mixed Grantees. 

The results detailed below suggest that the Fully Distributed Grantees supported loans relatively 

quickly after receiving their grant, as they often use the enhancement for loans that have already 

been approved by lenders, subject to a credit enhancement. Vertically Integrated Grantees take 

longer to make their loans after receiving their grant because they had to establish the terms and 

conditions for loan pools that they created from funds raised by investors. But, as discussed 

below, Vertically Integrated Grantees supported loans to more risky charter schools than Fully 
32

Distributed Grantees. The efficiency measures presented in exhibit 5-5 and discussed below 

show higher lending volumes and a greater number of schools served and transactions per grant 

dollar for Fully Distributed Grantees compared to Vertically Integrated Grantees. On the other 

hand, as shown in Exhibit 5-6, Fully Distributed Grantees served smaller and more start-up 

schools, both of which are more risky, than Vertically Integrated Grantees.14

As a last note, these results are preliminary and were based on a modest amount of transactions 

from a small number of Grantees. These data cannot provide conclusive evidence that one 

approach is superior to another. Rather, these data suggest that both approaches play a vital role 

in facilitating capital to charter schools that would otherwise not be able to secure financing from 

commercial lenders or through the bond market. 

What are the differences in lending volume and risk of schools assisted between 

different types of models of service? 

The two Fully Distributed Grantees, between FY 2003 and FY 2005, supported $4.4 worth of 

Directly Enhanced loans for each dollar of Program funds received (exhibit 5-5). This perProgram fund volume was more than two times that for Vertically Integrated Grantees, which 

have supported $1.9 worth of Directly Enhanced loans for each dollar of Program grant funds. In 

addition to higher levels of volume, the Fully Distributed Grantees have supported more loans 

than they proposed. Fully Distributed Grantees supported five more Directly Enhanced loans 

between FY 2003 and FY 2005 than proposed, as compared to Vertically Integrated Grantees, 

which supported 27 fewer Directly Enhanced loans than they proposed during the same time 

period. Moreover, Fully Distributed Grantees have assisted nearly two schools for every $1 

million worth of grant funds they received, as compared to about one school per $1 million of 

grant funds received by Vertically Integrated Grantees. 

These differences likely reflect the time needed by Vertically Integrated Grantees to establish 

loan pools after receiving their grants. For example, one Vertically Integrated Grantee makes 

loans with funds raised by a third party through a New Markets Tax Credit Allocation. This 

Grantee indicated that, shortly after receiving its grant in 2003, started negotiations with the 

third. These did not end until late 2005. Now that the agreement is in place to use the New 

Markets Tax Credit funds, this Grantee’s loan volume should increase. The same Grantee 

established another loan pool with investment from foundations and commercial lenders. As with 

the New Market Tax Credit pool, this Grantee spent a considerable amount of time working with 

the pool’s investors to develop guidelines and procedures that were acceptable to all parties. 

 

14 Two Grantees are using a Mixed model of service. Because these two Grantees are using approaches that are not 

similar to each other, the analysis of outcomes between models of service is restricted to analyses of loans made by 

Grantees using either a Vertically Integrated or Fully Distributed model of service. 
33 

Exhibit 5-5: Efficiency measures for Directly Enhanced loans supported by Grantees by model of service bFY 2005 

Model of service 

Efficiency measure 

Fully 

Distributed 

Vertically 

Integrated Mix

Lending Volumes Directly Enhanced loan volume between FY 2003 and FY 2005 for every dollar of Program granta $4.42 $1.92 Reported amount of funds leveraged for every dollar of Program grant $6.52 $2.67 Unpaid principal balance of Directly Enhanced loans as of Sept. 30, 2005, for every dollar of Program grant $4.10 $1.42 Difference between actual and proposed Directly Enhanced lending volume for every dollar of Program grantb

$1.27 more than 

proposed 

$0.21 more than 

proposed

$2.3

than pro

Transactions and Assisted Schools Number of schools that received Directly Enhanced loans between FY 2003 and FY 2005 per million dollar of Program grant 1.90 1.03 Number of students enrolled in schools that received Directly Enhanced loans between FY 2003 and FY 2005 per million dollar of Program grant 439.97 303.93 Difference between actual and proposed number of transactionsc

5 more than 

proposed 

27 fewer than 

proposed

42 fewe

pro

Exhibit Reads: The total volume of Directly Enhanced loans supported per Program grant dollar for Fully Distributed Grantees was $4for Vertically Integrated Grantees and $0.87 for Mixed Grantees. Notes: a. If a lease guarantee was to secure improvement of a site, the worth of the improvement was counted toward the originatio

credit enhanced loan. 

b. Difference between the Proposed and Actual Lending Volumes = [Actual Lending Volume as of Sept. 2005] – [Proposed 

Sept. 2005]. If there was no lending target to be met by Sept. 2005, proposed lending volume was prorated from the lendin2005. For example, if a Grantee proposed to support $10 million in loans from Jan. to Dec. 2005, the proposed lending tardifference by Sept. 2005 would be $7.5 million. 

c. Difference between the Actual and Proposed Number of Assisted Schools = [Actual Number of Assisted Schools as of Se

Number of Assisted Schools as of Sept. 2005]. If there was no target to be met by Sept. 2005, proposed number of was pr

closest to September 2005. For example, if a Grantee proposed to assist 12 schools from Jan. to Dec. 2005, the proposed nused to compute the difference by Sept. 2005 would be 8. 

Source: Grantee Annual Performance Reports. 
34

Vertically Integrated Grantees, supported loans to more risky charter schools as compared to 

Fully Distributed Grantees. The reason may be due in part to the more rigorous underwriting 

standards used by commercial lenders that made loans to charter schools that received credit 

enhancements from Fully Distributed Grantees. Vertically Integrated Grantees, in total, 

supported loans to more start-ups (which were more risky than schools with an established 

operating history) than did Fully Distributed Grantees (exhibit 5-6). Of the 38 schools assisted 

between FY 2003 and FY 2005 by Grantees using a Fully Distributed model of service, three (8 

percent) were start-ups. In comparison, Grantees using a Vertically Integrated model of service 

assisted nine start-up schools during the same period, which was 21 percent of the 43 schools 

they assisted between FY 2003 and FY 2005. 

Exhibit 5-6: Assisted schools’ mean number of months in operation, number of start-up 

schools, number of assisted schools, mean enrollment of schools assisted by Grantees 

between FY 2003 and FY 2005 

 

Fully 

Distributed 

model of 

service 

Vertically 

Integrated 

model of 

service 

Mixed model 

of service Total 

Mean number of months 

that existing assisted 

schools were in operation 

when they received their 

Directly Enhanced loan 39 34 24 37

Number of start-up assisted 

schools 3 9 4 16

Number of students 

enrolled in existing schools 

at time the schools received 

its Directly Enhanced loan 354 309 510 346

Total number of schools 

assisted 

38 43 6 87

Exhibit Reads: Fully Distributed Grantees supported Directly Enhanced loans to schools that were in operation for 

an average of 39 months, compared to 34 months for schools that received their Directly Enhanced loans from 

Vertically Integrated Grantees and 24 months for schools that received their Directly Enhanced loans from Mixed 

Grantees. 

Notes: 1. Fifteen start-up schools received Directly Enhanced loans between FY 2003 and FY 2005. One start-up 

school received loans from two Grantees that operate different models of service. 

 2. Eighty-four schools received Directly Enhanced loans between FY 2003 and FY 2005. Three schools 

received loans from two Grantees operating different model of service. 

Source: Grantee Annual Performance Reports. 

A loan’s risk is directly related to its loan-to-value ratio: the greater the loan amount is relative to 

the value of the collateral, the greater the likelihood that the borrower will default on his/her 

loan. Vertically Integrated Grantees supported acquisition and construction loans with an average 

loan-to-value ratio of 97 percent, as compared to an average 73 percent loan-to-value ratio for 

acquisition and construction loans enhanced by Fully Distributed Grantees. The higher average 
35

loan-to-value ratio for loans supported by Vertically Integrated Grantees suggests that they serve 

more risky charter schools than Fully Distributed Grantees do. 

Leasehold improvement loans, which are more risky than acquisition loans, account for a larger 

share of the Vertically Integrated Grantees’ lending volume as compared to Fully Distributed 

Grantees. Of the 35 Directly Enhanced loans supported by Vertically Integrated Grantees, 13 (37 

percent) were for leasehold improvements. This was slightly more than leasehold improvement 

loans’ share (30 percent) of Fully Distributed Grantees. The average loan amount for Directly 

Enhanced leasehold improvement loans was greater for Fully Distributed Grantees ($752,000) 

than for Vertically Integrated Grantees ($571,000). 

Lenders often charge higher interest rates to more risky borrowers. Given that Vertically 

Integrated Grantees make loans to more risky charter schools than Fully Distributed Grantees, 

one expects that the interest rates charged by Vertically Integrated Grantees would be higher than 

the interest rates charged by Fully Distributed Grantees. The results presented next are consistent 

with this expectation. 

The weighted average spread (WAS) for Directly Enhanced acquisition and construction loans 

supported by Vertically Integrated Grantees was 2.83 percent (exhibit 5-7). The WAS for these 

loans ranged from a minimum of 1.57 percentage points and a maximum of 5.26. The WAS for 

acquisition and construction loans supported by Fully Distributed Grantees was 1.91 percentage 

points (exhibit 5-7), and ranged from a minimum of -1.43 percentage points and a maximum of 

6.54 percentage points. The WAS for Directly Enhanced acquisition and construction loans 

supported by Fully Distributed Grantees was 0.92 percentage points lower than the same types of 

loans supported by Vertically Integrated Grantees. This is consistent with the finding that 

Vertically Integrated Grantees make loans to more risky charter schools, and so charge interest 

rates with a higher spread. 
36

Exhibit 5-7: Weighted average spread and coupon for Directly Enhanced acquisition and 

construction loans supported by Grantees between FY 2003 and FY 2005 by Grantee 

model of service 

5.59%

1.91%

6.82%

2.83%

5.65%

2.09%

0% 1% 2% 3% 4% 5% 6% 7% 8%

Weighted Average

Coupon

Weighted Average

Spread

Percent

Mixed model of service

Vertically Integrated model of service

Fully Distributed model of service

Exhibit Reads: The weighted average coupon for Directly Enhanced acquisition and construction loans supported 

between FY 2003 and FY 2005 by Fully Distributed Grantees was 5.59 percent, compared to 6.82 percent and 5.65 

percent for the same type of Directly Enhanced loans over the same period supported by Vertically Integrated and 

Mixed Grantees, respectively. 

Source: Grantee Annual Performance Reports. 

Fully Distributed Grantees, on average, charged a lower spread over comparable term Treasury 

yields (2.87 percentage points, with a minimum of 1.14 percentage points and a maximum of 

5.37 percentage points) for their leasehold improvement loans as compared to Vertically 

Integrated Grantees (3.68 percentage points, with a minimum of 2.07 percentage points and a 

maximum of 4.70 percentage points). 
37

Exhibit 5-8: Weighted average spread and coupon for Directly Enhanced leasehold 

improvement loans supported by Grantees between FY 2003 and FY 2005 by Grantee 

model of service 

6.59%

2.87%

7.27%

3.68%

5.84%

1.80%

0% 1% 2% 3% 4% 5% 6% 7% 8%

Weighted Average

Coupon

Weighted Average

Spread

Percent

Mixed model of service

Vertically Integrated model of service

Fully Distributed model of service

Exhibit Reads: The weighted average coupon for Directly Enhanced leasehold improvement loans supported by 

Fully Distributed Grantees between FY 2003 and FY 2005 was 6.59 percent, compared to 7.27 percent and 5.84 

percent for the same type of Directly Enhanced loans supported over the same period by Vertically Integrated and 

Mixed Grantees, respectively. 

Source: Grantee Annual Performance Reports. 

The Grantees using a Fully Distributed model of service charge a guarantee fee to charter 

schools for the credit enhancement provided for loans made by a third party. Furthermore, the 

third-party lender often charges an origination fee to assisted schools. The Grantees using a 

Vertically Integrated model of service do not charge assisted schools a guarantee fee, but they 

typically charge origination fees. Therefore, when charter schools work with either type of 

Grantee, they may incur other costs associated with the financing (e.g., origination fees, 

guarantees, and attorney fees). 

It is also possible that assisted schools that receive loans with a credit enhancement from a Fully 

Distributed Grantee may pay more fees, in total, than those receiving loans directly from 

Vertically Integrated Grantees. These higher fees, however, do not mean that the total financing 

costs (which include fees associated with a loan and a loan’s interest rate) for schools that 

receive loans from Fully Distributed Grantees are greater than the total financing costs for loans 

received from Vertically Integrated Grantees. The credit enhancements provided by Fully 
38

Distributed Grantees may result in lower interest rates than loans made by Vertically Integrated 

Grantees, and so result in lower total financing costs. 

Because assisted schools report data regarding only fees incurred by assisted schools that are 

paid to Grantees (and not fees paid to third-party lenders), the data for these costs were not 

available for analysis in this report. Therefore, this report does not include an analysis of fees or 

total finance costs paid by assisted schools. 

Is the Program serving communities with the greatest need for public 

school choice? 

The research team evaluated whether Grantees used selection criteria to choose assisted schools 

that include the following three factors ED uses to evaluate Program applications: 

• The extent to which the applicant selects to serve geographic areas in which a large 

proportion or number of public schools have been identified for improvement, corrective 

action, or restructuring under Title I of the Elementary and Secondary Education Act of 

1965, as amended by the No Child Left Behind Act; 

• The extent to which the applicant selects to serve geographic areas in which a large 

proportion of students perform below proficient on state academic assessments; and 

• The extent to which the applicant selects to serve communities with large proportions of 

students from low-income families. 

To determine whether Grantees selected service areas in need of school choice, the research team 

examined the types of criteria Grantees used to select charter schools, and compared these 

criteria with the same factors that ED uses to evaluate Program applications. To determine 

whether the Grantees made decisions to assist schools that were consistent with their selection 

criteria, the research team examined the demographic characteristics of students enrolled in the 

84 assisted schools and compared these characteristics to students enrolled in charter schools and 

the overall U.S. K–12 student population. The analysis also includes a comparison of the 

economic and demographic characteristics of the Census tracts in which assisted charter schools 

were located relative to the characteristics of the county in which the assisted school was located. 

As detailed below, all but one of the Grantees selects to serve areas that require school choice. In 

addition, Directly Enhanced loans, on average, were made to charter schools in which lower 

income and minority students comprise a larger share of enrollment as compared to all charter 

schools and all U.S. public schools. In addition, the assisted charter schools were located in 

Census tracts with lower median household incomes and a larger share of minority residents than 

the counties in which the schools were located. 
39

Proposed Grantee selection criteria for choosing schools to assist 

Seven of the eight Grantees use selection criteria that include any of the three following factors: 

(1) geographic areas in which public schools need improvement, corrective action, or 

restructuring; (2) geographic areas in which students perform below proficient on state 

assessments; or (3) communities with a large proportion of students from low-income families 

(exhibit 5-9). 

Four Grantees are using selection criteria that include all three factors. Five Grantees are using 

selection criteria that include geographic areas in which schools need improvement, corrective 

action, or restructuring. Six Grantees are using selection criteria that include geographic areas in 

which students are performing below a proficient level. Six Grantees are using selection criteria 

based on the income level of an assisted school’s surrounding area. 

These findings suggest that Grantees were aware of the Program objective to serve communities 

in need of school choice, and have incorporated this objective into their assisted school selection 

criteria. As detailed below, the characteristics of students enrolled in schools assisted by 

Grantees between FY 2003 and FY 2005 and the income of Census tracts in which these schools 

were located indicate that Grantees were using these selection criteria when making Directly 

Enhanced loans. 
40

Exhibit 5-9: Summary of Grantee selection criteria for Directly Enhanced loans 

Grantee 

Geographic areas in 

which public schools 

need improvement, 

corrective action, or 

restructuring 

Geographic areas in 

which students perform 

below proficient level on 

state assessments 

Communities with a 

large proportion of 

students from lowincome families 

America’s Charter Match 

with tcharacschoo

CSDCa Target schools in a 

district where more than 25 percent of public schools have been identified for improvement, based on their inability to meet adequate yearly progress. 

Target schools in a district where more than 50 percent of students do not meet the standard of proficiency on the state assessment. 

Target schools in a district with 50 percent or more of the student population eligible for free or reduced-price lunch. Target schools within communities identified as low income under the New Market Tax Credit program. 

LIIF Open to all charter 

schools in overcrowded and low-performing school districts. 

Open to all charter schools in overcrowded and lowperforming school districts. 

Emphasis on schools in low-income communities. 

Targestate. 
41

Exhibit 5-9: Summary of Grantee selection criteria for Directly Enhanced loans (cont.) 

Grantee 

Geographic areas in 

which public schools 

need improvement, 

corrective action, or 

restructuring 

Geographic areas in 

which students perform 

below proficient level on 

state assessments 

Communities with a 

large proportion of 

students from lowincome families 

LISC Direct 90 percent of the 

assistance supported by the grant to schools in geographic regions with a high proportion of students offered, or projected to be offered, choice under the No Child Left Behind Act (i.e., students residing in areas in which a large proportion of students perform poorly on state academic assessments or in which there are large proportions of low-income students). 

Direct 90 percent of the assistance supported by the grant to schools in geographic regions with a high proportion of students offered, or projected to be offered, choice under the No 

Child Left Behind Act (i.e., students residing in areas in which a large proportion of students perform poorly on state academic assessments or in which there are large proportions of low-income students). 
42

Exhibit 5-9: Summary of Grantee selection criteria for Directly Enhanced loans (cont.) 

Grantee 

Geographic areas in 

which public schools 

need improvement, 

corrective action, or 

restructuring 

Geographic areas in 

which students perform 

below proficient level on 

state assessments 

Communities with a 

large proportion of 

students from lowincome families 

MassDevelopment Use a scoring method 

that gives weights to the location of school in districts in which a public school has been identified for improvement, corrective action, or restructuring under the No Child Left Behind Act. 

Use a scoring method that gives weights to the location of schools in areas in which a large proportion of students perform poorly on state academic assessments. 

Use a scoring method that gives weights to the following: 

• Location in 

communities with large proportions of low-income students; and 

• Location of charter 

school in an economically distressed area. 

Targestate. Use thfunds establschooexisteyears. Use a gives follow

• • • 
43

Exhibit 5-9: Summary of Grantee selection criteria for Directly Enhanced loans (cont.) 

Grantee 

Geographic areas in 

which public schools 

need improvement, 

corrective action, or 

restructuring 

Geographic areas in 

which students perform 

below proficient level 

on state assessments 

Communities with a large 

proportion of students from 

low-income families 

NCBCI Program 2: 

Target at least 70 percent of its funds to poorly performing school districts. 

Program 2: Target at least 70 percent of its funds to poorly performing school districts. 

Program 1: At least 80 percent of the schools that the Grantee will finance have a majority of students who qualify for free or reduced-price lunches. At least 75 percent of the schools in the Grantee’s portfolio will be in low-income areas. Program 2: At least 80 percent of the schools that the funds finance will have a majority of students who qualify for free or reduced-price lunches. 

RDF Target neighborhoods 

where the closest regular public school is identified as being under-performing by the state or as being subject to improvement, corrective action, or restructuring under the No Child Left Behind Act. 

 Target communities with low or 

low-to-median incomes, and students from minority groups. 
44

Exhibit 5-9: Summary of Grantee selection criteria for Directly Enhanced loans (cont.) 

Grantee 

Geographic areas in 

which public schools 

need improvement, 

corrective action, or 

restructuring 

Geographic areas in 

which students 

perform below 

proficient level on 

state assessments 

Communities with a 

large proportion of 

students from lowincome families Oth

Self Helpb Schools serve 

underserved constituencies, such as students with a history of low academic performance. 

 Service high-

by focusing lprimarily, but six southern sCarolina, FloTennessee, TCarolina). Schools serve constituenciecommunities inner city comSchools cannconventional lack substantiThe pledged cthe Charter Sfacility. School is a styoung to have charter renew

Notes: a. 50 percent of assisted schools must meet one of the listed criteria.  b. Assisted schools must be in one of the six states and meet at least one of the remaining criteria. Sources: Grantee Annual Performance Reports and Grantee applications. 
45

Demographic characteristics of assisted schools 

The assisted schools were in 20 states and Washington, D.C. (exhibit 5-10). Arizona had the 

most assisted schools, with 11, followed by California and Washington, D.C., which both had 10 

schools. North Carolina had nine assisted schools and Massachusetts had eight assisted schools. 

Exhibit 5-10: Number of assisted schools, enrollment, and percent of students 

eligible for free and reduced-price lunches by state 

Number of 

assisted schools Enrollment 

Percent of students eligible for 

free and reduced-price lunch 

Arizona 11 2,889 31.7%

California 10 3,615 58.4%

Washington, D.C. 10 2,952 77.3%

North Carolina 9 2,859 68.1%

Massachusetts 8 1,737 35.2%

Indiana 6 1,728 44.0%

New York 6 1,107 82.9%

Minnesota 4 471 62.4%

Colorado 3 940 43.7%

Pennsylvania 3 1,834 83.0%

Florida 2 233 32.2%

Texas 2 699 80.1%

New Jersey 2 576 73.4%

Arkansas 1 410 16.3%

Idaho 1 Not reported N/A

Michigan 1 150 35.3%

Missouri 1 336 36.6%

New Mexico 1 92 0.0%†

Nevada 1 189 91.0%

Tennessee 1 270 76.7%

Oregon 1 75 86.7%

Total 84 23,162 58.9%

Exhibit Reads: Arizona had the largest number of schools (11) assisted by the Grantees between FY 2003 and FY 

2005. 

†

There is only one assisted school in New Mexico. The Grantee of this assisted school reported that no students in 

this school were eligible for free and reduced-price lunches. 

Note: States in this exhibit are presented in the order of the number of assisted schools. 

Source: Grantee Annual Performance Reports geocoded by the authors. 

These five states had nearly 60 percent of all of the schools assisted by the Program and over 60 

percent of all students enrolled in assisted schools. Over half of the students in assisted schools 

were eligible for free and reduced-price lunch. 

The 23,162 students enrolled in the 84 charter schools assisted between FY 2003 and FY 2005 

were more likely to be from lower income and minority families than students enrolled in all 

charter schools and students enrolled in all public schools. Fifty-nine percent of students enrolled 
46

in assisted charter schools were eligible for free or reduced-price lunches, compared to 39 

percent of all U.S. students in public school and 44 percent of all charter school students. 

Students enrolled in assisted schools are more likely to be minorities than those in all charter 

schools and all public schools (exhibit 5-11). African-American students account for 45 percent 

of students in the assisted charter schools compared to 17 percent in U.S. public schools 31 

percent in all charter schools. Hispanic students comprise 29 percent of students in assisted 

charter schools, compared to 22 percent in all charter schools and 19 percent in all U.S. public 

schools. 

Exhibit 5-11: Racial and ethnic composition of students enrolled in schools assisted under 

the Program between FY 2003 and FY 2005, all charter schools, and all U.S. public schools 

21.6 19.4

44.9

30.9

17.1

24.1

41.5

57.7

28.8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Schools assisted by

Grantees between FY

03 and FY 05

All Charter Schools All Public Schools

Type of School

Percentage of Enrollment

White

African-American

Hispanic

Other

2.2 4.6 5.7

Exhibit Reads: The proportion of white students in schools assisted by Grantees between FY 2003 and FY 2005 

was 24 percent; the proportion of such students in all charter schools was 42 percent and in all public schools was 58 

percent. 

Sources: 1. Information related to assisted schools: Grantee Annual Performance Reports. 

2. Information related to all charter and public schools in the United States: Common Core of Data (CCD), 

“Public Elementary/Secondary School Universe Survey,” 2004–05 (Preliminary) at 

http://nces.ed.gov/ccd/bat. 
47

Social and economic characteristics of counties containing assisted schools 

Using address information, each assisted school was geocoded to a Census tract and county. The 

Census tracts, in which assisted schools were located, on average, had a lower socioeconomic 

status than the county in which the schools were located. As of 2000, the average median 

household income for tracts that contain assisted schools was $36,000, or 83 percent of the 

average $43,000 median household income of all assisted schools’ counties. The variation of the 

median household income of Census tracts for assisted schools is illustrated in the maps 

presented in exhibit 5-12 through exhibit 5-15. These exhibits map the location of all schools 

assisted by Grantees in five counties—Los Angeles (which contains the city of Los Angeles), 

Hennepin County (which contains Minneapolis), Ramsey County (which contains St. Paul), 

Philadelphia (which is a county equivalent and contains the city of Philadelphia) and 

Washington, D.C. (the county equivalent that contains the city). These counties had the largest 

number of assisted schools (24 of 84 schools) among the 47 counties that contain a school 

assisted by a Grantee between FY 2003 and FY 2005. The maps also show the location of all 

charter schools and public schools in the county. In addition to the locations of the three types of 

schools, the maps show the median household income of all the Census tracts in a county as of 

the 2000 Census. 

Assisted schools in Los Angeles County were mostly in the central portion of the county, which 

contains the lowest income Census tracts (exhibit 5-12). Charter schools in Hennepin County 

(which contains Minneapolis) and Ramsey County (which contains St. Paul) were generally in 

Census tracts with median household incomes within the lowest quintile in the area (exhibit 5-

13). Charter schools in Philadelphia were largely in the southern portion of the city, which 

contains Census tracts generally with a median household income within the middle quintile 

(exhibit 5-14). The assisted charter schools were also located in the northeastern and central 

portions of the city (where the median household incomes were similar to southern Philadelphia), 

in which there were no other charter schools. The assisted schools within Washington, D.C., 

were in areas with a range of incomes, from the southeastern part of the city, which has Census 

tracts in the lowest income quintile, to areas in the northwestern portion, which has higher 

income levels. 
48

Exhibit 5-12: The median household income, as of 2000, for Los Angeles County Census 

tracts, the location of schools assisted by Grantees between FY 2003 and FY 2005, all 

charter schools, and all public schools 

Exhibit Reads: Schools in Los Angeles County assisted by Grantees between FY 2003 and FY 2005 were in 

Census tracts that had a median household income, as of the 2000 Census, in the lowest quintile. 

Sources: 1. Information related to assisted schools: Grantee Annual Performance Reports. 

2. Information related to all charter and public schools in United States: Common Core of Data (CCD), 

“Public Elementary/Secondary School Universe Survey,” 2004–05 (Preliminary) at 

http://nces.ed.gov/ccd/bat. 
49

Exhibit 5-13: The median household income, as of 2000, for Hennepin County and Ramsey 

County Census tracts, the location of schools assisted by Grantees between FY 2003 and 

FY 2005, all charter schools, and all public schools 

Exhibit Reads: Schools in Hennepin (Minneapolis) and Ramsey (St. Paul) counties assisted by Grantees between 

FY 2003 and FY 2005 were in Census tracts that had a median household income, as of the 2000 Census, in the 

lowest quintile. 

Sources: 1. Information related to assisted schools: Grantee Annual Performance Reports. 

2. Information related to all charter and public schools in the United States: Common Core of Data (CCD), 

“Public Elementary/Secondary School Universe Survey,” 2004–05 (Preliminary) at 

http://nces.ed.gov/ccd/bat. 
50

Exhibit 5-14: The median household income, as of 2000, for Philadelphia County Census 

tracts, the location of schools assisted by Grantees between FY 2003 and FY 2005, all 

charter schools, and all public schools 

Exhibit Reads: Schools in Philadelphia County assisted by Grantees between FY 2003 and FY 2005 were in 

Census tracts that had a median household income, as of the 2000 Census, in the lowest quintile. 

Sources: 1. Information related to assisted schools: Grantee Annual Performance Reports. 

2. Information related to all charter and public schools in the United States: Common Core of Data (CCD), 

“Public Elementary/Secondary School Universe Survey,” 2004–05 (Preliminary) at 

http://nces.ed.gov/ccd/bat. 
51

Exhibit 5-15: The median household income, as of 2000, for Washington, D.C., Census 

tracts, the location of schools assisted by Grantees between FY 2003 and FY 2005, all 

charter schools, and all public schools 

Exhibit Reads: Schools in Washington, D.C. assisted by Grantees between FY 2003 and FY 2005 were in Census 

tracts that had a median household income, as of the 2000 Census, in the lowest quintile. 

Sources: 1. Information related to assisted schools: Grantee Annual Performance Reports. 

2. Information related to all charter and public schools in the United States: Common Core of Data (CCD), 

“Public Elementary/Secondary School Universe Survey,” 2004–05 (Preliminary) at 

http://nces.ed.gov/ccd/bat. 

Consistent with lower household incomes, assisted schools were located in Census tracts with, 

on average, higher poverty rates than the counties in which they were located (exhibit 5-16). 

Overall, the average poverty rate for tracts in which assisted schools were located was 20.6 

percent as compared to 13.8 percent for the counties in which assisted schools were located. Also 

consistent with lower incomes, the proportion of residents on public assistance in tracts with 

assisted schools (6.7 percent) was greater than the overall proportion of counties in which 

assisted schools were located (4.2 percent). 

Assisted schools were located in tracts in which the proportion of residents younger than 18 was 

about the same as the counties in which they were located, but where the proportion of minority 

residents was greater. White, non-Hispanic account for about one-half of residents in tracts that 
52

contain assisted schools, compared with slightly more than two-thirds of residents in counties 

that contain assisted schools (exhibit 5-16). 

Exhibit 5-16: Selected characteristics of Census tracts and counties, as of the 2000 U.S. 

Census, with schools assisted by Grantees between FY 2003 and FY 2005 

20.6%

26.1%

6.7%

18.3%

20.3%

29.8%

51.9%

13.8%

26.5%

4.2%

18.4%

15.8%

16.4%

68.7%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Percent of households below poverty rate

Percent of Population Age 18 and Under

Percent of Households Receiving Public

Assistance

Percent other race

Percent Hispanic

Percent African-American

Percent White

Percent

Counties with assisted schools

Tracts with assisted schools

Exhibit Reads: The average poverty rate for Census tracts in which assisted schools were located was 20.6 percent. 

The average poverty rate for counties in which assisted schools were located was 13.8 percent. 

Note: The data used to prepare the information in this exhibit are presented in Appendix D. 

Sources: 1. Location of schools: Grantee Annual Performance Reports geocoded by the authors. 

2. Characteristics of Census tracts and counties in which assisted schools were located: U.S. Census 2000 
53

Use of loan funds by assisted schools 

The following discussion provides profiles of the eight assisted schools interviewed for this 

study. These profiles offer more details about the schools assisted by the Program, and how these 

schools use loans made possible by the Program to improve their facilities. The profiles include 

information provided by school representatives during interviews with the research team and so, 

to retain confidentiality, the school names are not included. 

Each profile includes information about the school’s enrollment, demographic characteristics of 

the school’s county, and the level of educational need in the school’s county, as defined by the 

Educational Needs Index.15 The Educational Needs Index, which uses county-level Census data 

to classify that area’s level of educational need, is a county-level study of educational, economic, 

and population pressures that influence educational policy and planning at local, regional, and 

state levels. 

The experiences of the eight charter schools illustrate how the Program assists charter schools in 

overcoming common facilities-related challenges. In nearly every case the assisted charter school 

did not have space that could accommodate enrollment growth or allow the school to deliver a 

complete range of educational services. Because the assisted schools did not have a long 

operating history (none of the eight schools were in operation for more than four years before 

receiving its loan), or were start-ups, they could not qualify for a loan from a commercial lender. 

In some cases the assisted schools received their loan directly from a Grantee. Other schools 

used Program-funded enhancements so that they could be approved for a commercial loan or sell 

a bond. In all eight cases the credit enhancement allowed the Grantee to make financing possible 

for the assisted school. 

 

15 The Educational Needs Index (ENI) includes 15 county-level variables that affect participation rates in 

postsecondary education, educational attainment levels, employment patterns, and socioeconomic status. Through an 

econometric model that uses these data, the ENI classifies counties as “most critical” when relatively poor 

conditions of under-education and economic challenges are compounded by population growth and shifting 

demographics toward youths or at-risk minority groups. http://www.educationalneedsindex.com/methodology.php. 
54

Assisted School #1 

Assisted by: NCBCI 

School characteristics when the loan was closed (FY 2003): 

Years in operation: 5 

Enrollment: 192 

Grades served: Grades 5 to 8 

Student racial composition: 0% White 

52% African-American 

0% Asian 

0% American Indian 

48% Hispanic 

Percent of students eligible for free or reducedprice lunches: 90% 

Percent of students in special education: 5% 

Percent of students with limited English 

proficiency: 0% 

 

County characteristics (in 2000): 

County: Bronx, N.Y. 

Educational Needs Index: Most critical 

Median household income: $29,364 

Percent of residents in poverty: 31% 

Percent of households receiving public 

assistance: 15% 

Racial/ethnic composition: 30% White 

36% African-American 

1% American Indian 

34% other race 

Percent of residents Hispanic: 48% 

Percent of population 18 or younger: 31% 

 

Use of Directly Enhanced loan proceeds: 

During the first four years, the school operated out of a space that it rented from a Catholic 

church. The church space was sufficient for the school’s enrollment of 100 students at the time, 

but did not allow for any enrollment growth. The school leased a parcel of land from the City of 

New York and completed plans for a new campus to accommodate more students than could be 

served in its rented space. The school developed plans for an $18 million, 40,000-square-foot 

facility. Because it was unable to raise all of the funds required to build the facility, the school 

developed the property in two phases. The school used its $4 million Directly Enhanced loan to 

complete the first phase. The school, based on its successful track record, was able to raise $12 

million in contributions to support the second phase of construction. The campus is now 

complete and will eventually accommodate 700–800 students in grades 5–12. 
55

Assisted School #2 

Assisted by: LISC 

School characteristics when the loan was closed (FY 2003): 

Years in operation: Start-up 

Enrollment: Will serve 400 students at full enrollment 

Grades served: Will serve grades 6–8 at full enrollment 

Student racial/ethnic composition: Not available 

Percent of students eligible for free or reducedprice lunches: Not available 

Percent of students in special education: Not available 

Percent of students with limited English 

proficiency: Not available 

 

County characteristics (in 2000): 

County: Los Angeles, Calif. 

Educational Needs Index: Most critical 

Median household income: $46,493 

Percent of residents in poverty: 18% 

Percent of households receiving public 

assistance: 6% 

Racial/ethnic composition: 49% White 

10% African-American 

1% American Indian 

41% other race 

Percent of residents Hispanic: 45% 

Percent of population 18 or younger: 29% 

 

Use of Directly Enhanced loan proceeds: 

The school was founded in August 2000 by a local community development corporation that 

operates in one of the poorest and most densely populated neighborhoods in Los Angeles. The 

school was operating an elementary school for a year prior to seeking a middle school charter. 

The $1.5 million Directly Enhanced loan financed a $4 million middle school. The school, 

based on its track record and financial strength, is now able to refinance the Directly Enhanced 

loan with a conventional commercial loan without any credit enhancement. The school, when it 

refinances the Directly Enhanced loan, will take cash out to construct a preschool for 240 fouryear-olds. 
56

Assisted School #3 

Assisted by: America’s Charter 

School characteristics when the loan was closed (FY 2003): 

Years in operation: 3 

Enrollment: 180 

Grades served: Pre-K to 7 

Student racial/ethnic composition: 29% White 

46% African-American 

22% Hispanic 

0% Asian 

0% American Indian 

Percent of students eligible for free or reducedprice lunches: 49% 

Percent of students in special education: 15% 

Percent of students with limited English 

proficiency: 6% 

 

County characteristics (in 2000): 

County: Washington, D.C. 

Educational Needs Index: Not available 

Median household income: $41,625 

Percent of residents in poverty: 20% 

Percent of households receiving public 

assistance: 6% 

Racial/ethnic composition: 31% White 

60% African-American 

0% American Indian 

9% other race 

Percent of residents Hispanic: 8% 

Percent of population 18 or younger: 22% 

 

Use of Directly Enhanced loan proceeds: 

The school was founded in 2000 by a group of parents working with teachers and other 

education professionals to create a school dedicated to the best practices in education reform. 

The school opened in the fall of 2000 in a rented space over a drugstore. Because this space was 

not adequate, the school purchased a former church. This space needed to be remodeled from a 

12,000 square-foot church into a 32,000 square-foot educational facility. The total costs 

associated with this project were $6.25 million. The school financed $4.85 million from bonds 

issued by the Washington, D.C., government. The credit enhancement was necessary because 

the property was a single-purpose entity, and so the appraised value was not 85 percent of the 

value of the bond, which investors required to purchase the bond. The school raised the 

remaining $1.4 million from donations. The facility, according to a representative of the school, 

is essential to provide educational services and is helpful in attracting students and retaining 

faculty. 
57

Assisted School #4 

Assisted by: Self-Help 

School characteristics when the loan was closed (FY 2003): 

Years in operation: 2 

Enrollment: 154 

Grades served: K to 4 

Student racial/ethnic composition: 60% White 

27% African-American 

3% Asian 

1% American Indian 

10% Hispanic 

Percent of students eligible for free or reducedprice lunches: Not available 

Percent of students in special education: 0% 

Percent of students with limited English 

proficiency: 1% 

 

County characteristics (in 2000): 

County: Durham, N.C. 

Educational Needs Index: Less critical 

Median household income: $41,333 

Percent of residents in poverty: 13% 

Percent of households receiving public 

assistance: 3% 

Racial/ethnic composition: 51% White 

39% African-American 

0% American Indian 

9% other race 

Percent of residents Hispanic: 8% 

Percent of population 18 or younger: 24% 

 

Use of Directly Enhanced loan proceeds: 

The school received its charter in February 2002 and started operations in July 2003. It operates 

in Durham, N.C., in a neighborhood that is experiencing reinvestment and economic 

development. The school’s staff took a planning year between February 2002 and July 2003. 

The school received its Directly Enhanced loan in two phases. In the first phase the school used 

$415,000 to renovate a space that the school was leasing in an old Army Reserve building. The 

renovations included installation of bathrooms, a firewall, and other changes necessary to get 

the building up to code. At the time, the school had a long-term lease and served 100 K–2 

students on only the first floor of a 28,000 square-foot building. Given projected enrollments, 

the school could operate on the first floor for two years. To accommodate more enrollment 

growth, the school received the balance of the Directly Enhanced loan and with the proceeds 

bought the building and renovated the second floor to accommodate K–5 students. 
58

Assisted School #5 

Assisted by: CSDC 

School characteristics when the loan was closed (FY 2004): 

Years in operation: 1 

Enrollment: 82 

Grades served: 9 to 10 

Student racial/ethnic composition: 48% White 

6% African-American 

4% Asian 

6% American Indian 

37% Hispanic 

Percent of students eligible for free or reducedprice lunches: 60% 

Percent of students in special education: 5% 

Percent of students with limited English 

proficiency: 0% 

 

County characteristics (in 2000): 

County: Pima, Ariz. 

Educational Needs Index: Most critical 

Median household income: $40,831 

Percent of residents in poverty: 15% 

Percent of households receiving public 

assistance: 3% 

Racial/ethnic composition: 75% White 

3% African-American 

3% American Indian 

19% other race 

Percent of residents Hispanic: 29% 

Percent of population 18 or younger: 26% 

Use of Directly Enhanced loan proceeds: 

The school was a start-up organization at the time it received its Directly Enhanced loan. The 

school identified commercial space in which to open for the 2004–05 school year. It secured a 

leasehold improvement loan from a bank to complete $500,000 worth of renovations to a 

23,000-square-foot property that was a shop in the 1940s. The school leased two full stories and 

a basement. The school funded these improvements with a $400,000 Directly Enhanced loan 

and $100,000 raised from donors. A credit enhancement was necessary because the building’s 

owner would not permit the lender that made the leasehold improvement loan to have a lien on 

the property. A Grantee pledged a certificate of deposit as partial collateral for the loan, which 

allowed the lender to make the initial $400,000 loan. With the $500,000, the school was able to 

complete improvements to the property’s upper floor and created, in a 9,000 square-foot area, 

eight classrooms and a cafeteria. In the remaining parts of the building, the school has 

completed infrastructure improvements so that the property conforms to local building codes. 

The school is gearing up for a Phase II project in which it would renovate the basement and first 

floor for the school’s use. The cost of this phase is expected to be about $400,000. 
59

Assisted School #6 

Assisted by: RDF 

School characteristics when the loan was closed (FY 2005): 

Years in operation: 1 

Enrollment: 180 

Grades served: 7 to 9 

Student racial/ethnic composition: 43% White 

55% African-American 

3% Asian 

0% American Indian 

8% Hispanic 

Percent of students eligible for free or reducedprice lunches: 43% 

Percent of students in special education: 21% 

Percent of students with limited English 

proficiency: 3% 

 

County characteristics (in 2000): 

County: Middlesex, Mass. 

Educational Needs Index: Less critical 

Median household income: $64,854 

Percent of residents in poverty: 7% 

Percent of households receiving public assistance: 2% 

Racial/ethnic composition: 86% White 

3% African-American 

0% American Indian 

11% other race 

Percent of residents Hispanic: 5% 

Percent of population 18 or younger: 24% 

 

Use of Directly Enhanced loan proceeds: 

The school started operations in August 2005 in Cambridge, Mass. Prior to starting operations, 

the school’s staff looked for space in that city. Due to a low vacancy rate, few properties were 

available for rent. The school eventually found 30,000 square feet of space to lease: 20,000 

square feet in one building and 10,000 square feet in a building across a parking lot from the 

larger space. 

The school received a $750,000 Directly Enhanced loan even though it was a start-up 

organization. The Grantee provided the loan to be disbursed in two phases. In the first phase, 

the school received $445,000 from the Grantee as part of a $550,000 project to improve the 

larger 20,000 square-foot space. The school operates in classrooms and administrative offices 

on four floors of the 20,000 square-foot building. This layout, according to a school 

representative, provides a different spatial experience for students. The school will use the 

$235,000 balance of the Directly Enhanced loan to renovate the 10,000 square foot building. 
60

Assisted School #7 

Assisted by: CSDC 

School characteristics when the loan was closed (FY 2003): 

Years in operation: 4 

Enrollment: 340 

Grades served: K to 8 

Student racial/ethnic composition: 84% White 

10% African-American 

1% Asian 

1% American Indian 

2% Hispanic 

Percent of students eligible for free or reduced-price lunches: 22% 

Percent of students in special education: 16% 

Percent of students with limited English proficiency: 0% 

 

County characteristics (in 2000): 

County: Buncombe, N.C. 

Educational Needs Index: Less critical 

Median household income: $36,124 

Percent of residents in poverty: 11% 

Percent of households receiving public assistance: 3% 

Racial/ethnic composition: 89% White 

7% African-American 

0% American Indian 

3% other race 

Percent of residents Hispanic: 3% 

Percent of population 18 or younger: 23% 

 

Use of Directly Enhanced loan proceeds: 

The school was founded in 1999 with the assistance of a $36,000 start-up grant from the state of 

North Carolina. These funds were used to place a deposit on a space in a local strip mall. During 

the time the school was in this space, it continued to look for a permanent location. A local bank 

had a lien on a vacant school property owned by a parochial school that had relocated to another 

site. The bank that had a lien on the property was willing to make a loan to the charter school for 

an amount equivalent to 80 percent of the purchase price. 

The school did not have sufficient resources for the remaining 20 percent. As a result, a Grantee 

provided a credit enhancement for a loan from the lender with a lien on the property, and the 

school received another loan, subordinate to the Directly Enhanced loan, for the remaining 

amount of the $1.6 million purchase price. The school, once it relocated from the strip mall, 

expanded from 270 to 364 students. In addition, the space allows the school to offer an on-site 

daycare for staff. The new space allows for more extensive sports facilities, including a soccer 

field and playgrounds. In addition, the school now has science labs and an expanded computer 

lab. Moreover, the new location is in a park-like campus setting, which allows the school to 

provide hands-on classes related to its environmental curriculum.
61

Assisted School #8 

Assisted by: NCBCI 

School characteristics when the loan was closed (FY 2003): 

Years in operation: 4 

Enrollment: 916 

Grades served: 1 to 12 

Student racial/ethnic composition: 1% White 

98% African-American 

0% Asian 

0% American Indian 

1% Hispanic 

Percent of students eligible for free or reducedprice lunches: 75% 

Percent of students in special education: 4% 

Percent of students with limited English 

proficiency: 0% 

 

County characteristics (in 2000): 

County Philadelphia, Pa. 

Educational Needs Index: Most critical 

Median household income: 23% 

Percent of households receiving public 

assistance: 

8% 

Racial/ethnic composition: 45% White 

43% African-American 

0% American Indian 

12% other race 

Percent of residents Hispanic: 9% 

Percent of population 18 or younger: 27% 

 

Use of Directly Enhanced loan proceeds: 

Located in Philadelphia, the school, prior to receiving its Directly Enhanced loan from a 

Grantee, was renting space for five years. The school used the loan proceeds to purchase the 

building it was renting and a parcel next to the building, on which it constructed classrooms 

with modular building technology. The school financed the entire $2.1 million cost from a 

Grantee loan. 

The space created with the loan proceeds allowed the school to add additional science labs and 

classrooms. Seniors use the labs for projects. In addition, the additional space allows the school 

to have a mini-courtroom that students who are taking classes in the school’s law curriculum 

use under supervision of a lawyer who provides instruction. 

Note: Level of educational needs of county provided by www.educationalneedsindex.com. 

Sources: Grantee Annual Performance Reports, assisted school Web sites, and interviews. 
62

What is the evidence of innovative methods? 

The Program emphasizes that organizations that receive grants will use innovative methods to 

facilitate loans to charter schools. There is no industry standard as to what constitutes an 

innovative method. However, one study (Hassel and Esser 2004) identified five types of 

innovative methods that provided a useful framework for describing the approaches that assisted 

schools used to either acquire or construct their own facility or to improve a leased facility: 

1. Direct borrowing on the private market; 

2. Sale or lease of existing facilities; 

3. Cost-saving solutions such as space sharing with community agencies and higher 

education institutions; 

4. New uses of community resources or use of distance education; and 

5. New forms of organizational arrangements such as establishing real estate trusts and 

intermediaries. 

The information used in this analysis was drawn from the loan-level data provided by Grantees 

in their Annual Performance Reports and the observations of Grantee and representatives of 

assisted schools.

Direct borrowing on the private market 

As discussed, Grantees and assisted school representatives reported that assisted schools 

typically did not have sufficient equity or a long enough operating history to meet the 

underwriting standards of commercial lenders and bond issuers. Grantees that operate a Fully 

Distributed model provide credit enhancements to make loans more attractive to third-party 

lenders, oftentimes commercial banks. As a result, charter schools assisted by Program Grantees 

were able to borrow directly from the private market. 

Grantees, with their Program funds, were able to attract capital from sources that have not been 

widely used to support charter school lending. One Grantee makes Directly Enhanced loans on 

behalf of a third party, which received a $36 million New Market Tax Credit allocation. This 

relationship allows charter schools to receive loans funded by the New Market Tax Credit 

program, which was a new source of capital. Another Grantee has been able to combine the 

credit enhancements available under the Program with the U.S. Department of Agriculture’s 

Community Facilities program, which makes available credit enhancements in the form of a 

guarantee of 90 percent of the loan amount for public schools (among other uses) in communities 

with populations under 20,000 (U.S. Department of Agriculture). 
63

Cost-saving solutions such as space sharing 

In some cases Grantees used innovative real estate solutions that created opportunities for charter 

schools to share space until they could purchase a building. A Grantee negotiated an agreement 

to purchase a 23,500 square-foot facility and obtained the necessary $2.425 million to renovate 

the building and turn it into classrooms, administrative offices, and a multipurpose space for two 

charter schools that operated in the building. One school moved into its own facility, and the 

other school will purchase the property soon. 

New forms of organizational arrangements such as real estate trusts and 

intermediaries 

Grantees had not yet established new intermediaries or real estate investment trusts, but the 

volume of Directly Enhanced lending made by the Grantees has now reached sufficient size that 

some of them, along with investment banks, are exploring the possibility of establishing a 

cooperatively owned, nonprofit conduit. This entity would purchase Directly Enhanced loans, 

aggregate them, and create asset-backed securities that use the cash flows from assisted charter 

school loan repayments to finance bonds issued by the conduit. In addition, Grantees are 

exploring the possibility of creating a multistate bond issuer, which could reduce fees paid by 

charter schools that issue bonds. 

This model, in which an intermediary aggregates loans and creates asset-backed securities, is 

well established for mortgage and commercial loans. And some charter school bonds have been 

aggregated as part of a larger issuance. Therefore, there is precedence for creating asset-backed 

securities that use charter school loans as collateral. 

In summary, charter schools assisted under the Program typically did not have sufficient equity 

or a long enough operating history to meet the underwriting standards of commercial lenders and 

bond issuers. Therefore, Grantees used Program funds creatively to attract lenders and investors 

to fund loans. These loans, according to commercial lenders, Grantees, and assisted school 

representatives would likely not have been made without the enhancement. Some Grantees were 

able to use funds made available through the New Markets Tax Credit program to fund charter 

school loans, which is a new source of liquidity for this type of lending. 

Moreover, as a result of the lending volume facilitated by Grantees, investment bankers and 

other industry participants are now examining the potential for creating a secondary market for 

the Directly Enhanced loans. Such a market would allow Grantees and other lenders to 

recapitalize and use the proceeds for even more charter school lending. If successful, a secondary 

market for charter school loans could, as with residential and commercial mortgages, provide a 

significant and efficient source of liquidity in the future. 
64

What are the major issues with Program implementation? 

One of the purposes of this study is to collect information from Grantees and assisted schools 

about their experiences with the Program and invite suggestions about potential improvements. 

To collect such observations, research team members, in their discussions with a Grantee 

representative, asked the following questions regarding Grantees’ experiences with the program: 

• What were the greatest challenges that your organization faced when implementing the 

Program? 

• What did your organization do to overcome these challenges? 

• What changes would your organization like to see to the Program? 

• How would your organization’s ability to serve charter schools change if the suggested 

changes to the Program were implemented? 

• Knowing what you now know, would you submit another Program application? 

All questions were open-ended to allow interviewees to raise the issues that they believed were 

the most important, given their experiences with the Program. As detailed below, assisted 

charters expressed satisfaction with the Program. Grantees expressed concerns primarily about 

the administrative costs of operating the program, but despite concerns, only one will not apply 

again for Program funds.

How Grantees view the Program 

Grantees were positive about the Program; eight of the nine Grantees indicated that they would 

apply for Program funds in the future. 

As discussed earlier, the Program requires Grantees to prepare Annual Performance Reports that 

provide ED with information about the loans supported by the Program and a narrative 

discussion of the Grantee’s activities. Grantees are required to submit annual performance 

reports under ED’s generic grant regulations and under this Program’s statute. Some of the 

components are mandated by the statute and some are required by ED. In addition, Grantees 

respond to questions that ED asks from time to time as part of its oversight responsibility to 

ensure that funds were being used in ways that support the Program’s objectives. A major 

implementation challenge raised by every Grantee was that the Program’s statute caps 

administrative costs at one-quarter of one percent of the grant amount. Grantees indicated that 

their costs to complete reports required by statute are greater than allowed for by the Program’s 

statutory cap and so were financing some administrative costs from other sources. To resolve this 

problem, Grantees indicated that they would like the statutory cap increased, or that they be 

allowed to generate more fees or other Program income, which could be used to fund 

administrative activities. 

The Program’s one-quarter of 1 percent statutory cap is low when compared to ED’s State 

Charter School Facilities Incentive grants program, which allows grant recipients to charge 

administrative costs up to 5 percentage points of the grant amount (Title V, Part B, Subpart 1 of 

the Elementary and Secondary Education Act of 1965, as amended by the No Child Left Behind 

Act § 5204(f)(4)). 
65

In addition to the administrative cap, Grantees indicated that other Program statutory restrictions 

could be changed to allow them to support a greater number of charter schools. A Grantee 

indicated that it could earn more income if it could use Program funds as a source of charter 

school loans, rather than being restricted to placing these funds in a reserve fund. Another 

Grantee indicated that the Program should be changed so that Grantees could support 

predevelopment loans, which many charter schools need to establish plans to acquire or 

rehabilitate facilities. Predevelopment loans are loans that a school might obtain to pay for the 

cost of determining whether a site is suitable for development, such as a study to determine 

whether a site is contaminated with environmental hazards.

Grantee concerns and recommendations concerning administrative costs should be taken in the 

context of their expressed overall level of satisfaction with the Program. Additional research, 

beyond the scope of this study, would be required to (1) assess the extent of these perceived 

problems; (2) identify potential changes, if any, to the reporting requirements that would reduce 

costs to Program fund recipients and still provide ED with information needed for effective 

oversight; and (3) evaluate the potential benefits of increasing the administrative fee provided by 

the Program’s statute. In addition, ED indicates that it has proposed making several changes to 

the reporting requirements under the Program that would reduce the amount of time Grantees 

spend completing reports. 

How assisted schools view the Program 

Assisted charter schools were generally satisfied with the Program. Only one assisted school 

expressed any criticism or concern at all during interviews. This representative stated that a 

Grantee was slow to provide disclosure information, and suggested that Grantees be required to 

make disclosures well in advance of the date in which the loan is made. All of the assisted 

schools, including the one with the concern, indicated that they would recommend the Program 

to other schools, and suggested no other changes to the Program. 

In general, representatives of assisted schools indicated that the Program allowed their schools to 

qualify for loans that were unavailable without the Program-funded guarantee. With few 

exceptions, the assisted school representatives indicated that their Directly Enhanced loan had a 

reasonable interest rate and that they would recommend other charter schools to take advantage 

of the Program. 
66
67

References 

CMBS 101: An Introduction to Commercial Mortgage Backed Securities (CMBS). Prepared by 

The Education/Research Committee of the Commercial Mortgage Securities Association. 

Debunking the Real Estate Risk of Charter Schools: A Study by the Ewing Marion Kauffman 

Foundation, 2005. Kansas City, Mo.: The Ewing Marion Kauffman Foundation. 

Dolan, J. V., Murray, D. and Walsh, G. (1998). Charter School Facility Financing: Constraints 

and Options. Boston, Mass.: Pioneer Institute for Public Policy Research. 

Hassel, B. and Esser, K. W. (2004). Facilities Financing: New Models for Districts That Are 

Creating Schools New. St. Paul, Minn.: Education Evolving. 

 

Hassel, B. (1999). Paying for the Charter Schoolhouse: Policy Options for Charter School 

Facilities Financing. St. Paul, Minn.: Charter Friends National Network. 

Hitchcock, D. and Breeding J. (2007). “Charter School Financing Conference: Debt Rating 

Criteria, Measuring Debt Burdens and a Case Study.” Presentation at the National Charter 

School Facility Financing Conference. Arlington, Va. 

McDonnell Investment Management, LLC. "Commercial Mortgage Backed Securities." Fixed 

Income Insight, Oct. 26, 2004. Author: Oak Brook, Ill. Retrieved Dec. 13, 2006, from: 

http://www.mcdonnellinvestments.com/MarketInsights.asp?page=1&order. 

National Alliance for Public Charter Schools (2007). Number of Charter Schools and Students in 

the 2006–07 School Year. Retrieved July 5, 2007, from 

http://www.publiccharters.org/content/publication/detail/2182. 

The No Child Left Behind Act of 2001, Public Law 107-110, 107th Congress, 2nd Session, Jan. 8, 

2002 

U.S. Department of Agriculture. Office of Rural Development. Housing and Community 

Facilities Programs. Retrieved Jan. 3, 2007, from 

http://www.rurdev.usda.gov/RHS/cf/brief_cp_direct.htm. 

U.S. Department of Education, Office of Innovation and Improvement. “Final Regulations,” 

Credit Enhancement for Charter School Facilities Program, Federal Register, March 24, 2005 

(Vol. 70, No. 56, p. 14,999). 
68
69

Appendix A: Glossary of Terms Used in This Report 
70

Acquisition loan—Money borrowed for the purpose of acquiring title to a property. 

Assisted school—A charter school that received a Directly Enhanced loan from a grantee 

between FY 2003 and FY 2005.

Collateral—Assets (usually real property for mortgages) pledged by a borrower to secure a loan 

or other credit, and subject to seizure in the event of a borrower’s default. 

Construction loan—An interim loan designed to provide funds for the actual construction of 

improvements on land.

Credit enhancement—The process of reducing credit risk by requiring collateral, insurance, or 

other agreements to provide the lender with reassurance that it will be compensated if the 

borrower defaults. 

Debt service coverage ratio—Calculated by dividing the annual net operating income by the 

sum of the annual loan payments. For example, if a charter school’s annual net operating income 

is $62,500 and the annual debt service (principal plus interest) on a loan of $50,000, its debt 

service coverage ratio is 1.25. 

Directly Enhanced loan—A loan received by a charter school between FY 2003 and FY 2005 

that received a credit enhancement from program funds or was funded from a loan pool credit 

enhanced by a grantee with program funds. 

Foreclosure—The legal process by which an owner’s right to a property is terminated, usually 

due to default. This process typically involves a forced sale of the property at public auction, 

with the proceeds being applied to the mortgage debt. 

Fully amortizing mortgage—A method of loan amortization in which equal periodic payments 

completely repay the loan during the loan term. 

Leasehold improvement—An improvement of a leased asset that increases the asset’s value. 

Charter schools oftentimes have to improve leased facilities to make them suitable for 

classrooms and administrative offices. In some cases, leasehold improvements are required to 

bring a building up to a jurisdiction’s building code. 

Loan pool—A source of financing loans in which more than one investor or bank agrees to 

provide the money that a borrower receives when the loan is made. 

Loan term—The length of time between when a loan is made and when the borrower must 

repay it. 

Loan to value ratio—The ratio of a loan to the value of the collateral used for that loan. For 

example, an $80,000 loan that is used to purchase a $100,000 property that is used as collateral 

has an LTV of $80,000/$100,000 = 0.80. 
71

Loan underwriting—The process lenders use to evaluate risks associated with a loan applicant. 

Mortgage underwriters typically evaluate the “three Cs:” a borrower’s capacity to repay the loan, 

his/her creditworthiness, and assets offered as collateral for the loan. 

New Market Tax Credits—A federal program that permits taxpayers to receive a credit against 

federal income taxes for making qualified equity investments in designated Community 

Development Entities (CDEs). Substantially all of the qualified equity investment must in turn be 

used by the CDE to provide investments in low- and moderate-income communities. The credit 

provided to the investor totals 39 percent of the cost of the investment and is claimed over a 

seven-year period.

Net operating income—Income after deducting for operating expenses (such as salaries, 

utilities, and other day-to-day expenses) but before deducting for income taxes and interest. 

Spread—The difference between two financial measures. 

Subordinate debt—Debt that is ranked below other loans (that are referred to as more “senior”) 

with regard to claims on assets that are used as collateral. In the event of a foreclosure, a lender 

that makes a subordinate loan is repaid only after the available proceeds from the sale of the 

asset used as collateral are paid to more senior lenders. Consequently, subordinate debt is more 

risky than senior debt, and so usually has a higher interest rate. 

Weighted average coupon—The weighted average of the gross interest rates of loans 

aggregated into a pool of loans. 
72
73

Appendix B: Interviews Conducted 
74

Grantees 

America’s Charter, Washington, D.C. (Sheila Ryan) 

CSDC, Hanover, Md. (Joel Sharfer) 

LIIF, San Francisco, Calif. (Susan Harper) 

LISC, New York, N.Y. (Elise Balboni) 

MassDevelopment, Boston, Mass. (Rebecca Sullivan) 

NCBCI, Arlington, Va. (Annie Donovan) 

RDF, Phoenix, Ariz. (Mark Van Brunt) 

Self-Help, Durham, N.C. (Laura Benedict, Meredith Lowe, Steve Farqair, Jane Ellis) 

Assisted Schools 

Bronx Preparatory Charter School, New York, N.Y. (Alyssa Levy) 

Camino Nuevo Charter School, Los Angeles, Calif. (Philip Lane) 

Capital City Pubic Charter School, Washington, D.C. (Karl Jentoff) 

Central Park School for Children, Durham, N.C. (Vickie Patten) 

City High School, Pima, Ariz. (Carrie Brennan) 

Community Charter School of Cambridge, Cambridge, Mass. (Joe Reilly) 

Evergreen Charter School, Ashville, N.C. (Maureen Molloy) 

Mathematics, Civics and Science Charter School, Philadelphia, Penn. (Veronica Joyner) 

Commercial Lenders 

Bank of America, New York, N.Y. (Dave Leopold) 

Citibank, New York, N.Y. (Kim Lattimer-Nelligan) 

JP Morgan Chase, New York, N.Y. (Dudley Ben-Oit) 

Developers 

Bouma Development, Grand Rapids, Mich. (Doug Bouma) 

Civic Builders, New York, N.Y. (David Umansky) 

Education Management Organizations 

National Heritage Academies, Grand Rapids, Mich. (JC Huizenga) 

Imagine Schools, Arlington, Va. (Dennis Bakke) 

Mosaica, New York, N.Y. (Mike Connolly) 

Unsuccessful Program Applicants 

Interviews were conducted by Kenneth Temkin and Bill Bavin with representatives of five 

unsuccessful Program applicants. The names of these representatives and their organizations are 

withheld to preserve their confidentiality. 
75

Rating Agencies and Bond Insurers 

ACA Capital, New York, N.Y. (Rueben Sellers) 

Moody’s, New York, N.Y. (Erin Gore, currently with Banc of America Securities) 

Standard and Poor’s, New York, N.Y. (David Hitchcock) 

Investment Banks 

Community Reinvestment Fund, Minneapolis, Minn. (Mary Tingerthal) 

Goldman Sachs, New York, N.Y. (Rich Bellis) 

RBC Dain Rauscher, Minneapolis, Minn. (Bill Wild and John Snyder) 

Wilary Winn, St. Paul, Minn. (Doug Winn) 
76
77

Appendix C: Discussion Guides 
78

Grantee Discussion Guide 

Grantee: ________________ 

Name: _________________ 

Date: _________________ 

I. Previous Charter School Lending (only applicable to grantees that had such a program 

prior to participating in the Program) in the Year Prior to the Program 

a. How long has your organization provided charter school facilities loans? 

b. What were the main strategies that your organization used to support lending for 

charter school facilities prior to the Program? 

c. What was your organization’s total charter school lending volume in the year 

prior to the Program? 

d. What was the source of funding for these loans? 

e. How many charter schools received loans from your organization in the year prior 

to participating in the Program? 

f. What types of loans (i.e., acquisition, repair, leasehold improvement) did your 

organization support in the year prior to the Program? 

g. What underwriting standards did your organization use to evaluate charter school 

loan applications in the year prior to receiving the grant? 

h. How did your organization establish rates and terms for these loans? What were 

typical spreads from comparable term Treasury and commercial real estate loans 

and fees? 

i. How many start-up schools did your organization originate loans to in the year 

prior to receiving grant funds? 

II. Charter School Lending Under the Program 

a. What types of activities (i.e., acquisition, repair, leasehold improvement) does 

your program support under the Program? 

b. What underwriting standards does your organization use when underwriting loan 

applications under the Program (if different from underwriting standards before 

Program)? 

i. Why are these underwriting standards different from those that your 

organization used before the Program? 
79

c. How does your organization establish rates and terms for loans originated under 

the Program? [Probe: Does the organization establish an interest rate spread from 

a benchmark?] 

d. How does your organization market the Program to potential charter school loan 

applicants? 

e. How does your organization market credit enhancements available under the 

Program to lenders that have funds to originate loans to charter schools (not 

applicable for grantees with Mixed or Vertically Integrated models)? 

f. How does your organization determine the level and types of technical assistance 

to provide to a charter school loan applicant? 

III. Effects of the Program 

a. What new (if any) credit enhancements does your organization offer under the 

Program to increase facilities lending to charter schools? 

i. How did the funding under the Program affect your ability to support such 

changes? 

ii. Is your organization able to serve charter schools that exhibit higher rates 

of credit loss risk? If yes, how? 

b. How does the Program affect the sources of financing that are available to support 

charter school facilities? 

c. How does the Program affect the rates and terms of loans available for charter 

school facilities? Are you able to document this effect? 

d. Has your organization established new relationships with lenders or other market 

participants under the Program? [If yes:] 

e. How have those relationships changed your organization’s ability to support 

charter school facilities lending? 

f. How does the technical assistance provided by your organization affect the ability 

of charter school loan applicants to secure financing for facilities? 

g. Since receiving the grant, have you done charter school lending or provided credit 

enhancements to support such lending beyond the grant-related activities you 

report? If yes, how much? 

h. Have you been able to facilitate any innovative real estate arrangements under the 

Program? [If yes:] 

i. What are those arrangements? 
80

ii. How did the Program support them? 

i. Overall, how has the Program affected your organization’s ability to support 

charter schools facilities lending? 

IV. Implementation/Program Challenges 

a. What were the greatest challenges that your organization faced when 

implementing the Program? 

b. What did your organization do to overcome these challenges? 

c. What changes would your organization like to see to the Program? Why? 

d. How would your organization’s ability to serve charter schools change if these 

suggested changes to the Program were implemented? 
81

Charter School Loan Recipient Discussion Guide 

Charter School: _________________ 

Name: _________________ 

Date: _________________ 

I. Ability to Secure Financing Before the Program 

a. Did your charter school, prior to receiving the loan from [Grantee’s name], apply 

for financing from another source? [If no, why not? If yes:] 

i. What was the purpose for the loan? 

ii. Where did you apply for the loan? 

iii. Was your loan application approved? 

[If no:] 

1. What reasons did the lenders provide for denying your charter 

school’s loan application? 

[If yes:] 

2. What were the loan’s rates and terms? 

II. Experience with the Grantee 

 

a. How did your charter school learn about loans offered by [Grantee’s name]? 

b. When did you initially contact [Grantee’s name] about acquiring a loan? 

c. Did you receive any type of technical assistance from [Grantee’s name]? [If yes:] 

i. What types of technical assistance did you receive from [Grantee’s name]? 

ii. Did this technical assistance help your charter school secure financing? [If 

yes, how so?] 

d. What types of information did you have to provide to [Grantee’s name and, if 

applicable, lender’s name]? 

e. What were your expectations regarding rates and terms before applying for the 

loan? 

f. How much did the actual rates and terms differ from your expectations? [If 

different:] 

i. What factors do you think created these differences? 

g. Did the loan from [Grantee’s name] allow your school to implement any real 

estate solutions (i.e., sharing space with other charter schools) that you thought 

were not feasible before applying for a loan? [If yes:] 

i. What were those solutions? 

ii. How did the Program make those solutions feasible? 
82

h. Would you recommend that other charter schools apply for loans from [Grantee’s 

name]? Why or why not? 

i. What changes would you like to be implemented? Why? 

j. Overall, how satisfied is your organization with the loan rates and terms that you 

received from [Grantee’s name]? 

III. Students’ Academic Performance 

a. Did your school meet AYP standards under the No Child Left Behind program? 
83

 Unsuccessful Applicant Discussion Guide 

Organization: _________________ 

Name: _________________ 

Date: _________________ 

I. Reasons for Submitting an Application 

a. What were the primary factors that influenced your organization’s decision to 

apply for a grant under the Program? 

b. Did you seek financing to support charter school facilities lending from other 

sources? [If yes:] 

i. What were those sources? 

II. Activities Subsequent to Submitting an Application 

a. How (if at all) does your organization now support charter school facilities 

lending? 

 

b. What are your organization’s sources of funding to support these activities? 

c. What types of credit enhancements did your organizations provide in the past 

year? 

d. How many charter school facilities loans did your organization facilitate last 

year? 

e. What activities (i.e., acquisition, repair, leasehold improvement) did those loans 

support? 

f. What were the rates and terms associated with those loans? 
84

Commercial Lenders That Originate Charter School Facility Loans Discussion Guide 

Lender: ________________ 

Name: _________________ 

Date: __________________ 

I. Charter School Lending 

a. How long have you originated charter school facilities loans? 

b. What types of loans (i.e., acquisition, predevelopment, repair, leasehold 

improvement) do your bank originate to charter schools? 

c. How many (number and dollar volume) charter school loans have you originated 

during the past three years? 

d. What underwriting standards do you use when underwriting loan applications 

from charter schools? 

e. Are these standards different from other types of commercial products? [If yes:] 

i. Why are these underwriting standards different from those that you use for 

other types of commercial products? 

f. How does your organization establish rates and terms for loans originated to 

charter schools? [Probe: Does the organization establish an interest rate spread 

from a benchmark?] 

g. Are the pricing policies different for other commercial loan products? [If yes:] 

i. Why are the pricing policies different? 

II. Credit Enhancements 

a. Have you required credit enhancements for charter school facilities loans that you 

have originated? [If yes:] 

i. For what proportion of loans did you require a credit enhancement? 

ii. Why did you require the credit enhancement? 

iii. What type of enhancement did you require? 

iv. Does the credit enhancement affect the rates and term of the loans 

receiving them? [If yes:] 

v. What was the effect of the enhancement on the rate and/or term? 

vi. Would you have approved the loan without the enhancement? [If no, 

why?] 
85

III. Future Lending Plans 

a. What is your bank’s projected charter school lending volume in the next year? 

b. Do you expect to change your underwriting/pricing standards for charter school 

loan in the next year? [If yes:] 

i. How will they change? 

ii. What are the reasons for this change? 
86

Real Estate Developers Who Construct Charter Schools Discussion Guide 

Company: ______________ 

Name: _________________ 

Date: __________________ 

I. Charter School Development Activities 

a. How many charter schools have you developed? Has the volume changed over the 

past few years? [If yes, why?] 

b. What other commercial facilities (if any) does your company develop? 

c. Charter school development activities account for what share of your overall 

development projects? 

d. How often are you approached by charter schools to develop properties? 

e. How often do such charter schools have financing already lined up? 

f. What do you advise charter schools who do not have financing already in place? 

II. Charter School Development Costs and Financing 

a. What are the total development costs for a typical charter school development 

project? What are the per square foot development costs for a typical charter 

school development project? 

 

b. Are these costs different for other commercial development projects? [If yes, 

why?] 

c. What sources do you use to finance charter school construction? 

d. Are these sources different for sources that you use for other commercial 

projects? [If yes, why?] 

e. How much equity do you require from the charter school to begin development? 

Is this amount different for other commercial projects? [If yes, why?] 

f. What sources do charter schools use for permanent financing? Are these sources 

different than for other commercial projects? 
87

III. Credit Enhancements 

a. For your developments, have you required that charter schools receive a credit 

enhancement for either the construction or permanent loan? [If yes:] 

i. For what proportion of projects did you require a credit enhancement? 

ii. Who provided the credit enhancement? 

iii. What was the credit enhancement? 

iv. Would you have gone forward with the project without the enhancement? 

[If no, why?] 

IV. Future Development Plans 

a. What is your projected charter school development activity in the next year? 
88

Investment Banks Discussion Guide 

Company: _______________ 

Name: _________________ 

Date: _________________ 

I. Transactional Volume 

a. How many charter school financing securitization transactions have you closed in 

the past year? How does this volume compare to previous years’? 

b. What is the typical financing amount for these charter school loan securitization 

transactions? Has this changed over time? [If yes, why?] 

II. Transactional Structure 

a. What types of charter schools (start-ups?) were included in these transactions? 

b. What types of charter school loans have been included in these transactions? 

c. What were the typical WLTV and debt service coverage ratio for the charter 

school loans included in the transaction? 

d. What types of credit enhancements have been included in these transactions? 

e. Which companies have provided these credit enhancements? 

f. How did the credit enhancements affect the transaction’s pricing? 

g. What fees did your company charge for the transaction? 

h. Is this fee different for other types of commercial bonds? [If yes, why?] 
89

Rating Agencies and Bond Insurers Discussion Guide 

Company: _______________ 

Name: _________________ 

Date: _________________ 

I. Transactional Volume 

a. How many charter school financing transactions have you evaluated (insured) in 

the past year? How does this volume compare to previous years? 

b. What is the typical financing amount for these transactions? Has this changed 

over time? [If yes, why?] 

II. Transactional Structure 

a. What types of charter schools (start-ups?) were included in these transactions? 

b. What types of loans have been included in these transactions? 

c. What were the typical WLTV and debt service coverage ratio for the loans 

included? 

d. What types of credit enhancements have been included in these transactions? 

e. Which companies have provided these credit enhancements? 

f. How did the credit enhancements affect your ratings of the transactions? 

FOR BOND INSURERS 

g. What fees did your company charge for the insurance? 

h. Is this fee different for other types of commercial bonds? [If yes, why?] 

i. How did this insurance affect the bond’s rating? 

j. Beyond affecting the bond’s rating, how do you think the insurance affected the 

market’s pricing of the issuance? 

k. Do you believe that bond insurance is more likely to be cost-effective from the 

standpoint of charter schools in the future? [If yes, why?] 

 
90

Educational Management Organizations Discussion Guide 

Company: _______________ 

Name: _________________ 

Date: _________________ 

I. Management Support Volume 

a. How many charter schools did your company provide services to in the past year? 

How does this volume compare to previous years’? 

b. What is the typical fee charged to these schools? Has this changed over time? [If 

yes, why?] 

II. Client Profile and Financing 

a. What types of charter schools (start-ups?) do you serve? 

b. In what types of facilities are these schools located? 

c. How many clients have sought financing for new facilities or improvements? 

d. What types of lenders have these schools approached for financing? 

e. How successful have these schools been in receiving financing? 

f. What types of credit enhancements have been included in these transactions? 

g. Which companies have provided these credit enhancements? 
91

Appendix D: Characteristics of Census Tracts and Counties in 

Which Schools Assisted by Grantees Between FY 2003 and FY 

2005 Were Located 
92

Exhibit D-1: Median household income, as of 2000, in tracts and counties with schools assisted by 

Grantees between FY 2003 and FY 2005 

Assisted Schools County State

Tract Median 

HH Income 

in 2000

County Median HH 

Income in 2000

Ratio of 2000 Tract HH 

Income and 2000 

County HH Income 

Benton County School Of Arts Benton AR $48,354 $39,023 1.24

Northland Preparatory Academy Coconino AZ $51,758 1.44

Star School Coconino AZ $56,156 1.56

Arizona Agriculture and Equine Charter School Maricopa AZ $44,549 0.91

Arizona Agribusiness & Equine Center, Paradise Valley Campus Maricopa AZ $42,194 0.87

Bell Canyon Charter School Maricopa AZ $45,322 0.93

Excalibur Charter Schools, Avalon Academy Campus Maricopa AZ $35,279 0.72

Valle del Sol Incorporated Maricopa AZ $38,829 0.80

West Gilbert Charter Elementary School and West Gilbert Charter Middle School Maricopa AZ $72,353 1.48

Calli Ollin Academy Pima AZ $9,464 0.23

City High School Pima AZ $9,464 0.23

Millsmont Academy (Aspire Public Schools) Alameda CA $32,578 $59,060 0.55

Leadership Public Schools Richmond Contra Costa CA $30,389 $67,863 0.45

Academia Semillas Del Pueblo Los Angeles CA $34,234 0.74

Animo Inglewood High School Los Angeles CA $22,667 0.49

Animo Leadership Charter High School Los Angeles CA $25,721 0.55

Camino Nuevo Charter Academy - Middle School Los Angeles CA $26,689 0.57

Camino Nuevo Charter Academy High School Los Angeles CA $21,045 0.45

New Academy Of Science & Arts Charter School Los Angeles CA $17,743 0.38

View Park Preparatory Accelerated Middle Los Angeles CA $65,833 1.42

Envision Schools San Francisco CA $57,281 $59,027 0.97

Highline Academy Denver CO $56,512 1.36

KIPP Sunshine Peak Academy Denver CO $7,411 0.18

Carbon Valley Academy Weld CO $52,746 $40,640 1.30

Capital City Public Charter School DC DC $22,736 0.55

Carlos Rosario International Public Charter School DC DC $37,889 0.91

Cesar Chavez Public Charter School for Public Policy (Parkside Campus) DC DC $42,500 1.02

Cesar Chavez Public Policy Public Charter School DC DC $21,746 0.52

Community Academy Public Charter School DC DC $51,510 1.24

D.C. Preparatory Academy Public Charter School DC DC $22,063 0.53

Options Public Charter School DC DC $35,225 0.85

Sasha Bruce Public Charter School DC DC $67,109 1.61

Thurgood Marshall Academy Public Charter School DC DC $22,539 0.54

Tree Of Life Public Charter School DC DC $35,225 0.85

Literacy/Leadership/Technology Academy Hillsborough FL $37,617 $42,858 0.88

Corebridge Educational Academy Palm Beach FL $49,545 $50,394 0.98

Thomas Jefferson Charter School Canyon ID $34,815 $34,302 1.01

Community Montessori Floyd IN $68,290 $34,302 1.99

Charter School of the Dunes Lake IN $30,099 0.76

Gary Lighthouse Charter School Lake IN $30,951 0.79

Indianapolis Lighthouse Charter School Marion IN $27,308 0.67

Irvington Community School Marion IN $38,214 0.94

Southeast Neighborhood School of Excellence Marion IN $31,292 0.77

Berkshire Arts and Technology Charter School Berkshire MA $25,750 $40,813 0.63

Marblehead Community Charter School Essex MA $61,231 $53,094 1.15

Four Rivers Charter School Franklin MA $46,793 $41,596 1.12

Holyoke Community Charter School Hampden MA $32,624 $39,666 0.82

Community Charter School of Cambridge Middlesex MA $49,850 $64,852 0.77

Edward Brooke Charter School Suffolk MA $50,410 1.28

Frederick Douglass Charter School Suffolk MA $50,410 1.28

Neighborhood House Charter School Suffolk MA $50,039 1.27

Three Oaks Public School Academy Muskegon MI $30,725 $36,984 0.83

Augsburg Academy for Health Careers Hennepin MN $48,519 0.91

Aurora Charter School Hennepin MN $50,688 0.96

El Colegio Charter School Hennepin MN $21,601 0.41

Great River School Ramsey MN $52,946 $45,371 1.17

Academie Lafayette Jackson MO $62,317 $38,046 1.64

Artspace Charter Buncombe NC $41,351 1.14

Evergreen Community Charter Buncombe NC $37,476 1.04

Central Park School for Children Durham NC $34,706 0.84

Maureen Joy Charter Durham NC $33,265 0.80

Gaston College Preparatory Gaston NC $27,945 $26,633 1.05

Kinston Charter Academy Lenoir NC $34,085 $30,001 1.14

Sugar Creek Charter Mecklenburg NC $28,991 $51,463 0.56

Casa Esperanza Montessori Wake NC $61,602 $54,951 1.12

Sallie B Howard School Wilson NC $17,208 $31,161 0.55

Team Academy Charter School Essex NJ $23,397 $47,827 0.49

Paterson Charter School for Science and Technology Passaic NJ $21,048 $48,695 0.43

Moreno Valley High School Colfax NM $33,585 $30,745 1.09

Mariposa Academy Charter School Washoe NV $27,104 $51,764 0.52

Bronx Charter School - Arts Bronx NY $7,044 0.24

Bronx Prep Charter School Bronx NY $16,591 0.56

KIPP Sankofa Charter School Erie NY $24,901 0.68

Pinnacle Charter School Erie NY $15,360 0.42

Amber Charter School New York NY $27,168 $49,512 0.55

Charter School of Educational Excellence Westchester NY $28,546 $71,609 0.40

Arthur Academy Public Charter School Marion OR $33,935 $40,872 0.83

First Philadelphia Charter School for Literacy Philadelphia PA $41,412 1.29

Math, Civics, and Sciences Charter School Philadelphia PA $31,838 0.99

Nueva Esperanza Academy Charter School Philadelphia PA $15,710 0.49

Memphis Academy of Health Sciences Shelby TN $7,885 $39,476 0.20

IDEA Academy Hidalgo TX $20,683 $25,869 0.80

East Fort Worth Montessori Academy Tarrant TX $37,539 $48,491 0.77

$35,975

$48,776

$40,831

$46,493

$41,471

$41,625

$39,424

$40,467

$36,738

$32,002

$39,459

$53,036

$36,124

$41,333

$29,396

Sources: 1. Location of schools: Grantee Annual Performance Reports geocoded by the authors. 

2. Characteristics of Census tracts and counties in which assisted schools were located: U.S. Census 2000. 
93

Exhibit D-2: Poverty rates, as of 2000, in tracts and counties with schools assisted by Grantees 

between FY 2003 and FY 2005 

Assisted Schools County State

Tract 

Poverty 

Rate in 

2000

County 

Poverty 

Rate in 

2000

Ratio of 2000 Tract 

Poverty Rate and 

2000 County Poverty 

Rate

Benton County School Of Arts Benton AR 7.7% 10.1% 0.76

Northland Preparatory Academy Coconino AZ 6.7% 0.37

Star School Coconino AZ 4.7% 0.26

Arizona Agribusiness & Equine Center, Paradise Valley Campus Maricopa AZ 4.4% 0.38

Bell Canyon Charter School Maricopa AZ 6.2% 0.53

Excalibur Charter Schools, Avalon Academy Campus Maricopa AZ 10.7% 0.91

West Gilbert Charter Elementary School and West Gilbert Charter Middle School Maricopa AZ 9.0% 0.77

Arizona Agriculture and Equine Charter School Maricopa AZ 11.1% 0.95

Valle del Sol Incorporated Maricopa AZ 0.9% 0.08

City High School Pima AZ 48.9% 3.33

Calli Ollin Academy Pima AZ 48.9% 3.33

Millsmont Academy (Aspire Public Schools) Alameda CA 22.9% 11.0% 2.08

Leadership Public Schools Richmond Contra Costa CA 31.0% 7.6% 4.08

Camino Nuevo Charter Academy High School Los Angeles CA 26.8% 1.50

View Park Preparatory Accelerated Middle Los Angeles CA 15.5% 0.86

Animo Inglewood High School Los Angeles CA 19.3% 1.08

Camino Nuevo Charter Academy - Middle School Los Angeles CA 25.7% 1.44

Academia Semillas Del Pueblo Los Angeles CA 31.2% 1.74

New Academy Of Science & Arts Charter School Los Angeles CA 45.2% 2.53

Animo Leadership Charter High School Los Angeles CA 6.2% 0.35

Envision Schools San Francisco CA 6.6% 11.3% 0.58

Highline Academy Denver CO 3.9% 0.27

KIPP Sunshine Peak Academy Denver CO 71.5% 5.00

Carbon Valley Academy Weld CO 6.5% 12.5% 0.52

Capital City Public Charter School DC DC 33.0% 1.63

Cesar Chavez Public Policy Public Charter School DC DC 21.4% 1.06

Cesar Chavez Public Charter School for Public Policy (Parkside Campus) DC DC 20.3% 1.01

D.C. Preparatory Academy Public Charter School DC DC 32.6% 1.61

Options Public Charter School DC DC 13.0% 0.64

Sasha Bruce Public Charter School DC DC 28.8% 1.42

Thurgood Marshall Academy Public Charter School DC DC 24.5% 1.21

Community Academy Public Charter School DC DC 13.5% 0.67

Tree Of Life Public Charter School DC DC 33.4% 1.65

Carlos Rosario International Public Charter School DC DC 24.5% 1.21

Literacy/Leadership/Technology Academy Hillsborough FL 10.0% 12.5% 0.80

Corebridge Educational Academy Palm Beach FL 9.1% 9.9% 0.92

Thomas Jefferson Charter School Canyon ID 10.3% 12.0% 0.86

Community Montessori Floyd IN 2.2% 8.7% 0.26

Charter School of the Dunes Lake IN 22.0% 1.80

Gary Lighthouse Charter School Lake IN 24.0% 1.96

Irvington Community School Marion IN 25.6% 2.24

Indianapolis Lighthouse Charter School Marion IN 4.7% 0.42

Southeast Neighborhood School of Excellence Marion IN 22.5% 1.97

Berkshire Arts and Technology Charter School Berkshire MA 13.1% 9.5% 1.38

Marblehead Community Charter School Essex MA 6.4% 8.9% 0.72

Four Rivers Charter School Franklin MA 10.4% 9.4% 1.10

Holyoke Community Charter School Hampden MA 21.3% 14.7% 1.45

Community Charter School of Cambridge Middlesex MA 15.1% 6.5% 2.32

Edward Brooke Charter School Suffolk MA 7.9% 0.42

Frederick Douglass Charter School Suffolk MA 7.9% 0.42

Neighborhood House Charter School Suffolk MA 10.0% 0.53

Three Oaks Public School Academy Muskegon MI 17.5% 11.4% 1.53

El Colegio Charter School Hennepin MN 8.2% 0.99

Aurora Charter School Hennepin MN 4.5% 0.54

Augsburg Academy for Health Careers Hennepin MN 42.0% 5.07

Great River School Ramsey MN 4.1% 10.6% 0.39

Academie Lafayette Jackson MO 4.2% 11.9% 0.35

Artspace Charter Buncombe NC 5.9% 0.52

Evergreen Community Charter Buncombe NC 9.2% 0.81

Central Park School for Children Durham NC 17.2% 1.28

Maureen Joy Charter Durham NC 19.9% 1.49

Gaston College Preparatory Gaston NC 18.9% 21.3% 0.89

Kinston Charter Academy Lenoir NC 13.1% 16.6% 0.79

Sugar Creek Charter Mecklenburg NC 16.1% 9.2% 1.75

Casa Esperanza Montessori Wake NC 6.9% 7.8% 0.89

Sallie B Howard School Wilson NC 35.6% 18.5% 1.92

Team Academy Charter School Essex NJ 22.1% 15.6% 1.41

Paterson Charter School for Science and Technology Passaic NJ 36.2% 12.3% 2.95

Moreno Valley High School Colfax NM 13.5% 14.8% 0.91

Mariposa Academy Charter School Washoe NV 25.7% 10.0% 2.57

Bronx Prep Charter School Bronx NY 72.3% 2.35

Bronx Charter School - Arts Bronx NY 41.5% 1.35

Amber Charter School New York NY 27.6% 20.0% 1.38

Pinnacle Charter School Erie NY 28.3% 2.32

KIPP Sankofa Charter School Erie NY 37.4% 3.07

Charter School of Educational Excellence Westchester NY 29.7% 8.8% 3.37

Arthur Academy Public Charter School Marion OR 14.4% 13.5% 1.07

First Philadelphia Charter School for Literacy Philadelphia PA 8.4% 0.37

Math, Civics, and Sciences Charter School Philadelphia PA 27.7% 1.21

Nueva Esperanza Academy Charter School Philadelphia PA 47.0% 2.05

Memphis Academy of Health Sciences Shelby TN 62.3% 16.0% 3.89

IDEA Academy Hidalgo TX 44.2% 35.9% 1.23

East Fort Worth Montessori Academy Tarrant TX 12.5% 10.6% 1.18

18.2%

11.7%

14.7%

17.9%

14.3%

20.2%

12.2%

11.4%

30.7%

12.2%

22.9%

19.0%

8.3%

11.4%

13.4%

Sources: 1. Location of schools: Grantee Annual Performance Reports geocoded by the authors. 

2. Characteristics of Census tracts and counties in which assisted schools were located: U.S. Census 2000. 
94

Exhibit D-3: Proportion of population aged 18 and under, as of 2000, in tracts and counties with 

schools assisted by Grantees between FY 2003 and FY 2005 

Assisted Schools County State

Raw Count Percentage Raw Count Percentage Raw Count Percentage

Benton County School Of Arts Benton AR 1656 28.0% 42747 27.9% 0.04 1.00

Northland Preparatory Academy Coconino AZ 957 28.9% 0.03 0.95

Star School Coconino AZ 2882 32.2% 0.08 1.06

Arizona Agribusiness & Equine Center, Paradise Valley Campus Maricopa AZ 1437 30.3% 0.00 1.07

Bell Canyon Charter School Maricopa AZ 1404 35.3% 0.00 1.25

Excalibur Charter Schools, Avalon Academy Campus Maricopa AZ 1300 24.8% 0.00 0.88

West Gilbert Charter Elementary School and West Gilbert Charter Middle School Maricopa AZ 1021 33.3% 0.00 1.18

Arizona Agriculture and Equine Charter School Maricopa AZ 1032 16.0% 0.00 0.57

Valle del Sol Incorporated Maricopa AZ 942 17.1% 0.00 0.60

City High School Pima AZ 19 3.1% 0.00 0.12

Calli Ollin Academy Pima AZ 19 3.1% 0.00 0.12

Millsmont Academy (Aspire Public Schools) Alameda CA 2589 34.3% 372370 25.8% 0.01 1.33

Leadership Public Schools Richmond Contra Costa CA 2777 36.6% 262671 27.7% 0.01 1.32

Camino Nuevo Charter Academy High School Los Angeles CA 1175 23.0% 0.00 0.78

View Park Preparatory Accelerated Middle Los Angeles CA 1241 22.5% 0.00 0.77

Animo Inglewood High School Los Angeles CA 404 19.2% 0.00 0.65

Camino Nuevo Charter Academy - Middle School Los Angeles CA 941 20.8% 0.00 0.71

Academia Semillas Del Pueblo Los Angeles CA 1665 35.1% 0.00 1.20

New Academy Of Science & Arts Charter School Los Angeles CA 2281 33.9% 0.00 1.15

Animo Leadership Charter High School Los Angeles CA 117 2.9% 0.00 0.10

Envision Schools San Francisco CA 1853 21.8% 118952 15.3% 0.02 1.43

Highline Academy Denver CO 347 10.4% 0.00 0.45

KIPP Sunshine Peak Academy Denver CO 818 54.2% 0.01 2.36

Carbon Valley Academy Weld CO 2153 30.5% 54410 30.1% 0.04 1.01

Capital City Public Charter School DC DC 1167 24.8% 0.01 1.15

Cesar Chavez Public Policy Public Charter School DC DC 463 18.9% 0.00 0.88

Cesar Chavez Public Charter School for Public Policy (Parkside Campus) DC DC 1159 37.7% 0.01 1.75

D.C. Preparatory Academy Public Charter School DC DC 698 28.9% 0.01 1.34

Options Public Charter School DC DC 882 27.2% 0.01 1.26

Sasha Bruce Public Charter School DC DC 203 9.5% 0.00 0.44

Thurgood Marshall Academy Public Charter School DC DC 954 37.3% 0.01 1.73

Community Academy Public Charter School DC DC 541 22.7% 0.00 1.05

Tree Of Life Public Charter School DC DC 882 27.2% 0.01 1.26

Carlos Rosario International Public Charter School DC DC 817 17.3% 0.01 0.80

Literacy/Leadership/Technology Academy Hillsborough FL 615 33.9% 265215 26.5% 0.00 1.28

Corebridge Educational Academy Palm Beach FL 742 18.8% 251475 22.2% 0.00 0.84

Thomas Jefferson Charter School Canyon ID 1991 33.3% 42735 32.5% 0.05 1.02

Community Montessori Floyd IN 2141 30.6% 19277 27.2% 0.11 1.13

Charter School of the Dunes Lake IN 1918 30.2% 0.01 1.07

Gary Lighthouse Charter School Lake IN 1892 31.4% 0.01 1.11

Irvington Community School Marion IN 1180 21.5% 0.01 0.79

Indianapolis Lighthouse Charter School Marion IN 1477 31.7% 0.01 1.17

Southeast Neighborhood School of Excellence Marion IN 1022 31.4% 0.00 1.16

Berkshire Arts and Technology Charter School Berkshire MA 640 22.4% 32239 23.9% 0.02 0.94

Marblehead Community Charter School Essex MA 1730 20.0% 190777 26.4% 0.01 0.76

Four Rivers Charter School Franklin MA 830 24.7% 17742 24.8% 0.05 1.00

Holyoke Community Charter School Hampden MA 2177 26.8% 125344 27.5% 0.02 0.98

Community Charter School of Cambridge Middlesex MA 289 12.9% 346043 23.6% 0.00 0.55

Edward Brooke Charter School Suffolk MA 1067 24.2% 0.01 1.11

Frederick Douglass Charter School Suffolk MA 1067 24.2% 0.01 1.11

Neighborhood House Charter School Suffolk MA 1071 29.1% 0.01 1.34

Three Oaks Public School Academy Muskegon MI 1883 19.6% 49095 28.8% 0.04 0.68

El Colegio Charter School Hennepin MN 728 24.5% 0.00 0.97

Aurora Charter School Hennepin MN 1002 30.3% 0.00 1.20

Augsburg Academy for Health Careers Hennepin MN 694 20.1% 0.00 0.80

Great River School Ramsey MN 668 19.3% 138401 27.1% 0.00 0.71

Academie Lafayette Jackson MO 891 17.7% 177155 27.1% 0.01 0.66

Artspace Charter Buncombe NC 1388 21.0% 0.03 0.91

Evergreen Community Charter Buncombe NC 1476 19.8% 0.03 0.86

Central Park School for Children Durham NC 649 20.8% 0.01 0.86

Maureen Joy Charter Durham NC 920 29.2% 0.02 1.20

Gaston College Preparatory Gaston NC 1334 24.2% 5629 25.5% 0.24 0.95

Kinston Charter Academy Lenoir NC 1130 26.8% 15967 26.8% 0.07 1.00

Sugar Creek Charter Mecklenburg NC 627 23.7% 182332 26.2% 0.00 0.90

Casa Esperanza Montessori Wake NC 3062 33.3% 165596 26.4% 0.02 1.26

Sallie B Howard School Wilson NC 2061 32.1% 19863 26.9% 0.10 1.19

Team Academy Charter School Essex NJ 757 31.7% 216131 27.2% 0.00 1.16

Paterson Charter School for Science and Technology Passaic NJ 834 18.2% 133659 27.3% 0.01 0.67

Moreno Valley High School Colfax NM 1601 27.7% 3823 26.9% 0.42 1.03

Mariposa Academy Charter School Washoe NV 2913 32.5% 88837 26.2% 0.03 1.24

Bronx Prep Charter School Bronx NY 652 35.2% 0.00 1.13

Bronx Charter School - Arts Bronx NY 182 33.0% 0.00 1.05

Amber Charter School New York NY 1986 24.4% 272585 17.7% 0.01 1.37

Pinnacle Charter School Erie NY 512 27.1% 0.00 1.06

KIPP Sankofa Charter School Erie NY 1874 35.9% 0.01 1.40

Charter School of Educational Excellence Westchester NY 1451 35.5% 239433 25.9% 0.01 1.37

Arthur Academy Public Charter School Marion OR 2989 26.0% 82445 28.9% 0.04 0.90

First Philadelphia Charter School for Literacy Philadelphia PA 1539 26.1% 0.00 0.98

Math, Civics, and Sciences Charter School Philadelphia PA 76 9.5% 0.00 0.35

Nueva Esperanza Academy Charter School Philadelphia PA 1006 38.2% 0.00 1.43

Memphis Academy of Health Sciences Shelby TN 602 39.3% 265927 29.6% 0.00 1.33

IDEA Academy Hidalgo TX 3271 37.9% 210936 37.0% 0.02 1.02

East Fort Worth Montessori Academy Tarrant TX 1419 29.7% 426469 29.5% 0.00 1.01

31.3%

25.6%

23.0%

21.6%

28.3%

27.0%

26.8%

21.8%

25.2%

22.9%

24.3%

30.5%

28.3%

26.1%

29.4%

Ratio of 2000 Tract Pop. Aged 18 

and Under and 2000 County Pop. 

Aged 18 and Under

County Pop. Aged 18 and Under in 

2000 2000

868661

123329

137114

232739

416757

243470

406409

35444

219955

2798503

127612

150386

281609

47343

54315

 Sources: 1. Location of schools: Grantee Annual Performance Reports geocoded by the authors. 

2. Characteristics of Census tracts and counties in which assisted schools were located: U.S. Census 2000. 
95

Exhibit D-4: Percent of households receiving public assistance, as of 2000, in tracts and counties 

with schools assisted by Grantees between FY 2003 and FY 2005 

Assisted Schools County State

Tract Percent of 

HH receiving PA 

in 2000

County Percent of HH 

receiving PA in 2000

Ratio of 2000 Tract Percent of 

HH receiving PA and 2000 

County Percent of HH 

receiving PA 

Benton County School Of Arts Benton AR 2.9% 2.0% 1.47

Northland Preparatory Academy Coconino AZ 1.8% 0.47

Star School Coconino AZ 1.2% 0.31

Arizona Agribusiness & Equine Center, Paradise Valley Campus Maricopa AZ 1.1% 0.51

Bell Canyon Charter School Maricopa AZ 2.3% 1.06

Excalibur Charter Schools, Avalon Academy Campus Maricopa AZ 2.8% 1.27

West Gilbert Charter Elementary School and West Gilbert Charter Middle School Maricopa AZ 4.5% 2.07

Arizona Agriculture and Equine Charter School Maricopa AZ 1.2% 0.54

Valle del Sol Incorporated Maricopa AZ 0.9% 0.42

City High School Pima AZ 9.6% 3.11

Calli Ollin Academy Pima AZ 9.6% 3.11

Millsmont Academy (Aspire Public Schools) Alameda CA 14.3% 4.2% 3.36

Leadership Public Schools Richmond Contra Costa CA 12.5% 2.8% 4.41

Camino Nuevo Charter Academy High School Los Angeles CA 12.7% 1.99

View Park Preparatory Accelerated Middle Los Angeles CA 6.6% 1.04

Animo Inglewood High School Los Angeles CA 1.6% 0.25

Camino Nuevo Charter Academy - Middle School Los Angeles CA 5.2% 0.82

Academia Semillas Del Pueblo Los Angeles CA 2.9% 0.46

New Academy Of Science & Arts Charter School Los Angeles CA 13.3% 2.09

Animo Leadership Charter High School Los Angeles CA 1.5% 0.23

Envision Schools San Francisco CA 8.7% 3.9% 2.22

Highline Academy Denver CO 0.5% 0.14

KIPP Sunshine Peak Academy Denver CO 27.8% 8.29

Carbon Valley Academy Weld CO 1.1% 2.9% 0.38

Capital City Public Charter School DC DC 8.5% 1.55

Cesar Chavez Public Policy Public Charter School DC DC 2.3% 0.42

Cesar Chavez Public Charter School for Public Policy (Parkside Campus) DC DC 5.5% 1.00

D.C. Preparatory Academy Public Charter School DC DC 11.1% 2.01

Options Public Charter School DC DC 0.8% 0.14

Sasha Bruce Public Charter School DC DC 12.7% 2.31

Thurgood Marshall Academy Public Charter School DC DC 3.7% 0.68

Community Academy Public Charter School DC DC 0.8% 0.14

Tree Of Life Public Charter School DC DC 14.1% 2.56

Carlos Rosario International Public Charter School DC DC 3.7% 0.68

Literacy/Leadership/Technology Academy Hillsborough FL 2.3% 3.0% 0.75

Corebridge Educational Academy Palm Beach FL 1.4% 1.8% 0.77

Thomas Jefferson Charter School Canyon ID 5.0% 4.1% 1.24

Community Montessori Floyd IN 0.9% 3.0% 0.29

Charter School of the Dunes Lake IN 6.0% 1.28

Gary Lighthouse Charter School Lake IN 9.8% 2.11

Irvington Community School Marion IN 5.7% 1.91

Indianapolis Lighthouse Charter School Marion IN 2.2% 0.73

Southeast Neighborhood School of Excellence Marion IN 7.1% 2.39

Berkshire Arts and Technology Charter School Berkshire MA 4.5% 2.7% 1.70

Marblehead Community Charter School Essex MA 1.0% 3.1% 0.33

Four Rivers Charter School Franklin MA 5.3% 3.3% 1.63

Holyoke Community Charter School Hampden MA 8.1% 5.4% 1.49

Community Charter School of Cambridge Middlesex MA 3.6% 1.9% 1.90

Edward Brooke Charter School Suffolk MA 1.9% 0.46

Frederick Douglass Charter School Suffolk MA 1.9% 0.46

Neighborhood House Charter School Suffolk MA 7.0% 1.70

Three Oaks Public School Academy Muskegon MI 8.2% 4.7% 1.76

El Colegio Charter School Hennepin MN 1.7% 0.46

Aurora Charter School Hennepin MN 0.6% 0.16

Augsburg Academy for Health Careers Hennepin MN 16.7% 4.43

Great River School Ramsey MN 1.9% 5.4% 0.35

Academie Lafayette Jackson MO 1.0% 3.5% 0.28

Artspace Charter Buncombe NC 3.5% 1.23

Evergreen Community Charter Buncombe NC 2.2% 0.77

Central Park School for Children Durham NC 4.2% 1.58

Maureen Joy Charter Durham NC 3.2% 1.20

Gaston College Preparatory Gaston NC 4.6% 6.0% 0.77

Kinston Charter Academy Lenoir NC 4.0% 4.2% 0.94

Sugar Creek Charter Mecklenburg NC 3.6% 2.3% 1.58

Casa Esperanza Montessori Wake NC 1.3% 1.6% 0.79

Sallie B Howard School Wilson NC 11.5% 4.4% 2.59

Team Academy Charter School Essex NJ 8.5% 6.5% 1.31

Paterson Charter School for Science and Technology Passaic NJ 10.4% 4.0% 2.62

Moreno Valley High School Colfax NM 3.6% 4.2% 0.85

Mariposa Academy Charter School Washoe NV 3.5% 2.1% 1.66

Bronx Prep Charter School Bronx NY 38.8% 2.65

Bronx Charter School - Arts Bronx NY 19.2% 1.31

Amber Charter School New York NY 5.6% 5.5% 1.03

Pinnacle Charter School Erie NY 11.8% 2.63

KIPP Sankofa Charter School Erie NY 11.4% 2.55

Charter School of Educational Excellence Westchester NY 16.5% 2.7% 6.00

Arthur Academy Public Charter School Marion OR 4.4% 4.3% 1.02

First Philadelphia Charter School for Literacy Philadelphia PA 3.4% 0.39

Math, Civics, and Sciences Charter School Philadelphia PA 3.1% 0.35

Nueva Esperanza Academy Charter School Philadelphia PA 19.4% 2.22

Memphis Academy of Health Sciences Shelby TN 24.7% 4.5% 5.48

IDEA Academy Hidalgo TX 17.4% 10.8% 1.61

East Fort Worth Montessori Academy Tarrant TX 2.2% 2.1% 1.02

14.6%

4.5%

8.7%

4.1%

3.8%

2.8%

2.7%

3.4%

5.5%

3.0%

4.6%

3.8%

2.2%

3.1%

6.4%

Sources: 1. Location of schools: Grantee Annual Performance Reports geocoded by the authors. 

2. Characteristics of Census tracts and counties in which assisted schools were located: U.S. Census 2000. 
96

Exhibit D-5: Percentage white residents, as of 2000, in tracts and counties with schools assisted by 

Grantees between FY 2003 and FY 2005 

Assisted Schools County State

Raw Count Percentage Raw Count Percentage Raw Count Percentage

Benton County School Of Arts Benton AR 5535 93.5% 139457 90.9% 0.04 1.03

Northland Preparatory Academy Coconino AZ 2943 88.8% 0.04 1.40

Star School Coconino AZ 7327 81.8% 0.10 1.29

Arizona Agribusiness & Equine Center, Paradise Valley Campus Maricopa AZ 4111 86.6% 0.00 1.12

Bell Canyon Charter School Maricopa AZ 3495 87.8% 0.00 1.14

Excalibur Charter Schools, Avalon Academy Campus Maricopa AZ 4614 88.1% 0.00 1.14

West Gilbert Charter Elementary School and West Gilbert Charter Middle School Maricopa AZ 2836 92.5% 0.00 1.20

Arizona Agriculture and Equine Charter School Maricopa AZ 5881 91.3% 0.00 1.18

Valle del Sol Incorporated Maricopa AZ 4229 76.7% 0.00 0.99

City High School Pima AZ 436 70.9% 0.00 0.95

Calli Ollin Academy Pima AZ 436 70.9% 0.00 0.95

Millsmont Academy (Aspire Public Schools) Alameda CA 1170 15.5% 702440 48.7% 0.00 0.32

Leadership Public Schools Richmond Contra Costa CA 2161 28.5% 619576 65.3% 0.00 0.44

Camino Nuevo Charter Academy High School Los Angeles CA 768 15.0% 0.00 0.31

View Park Preparatory Accelerated Middle Los Angeles CA 260 4.7% 0.00 0.10

Animo Inglewood High School Los Angeles CA 238 11.3% 0.00 0.23

Camino Nuevo Charter Academy - Middle School Los Angeles CA 1307 28.9% 0.00 0.59

Academia Semillas Del Pueblo Los Angeles CA 1506 31.8% 0.00 0.65

New Academy Of Science & Arts Charter School Los Angeles CA 1868 27.7% 0.00 0.57

Animo Leadership Charter High School Los Angeles CA 1239 30.7% 0.00 0.63

Envision Schools San Francisco CA 1513 17.8% 385325 49.6% 0.00 0.36

Highline Academy Denver CO 2895 86.7% 0.01 1.33

KIPP Sunshine Peak Academy Denver CO 621 41.2% 0.00 0.63

Carbon Valley Academy Weld CO 5972 84.6% 147616 81.6% 0.04 1.04

Capital City Public Charter School DC DC 1001 21.3% 0.01 0.70

Cesar Chavez Public Policy Public Charter School DC DC 709 28.9% 0.00 0.95

Cesar Chavez Public Charter School for Public Policy (Parkside Campus) DC DC 0 0.0% 0.00 0.00

D.C. Preparatory Academy Public Charter School DC DC 120 5.0% 0.00 0.16

Options Public Charter School DC DC 148 4.6% 0.00 0.15

Sasha Bruce Public Charter School DC DC 1478 69.0% 0.01 2.25

Thurgood Marshall Academy Public Charter School DC DC 13 0.5% 0.00 0.02

Community Academy Public Charter School DC DC 364 15.3% 0.00 0.50

Tree Of Life Public Charter School DC DC 148 4.6% 0.00 0.15

Carlos Rosario International Public Charter School DC DC 2111 44.7% 0.01 1.46

Literacy/Leadership/Technology Academy Hillsborough FL 1365 75.3% 750497 75.1% 0.00 1.00

Corebridge Educational Academy Palm Beach FL 3326 84.1% 893242 79.0% 0.00 1.07

Thomas Jefferson Charter School Canyon ID 4500 75.3% 108760 82.7% 0.04 0.91

Community Montessori Floyd IN 6828 97.7% 66051 93.3% 0.10 1.05

Charter School of the Dunes Lake IN 1152 18.1% 0.00 0.27

Gary Lighthouse Charter School Lake IN 466 7.7% 0.00 0.12

Irvington Community School Marion IN 4986 90.7% 0.01 1.29

Indianapolis Lighthouse Charter School Marion IN 3038 65.2% 0.01 0.93

Southeast Neighborhood School of Excellence Marion IN 3072 94.3% 0.01 1.34

Berkshire Arts and Technology Charter School Berkshire MA 2806 98.4% 128332 95.1% 0.02 1.03

Marblehead Community Charter School Essex MA 8421 97.4% 624822 86.4% 0.01 1.13

Four Rivers Charter School Franklin MA 3071 91.5% 68501 95.8% 0.04 0.95

Holyoke Community Charter School Hampden MA 5836 71.9% 359879 78.9% 0.02 0.91

Community Charter School of Cambridge Middlesex MA 1642 73.3% 1257944 85.8% 0.00 0.85

Edward Brooke Charter School Suffolk MA 2928 66.4% 0.01 1.15

Frederick Douglass Charter School Suffolk MA 2928 66.4% 0.01 1.15

Neighborhood House Charter School Suffolk MA 1027 27.9% 0.00 0.48

Three Oaks Public School Academy Muskegon MI 5188 54.1% 138430 81.3% 0.04 0.66

El Colegio Charter School Hennepin MN 2042 68.8% 0.00 0.85

Aurora Charter School Hennepin MN 968 29.3% 0.00 0.36

Augsburg Academy for Health Careers Hennepin MN 3054 88.6% 0.00 1.10

Great River School Ramsey MN 2991 86.4% 395740 77.4% 0.01 1.12

Academie Lafayette Jackson MO 4534 90.2% 459002 70.1% 0.01 1.29

Artspace Charter Buncombe NC 6376 96.4% 0.03 1.08

Evergreen Community Charter Buncombe NC 6582 88.4% 0.04 0.99

Central Park School for Children Durham NC 1198 38.5% 0.01 0.75

Maureen Joy Charter Durham NC 1314 41.7% 0.01 0.82

Gaston College Preparatory Gaston NC 2308 41.8% 8659 39.2% 0.27 1.07

Kinston Charter Academy Lenoir NC 2509 59.4% 33483 56.1% 0.07 1.06

Sugar Creek Charter Mecklenburg NC 819 30.9% 445356 64.0% 0.00 0.48

Casa Esperanza Montessori Wake NC 5453 59.3% 453928 72.3% 0.01 0.82

Sallie B Howard School Wilson NC 1229 19.2% 40921 55.4% 0.03 0.35

Team Academy Charter School Essex NJ 25 1.1% 352937 44.5% 0.00 0.02

Paterson Charter School for Science and Technology Passaic NJ 1403 30.6% 304479 62.3% 0.00 0.49

Moreno Valley High School Colfax NM 4853 84.1% 11582 81.6% 0.42 1.03

Mariposa Academy Charter School Washoe NV 5231 58.3% 272622 80.3% 0.02 0.73

Bronx Prep Charter School Bronx NY 222 12.0% 0.00 0.40

Bronx Charter School - Arts Bronx NY 200 36.2% 0.00 1.21

Amber Charter School New York NY 2387 29.3% 835298 54.3% 0.00 0.54

Pinnacle Charter School Erie NY 57 3.0% 0.00 0.04

KIPP Sankofa Charter School Erie NY 561 10.7% 0.00 0.13

Charter School of Educational Excellence Westchester NY 834 20.4% 659051 71.4% 0.00 0.29

Arthur Academy Public Charter School Marion OR 7963 69.2% 232709 81.7% 0.03 0.85

First Philadelphia Charter School for Literacy Philadelphia PA 4680 79.5% 0.01 1.76

Math, Civics, and Sciences Charter School Philadelphia PA 389 48.6% 0.00 1.08

Nueva Esperanza Academy Charter School Philadelphia PA 821 31.2% 0.00 0.69

Memphis Academy of Health Sciences Shelby TN 5 0.3% 424523 47.3% 0.00 0.01

IDEA Academy Hidalgo TX 7375 85.4% 442579 77.7% 0.02 1.10

East Fort Worth Montessori Academy Tarrant TX 3051 63.9% 1030614 71.3% 0.00 0.90

Tract White in 2000 County White in 2000

Ratio of 2000 White and 

2000 White

73702 63.4%

2375391 77.3%

632560 75.0%

4622759 48.6%

362069 65.3%

175306 30.6%

605755 70.4%

323214 66.7%

398032 57.7%

900063 80.6%

114070

183545 89.0%

51.1%

398530 29.9%

781935 82.3%

684603 45.1%

Sources: 1. Location of schools: Grantee Annual Performance Reports geocoded by the authors. 

2. Characteristics of Census tracts and counties in which assisted schools were located: U.S. Census 2000. 
97

Exhibit D-6: Percentage black residents, as of 2000, in tracts and counties with schools assisted by 

Grantees between FY 2003 and FY 2005

Assisted Schools County State

Raw Count Percentage Raw Count Percentage Raw Count Percentage

Benton County School Of Arts Benton AR 51 0.9% 778 0.5% 0.07 1.72

Northland Preparatory Academy Coconino AZ 0 0.0% 0.00 0.00

Star School Coconino AZ 74 0.8% 0.05 0.69

Arizona Agribusiness & Equine Center, Paradise Valley Campus Maricopa AZ 124 2.6% 0.00 0.73

Bell Canyon Charter School Maricopa AZ 41 1.0% 0.00 0.29

Excalibur Charter Schools, Avalon Academy Campus Maricopa AZ 39 0.7% 0.00 0.21

West Gilbert Charter Elementary School and West Gilbert Charter Middle School Maricopa AZ 21 0.7% 0.00 0.19

Arizona Agriculture and Equine Charter School Maricopa AZ 83 1.3% 0.00 0.36

Valle del Sol Incorporated Maricopa AZ 167 3.0% 0.00 0.84

City High School Pima AZ 56 9.1% 0.00 3.14

Calli Ollin Academy Pima AZ 56 9.1% 0.00 3.14

Millsmont Academy (Aspire Public Schools) Alameda CA 4235 56.1% 212442 14.7% 0.02 3.82

Leadership Public Schools Richmond Contra Costa CA 2576 33.9% 87444 9.2% 0.03 3.69

Camino Nuevo Charter Academy High School Los Angeles CA 210 4.1% 0.00 0.43

View Park Preparatory Accelerated Middle Los Angeles CA 4849 88.0% 0.01 9.16

Animo Inglewood High School Los Angeles CA 1694 80.4% 0.00 8.38

Camino Nuevo Charter Academy - Middle School Los Angeles CA 464 10.3% 0.00 1.07

Academia Semillas Del Pueblo Los Angeles CA 238 5.0% 0.00 0.52

New Academy Of Science & Arts Charter School Los Angeles CA 198 2.9% 0.00 0.31

Animo Leadership Charter High School Los Angeles CA 267 6.6% 0.00 0.69

Envision Schools San Francisco CA 1509 17.8% 59060 7.6% 0.03 2.34

Highline Academy Denver CO 248 7.4% 0.00 0.68

KIPP Sunshine Peak Academy Denver CO 246 16.3% 0.00 1.50

Carbon Valley Academy Weld CO 12 0.2% 969 0.5% 0.01 0.34

Capital City Public Charter School DC DC 1514 32.2% 0.00 0.54

Cesar Chavez Public Policy Public Charter School DC DC 1404 57.3% 0.00 0.96

Cesar Chavez Public Charter School for Public Policy (Parkside Campus) DC DC 3045 99.0% 0.01 1.65

D.C. Preparatory Academy Public Charter School DC DC 2297 95.0% 0.01 1.58

Options Public Charter School DC DC 2997 92.4% 0.01 1.54

Sasha Bruce Public Charter School DC DC 525 24.5% 0.00 0.41

Thurgood Marshall Academy Public Charter School DC DC 2534 99.2% 0.01 1.65

Community Academy Public Charter School DC DC 1481 62.2% 0.00 1.04

Tree Of Life Public Charter School DC DC 2997 92.4% 0.01 1.54

Carlos Rosario International Public Charter School DC DC 1570 33.3% 0.00 0.55

Literacy/Leadership/Technology Academy Hillsborough FL 256 14.1% 147966 14.8% 0.00 0.95

Corebridge Educational Academy Palm Beach FL 323 8.2% 156496 13.8% 0.00 0.59

Thomas Jefferson Charter School Canyon ID 13 0.2% 337 0.3% 0.04 0.73

Community Montessori Floyd IN 77 1.1% 3226 4.6% 0.02 0.24

Charter School of the Dunes Lake IN 4817 75.8% 0.04 3.01

Gary Lighthouse Charter School Lake IN 5346 88.8% 0.04 3.52

Irvington Community School Marion IN 420 7.6% 0.00 0.32

Indianapolis Lighthouse Charter School Marion IN 1483 31.8% 0.01 1.32

Southeast Neighborhood School of Excellence Marion IN 138 4.2% 0.00 0.18

Berkshire Arts and Technology Charter School Berkshire MA 25 0.9% 2704 2.0% 0.01 0.44

Marblehead Community Charter School Essex MA 47 0.5% 17868 2.5% 0.00 0.22

Four Rivers Charter School Franklin MA 61 1.8% 531 0.7% 0.11 2.60

Holyoke Community Charter School Hampden MA 298 3.7% 36662 8.0% 0.01 0.46

Community Charter School of Cambridge Middlesex MA 141 6.3% 48093 3.3% 0.00 1.91

Edward Brooke Charter School Suffolk MA 754 17.1% 0.00 0.78

Frederick Douglass Charter School Suffolk MA 754 17.1% 0.00 0.78

Neighborhood House Charter School Suffolk MA 1662 45.2% 0.01 2.06

Three Oaks Public School Academy Muskegon MI 3607 37.6% 24037 14.1% 0.15 2.67

El Colegio Charter School Hennepin MN 357 12.0% 0.00 1.37

Aurora Charter School Hennepin MN 1138 34.4% 0.01 3.91

Augsburg Academy for Health Careers Hennepin MN 129 3.7% 0.00 0.43

Great River School Ramsey MN 66 1.9% 37414 7.3% 0.00 0.26

Academie Lafayette Jackson MO 272 5.4% 150202 22.9% 0.00 0.24

Artspace Charter Buncombe NC 64 1.0% 0.00 0.13

Evergreen Community Charter Buncombe NC 579 7.8% 0.04 1.06

Central Park School for Children Durham NC 1539 49.4% 0.02 1.26

Maureen Joy Charter Durham NC 1719 54.6% 0.02 1.40

Gaston College Preparatory Gaston NC 3112 56.3% 13113 59.4% 0.24 0.95

Kinston Charter Academy Lenoir NC 1572 37.2% 24188 40.6% 0.06 0.92

Sugar Creek Charter Mecklenburg NC 1483 56.0% 192666 27.7% 0.01 2.02

Casa Esperanza Montessori Wake NC 2913 31.7% 123058 19.6% 0.02 1.61

Sallie B Howard School Wilson NC 4597 71.7% 29350 39.8% 0.16 1.80

Team Academy Charter School Essex NJ 2173 91.0% 325185 41.0% 0.01 2.22

Paterson Charter School for Science and Technology Passaic NJ 1435 31.3% 63537 13.0% 0.02 2.41

Moreno Valley High School Colfax NM 58 1.0% 88 0.6% 0.66 1.67

Mariposa Academy Charter School Washoe NV 273 3.0% 6581 1.9% 0.04 1.60

Bronx Prep Charter School Bronx NY 1010 54.5% 0.00 1.54

Bronx Charter School - Arts Bronx NY 155 28.1% 0.00 0.79

Amber Charter School New York NY 2555 31.3% 265682 17.3% 0.01 1.81

Pinnacle Charter School Erie NY 1804 95.5% 0.01 7.40

KIPP Sankofa Charter School Erie NY 4528 86.6% 0.04 6.72

Charter School of Educational Excellence Westchester NY 1714 41.9% 128916 14.0% 0.01 3.00

Arthur Academy Public Charter School Marion OR 71 0.6% 2459 0.9% 0.03 0.69

First Philadelphia Charter School for Literacy Philadelphia PA 370 6.3% 0.00 0.15

Math, Civics, and Sciences Charter School Philadelphia PA 203 25.3% 0.00 0.59

Nueva Esperanza Academy Charter School Philadelphia PA 549 20.9% 0.00 0.48

Memphis Academy of Health Sciences Shelby TN 1527 99.7% 434127 48.4% 0.00 2.06

IDEA Academy Hidalgo TX 26 0.3% 2777 0.5% 0.01 0.60

East Fort Worth Montessori Academy Tarrant TX 1250 26.2% 182365 12.6% 0.01 2.08

Tract Black in 2000 County Black in 2000

Ratio of 2000 Black and 

2000 Black

1368 1.2%

111584 3.6%

24460 2.9%

916907 9.6%

60579 10.9%

343213 60.0%

122279 25.2%

207357 24.1%

150969 21.9%

98138 8.8%

15063 7.3%

87424 39.1%

473407 35.5%

122928 12.9%

653364 43.1%

Sources: 1. Location of schools: Grantee Annual Performance Reports geocoded by the authors. 

2. Characteristics of Census tracts and counties in which assisted schools were located: U.S. Census 2000. 
98

Exhibit D-7: Percentage American Indian residents, as of 2000, in tracts and counties with schools 

assisted by Grantees between FY 2003 and FY 2005 

Assisted Schools County State

Raw Count Percentage Raw Count Percentage Raw Count Percentage

Benton County School Of Arts Benton AR 114 1.9% 2934 1.9% 0.04 1.01

Northland Preparatory Academy Coconino AZ 191 5.8% 0.01 0.20

Star School Coconino AZ 1138 12.7% 0.03 0.45

Arizona Agribusiness & Equine Center, Paradise Valley Campus Maricopa AZ 15 0.3% 0.00 0.18

Bell Canyon Charter School Maricopa AZ 52 1.3% 0.00 0.73

Excalibur Charter Schools, Avalon Academy Campus Maricopa AZ 0 0.0% 0.00 0.00

West Gilbert Charter Elementary School and West Gilbert Charter Middle School Maricopa AZ 47 1.5% 0.00 0.85

Arizona Agriculture and Equine Charter School Maricopa AZ 52 0.8% 0.00 0.45

Valle del Sol Incorporated Maricopa AZ 159 2.9% 0.00 1.60

City High School Pima AZ 40 6.5% 0.00 1.97

Calli Ollin Academy Pima AZ 40 6.5% 0.00 1.97

Millsmont Academy (Aspire Public Schools) Alameda CA 44 0.6% 9095 0.6% 0.00 0.97

Leadership Public Schools Richmond Contra Costa CA 66 0.9% 5501 0.6% 0.01 1.45

Camino Nuevo Charter Academy High School Los Angeles CA 73 1.4% 0.00 2.04

View Park Preparatory Accelerated Middle Los Angeles CA 22 0.4% 0.00 0.57

Animo Inglewood High School Los Angeles CA 17 0.8% 0.00 1.16

Camino Nuevo Charter Academy - Middle School Los Angeles CA 9 0.2% 0.00 0.29

Academia Semillas Del Pueblo Los Angeles CA 19 0.4% 0.00 0.57

New Academy Of Science & Arts Charter School Los Angeles CA 94 1.4% 0.00 1.99

Animo Leadership Charter High School Los Angeles CA 8 0.2% 0.00 0.29

Envision Schools San Francisco CA 36 0.4% 3524 0.5% 0.01 0.84

Highline Academy Denver CO 15 0.5% 0.00 0.35

KIPP Sunshine Peak Academy Denver CO 63 4.2% 0.01 3.21

Carbon Valley Academy Weld CO 65 0.9% 1650 0.9% 0.04 1.02

Capital City Public Charter School DC DC 40 0.9% 0.02 2.13

Cesar Chavez Public Policy Public Charter School DC DC 16 0.7% 0.01 1.63

Cesar Chavez Public Charter School for Public Policy (Parkside Campus) DC DC 9 0.3% 0.00 0.73

D.C. Preparatory Academy Public Charter School DC DC 0 0.0% 0.00 0.00

Options Public Charter School DC DC 5 0.2% 0.00 0.38

Sasha Bruce Public Charter School DC DC 0 0.0% 0.00 0.00

Thurgood Marshall Academy Public Charter School DC DC 0 0.0% 0.00 0.00

Community Academy Public Charter School DC DC 13 0.6% 0.01 1.38

Tree Of Life Public Charter School DC DC 5 0.2% 0.00 0.38

Carlos Rosario International Public Charter School DC DC 0 0.0% 0.00 0.00

Literacy/Leadership/Technology Academy Hillsborough FL 0 0.0% 4175 0.4% 0.00 0.00

Corebridge Educational Academy Palm Beach FL 24 0.6% 2706 0.2% 0.01 3.05

Thomas Jefferson Charter School Canyon ID 6 0.1% 875 0.7% 0.01 0.14

Community Montessori Floyd IN 0 0.0% 104 0.1% 0.00 0.00

Charter School of the Dunes Lake IN 17 0.3% 0.01 0.90

Gary Lighthouse Charter School Lake IN 24 0.4% 0.02 1.33

Irvington Community School Marion IN 0 0.0% 0.00 0.00

Indianapolis Lighthouse Charter School Marion IN 17 0.4% 0.01 1.20

Southeast Neighborhood School of Excellence Marion IN 0 0.0% 0.00 0.00

Berkshire Arts and Technology Charter School Berkshire MA 6 0.2% 153 0.1% 0.04 2.10

Marblehead Community Charter School Essex MA 11 0.1% 1623 0.2% 0.01 0.65

Four Rivers Charter School Franklin MA 0 0.0% 169 0.2% 0.00 0.00

Holyoke Community Charter School Hampden MA 13 0.2% 1024 0.2% 0.01 0.80

Community Charter School of Cambridge Middlesex MA 0 0.0% 2643 0.2% 0.00 0.00

Edward Brooke Charter School Suffolk MA 20 0.5% 0.01 1.13

Frederick Douglass Charter School Suffolk MA 20 0.5% 0.01 1.13

Neighborhood House Charter School Suffolk MA 29 0.8% 0.01 1.98

Three Oaks Public School Academy Muskegon MI 219 2.3% 1248 0.7% 0.18 3.26

El Colegio Charter School Hennepin MN 58 2.0% 0.01 1.95

Aurora Charter School Hennepin MN 212 6.4% 0.02 6.41

Augsburg Academy for Health Careers Hennepin MN 88 2.6% 0.01 2.55

Great River School Ramsey MN 34 1.0% 4581 0.9% 0.01 1.09

Academie Lafayette Jackson MO 9 0.2% 3334 0.5% 0.00 0.36

Artspace Charter Buncombe NC 31 0.5% 0.04 1.18

Evergreen Community Charter Buncombe NC 15 0.2% 0.02 0.50

Central Park School for Children Durham NC 11 0.4% 0.01 1.17

Maureen Joy Charter Durham NC 7 0.2% 0.01 0.73

Gaston College Preparatory Gaston NC 30 0.5% 53 0.2% 0.57 2.70

Kinston Charter Academy Lenoir NC 0 0.0% 110 0.2% 0.00 0.00

Sugar Creek Charter Mecklenburg NC 12 0.5% 3250 0.5% 0.00 0.90

Casa Esperanza Montessori Wake NC 0 0.0% 2271 0.4% 0.00 0.00

Sallie B Howard School Wilson NC 9 0.1% 125 0.2% 0.07 0.70

Team Academy Charter School Essex NJ 8 0.3% 1870 0.2% 0.00 1.70

Paterson Charter School for Science and Technology Passaic NJ 21 0.5% 1539 0.3% 0.01 1.53

Moreno Valley High School Colfax NM 61 1.1% 152 1.1% 0.40 0.96

Mariposa Academy Charter School Washoe NV 234 2.6% 6212 1.8% 0.04 1.45

Bronx Prep Charter School Bronx NY 28 1.5% 0.00 1.89

Bronx Charter School - Arts Bronx NY 19 3.4% 0.00 4.30

Amber Charter School New York NY 42 0.5% 6904 0.4% 0.01 1.28

Pinnacle Charter School Erie NY 0 0.0% 0.00 0.00

KIPP Sankofa Charter School Erie NY 16 0.3% 0.00 0.52

Charter School of Educational Excellence Westchester NY 46 1.1% 2633 0.3% 0.02 3.77

Arthur Academy Public Charter School Marion OR 22 0.2% 3770 1.3% 0.01 0.15

First Philadelphia Charter School for Literacy Philadelphia PA 6 0.1% 0.00 0.33

Math, Civics, and Sciences Charter School Philadelphia PA 17 2.1% 0.00 7.07

Nueva Esperanza Academy Charter School Philadelphia PA 10 0.4% 0.00 1.27

Memphis Academy of Health Sciences Shelby TN 0 0.0% 1722 0.2% 0.00 0.00

IDEA Academy Hidalgo TX 0 0.0% 2093 0.4% 0.00 0.00

East Fort Worth Montessori Academy Tarrant TX 10 0.2% 8809 0.6% 0.00 0.35

Tract Native 

American/American Indian 

in 2000

County Native 

American/American Indian 

in 2000

Ratio of 2000 Native 

American/American Indian and 

2000 Native 

American/American Indian

32826 28.2%

55177 1.8%

27440 3.3%

68471 0.7%

7330 1.3%

2006 0.4%

1236 0.3%

2873 0.3%

3010 0.4%

10659 1.0%

833 0.4%

778 0.3%

10429 0.8%

6032 0.6%

4413 0.3%

Sources: 1. Location of schools: Grantee Annual Performance Reports geocoded by the authors. 

2. Characteristics of Census tracts and counties in which assisted schools were located: U.S. Census 2000. 
99

Exhibit D-8: Percentage of other race residents, as of 2000, in tracts and counties with schools 

assisted by Grantees between FY 2003 and FY 2005

Assisted Schools County State

Raw Count Percentage Raw Count Percentage Raw Count Percentage

Benton County School Of Arts Benton AR 223 3.8% 10237 6.7% 0.02 0.56

Northland Preparatory Academy Coconino AZ 181 5.5% 0.02 0.76

Star School Coconino AZ 421 4.7% 0.05 0.65

Arizona Agribusiness & Equine Center, Paradise Valley Campus Maricopa AZ 500 10.5% 0.00 0.61

Bell Canyon Charter School Maricopa AZ 394 9.9% 0.00 0.57

Excalibur Charter Schools, Avalon Academy Campus Maricopa AZ 582 11.1% 0.00 0.64

West Gilbert Charter Elementary School and West Gilbert Charter Middle School Maricopa AZ 161 5.3% 0.00 0.30

Arizona Agriculture and Equine Charter School Maricopa AZ 429 6.7% 0.00 0.38

Valle del Sol Incorporated Maricopa AZ 959 17.4% 0.00 1.01

City High School Pima AZ 83 13.5% 0.00 0.71

Calli Ollin Academy Pima AZ 83 13.5% 0.00 0.71

Millsmont Academy (Aspire Public Schools) Alameda CA 2100 27.8% 519764 36.0% 0.00 0.77

Leadership Public Schools Richmond Contra Costa CA 2793 36.8% 236295 24.9% 0.01 1.48

Camino Nuevo Charter Academy High School Los Angeles CA 4065 79.5% 0.00 1.93

View Park Preparatory Accelerated Middle Los Angeles CA 382 6.9% 0.00 0.17

Animo Inglewood High School Los Angeles CA 157 7.5% 0.00 0.18

Camino Nuevo Charter Academy - Middle School Los Angeles CA 2749 60.7% 0.00 1.48

Academia Semillas Del Pueblo Los Angeles CA 2975 62.8% 0.00 1.53

New Academy Of Science & Arts Charter School Los Angeles CA 4579 68.0% 0.00 1.65

Animo Leadership Charter High School Los Angeles CA 2519 62.5% 0.00 1.52

Envision Schools San Francisco CA 5429 64.0% 328824 42.3% 0.02 1.51

Highline Academy Denver CO 183 5.5% 0.00 0.24

KIPP Sunshine Peak Academy Denver CO 579 38.4% 0.00 1.71

Carbon Valley Academy Weld CO 1007 14.3% 30701 17.0% 0.03 0.84

Capital City Public Charter School DC DC 2145 45.6% 0.04 5.07

Cesar Chavez Public Policy Public Charter School DC DC 321 13.1% 0.01 1.46

Cesar Chavez Public Charter School for Public Policy (Parkside Campus) DC DC 21 0.7% 0.00 0.08

D.C. Preparatory Academy Public Charter School DC DC 0 0.0% 0.00 0.00

Options Public Charter School DC DC 92 2.8% 0.00 0.32

Sasha Bruce Public Charter School DC DC 139 6.5% 0.00 0.72

Thurgood Marshall Academy Public Charter School DC DC 8 0.3% 0.00 0.03

Community Academy Public Charter School DC DC 525 22.0% 0.01 2.45

Tree Of Life Public Charter School DC DC 92 2.8% 0.00 0.32

Carlos Rosario International Public Charter School DC DC 1037 22.0% 0.02 2.44

Literacy/Leadership/Technology Academy Hillsborough FL 191 10.5% 96310 9.6% 0.00 1.10

Corebridge Educational Academy Palm Beach FL 280 7.1% 78740 7.0% 0.00 1.01

Thomas Jefferson Charter School Canyon ID 1461 24.4% 21469 16.3% 0.07 1.50

Community Montessori Floyd IN 82 1.2% 1442 2.0% 0.06 0.59

Charter School of the Dunes Lake IN 373 5.9% 0.01 0.75

Gary Lighthouse Charter School Lake IN 184 3.1% 0.00 0.39

Irvington Community School Marion IN 90 1.6% 0.00 0.32

Indianapolis Lighthouse Charter School Marion IN 120 2.6% 0.00 0.50

Southeast Neighborhood School of Excellence Marion IN 49 1.5% 0.00 0.29

Berkshire Arts and Technology Charter School Berkshire MA 15 0.5% 3764 2.8% 0.00 0.19

Marblehead Community Charter School Essex MA 171 2.0% 79106 10.9% 0.00 0.18

Four Rivers Charter School Franklin MA 226 6.7% 2334 3.3% 0.10 2.04

Holyoke Community Charter School Hampden MA 1967 24.2% 58663 12.9% 0.03 1.88

Community Charter School of Cambridge Middlesex MA 456 20.4% 156716 10.7% 0.00 1.90

Edward Brooke Charter School Suffolk MA 707 16.0% 0.01 0.80

Frederick Douglass Charter School Suffolk MA 707 16.0% 0.01 0.80

Neighborhood House Charter School Suffolk MA 958 26.1% 0.01 1.30

Three Oaks Public School Academy Muskegon MI 584 6.1% 6485 3.8% 0.09 1.60

El Colegio Charter School Hennepin MN 511 17.2% 0.00 1.79

Aurora Charter School Hennepin MN 989 29.9% 0.01 3.12

Augsburg Academy for Health Careers Hennepin MN 177 5.1% 0.00 0.53

Great River School Ramsey MN 371 10.7% 73300 14.3% 0.01 0.75

Academie Lafayette Jackson MO 214 4.3% 42342 6.5% 0.01 0.66

Artspace Charter Buncombe NC 146 2.2% 0.02 0.67

Evergreen Community Charter Buncombe NC 272 3.7% 0.04 1.11

Central Park School for Children Durham NC 368 11.8% 0.02 1.26

Maureen Joy Charter Durham NC 111 3.5% 0.01 0.37

Gaston College Preparatory Gaston NC 74 1.3% 261 1.2% 0.28 1.12

Kinston Charter Academy Lenoir NC 140 3.3% 1867 3.1% 0.07 1.07

Sugar Creek Charter Mecklenburg NC 335 12.7% 54182 7.8% 0.01 1.62

Casa Esperanza Montessori Wake NC 837 9.1% 48589 7.7% 0.02 1.18

Sallie B Howard School Wilson NC 580 9.0% 3418 4.6% 0.17 1.97

Team Academy Charter School Essex NJ 182 7.6% 113641 14.3% 0.00 0.53

Paterson Charter School for Science and Technology Passaic NJ 1727 37.7% 119494 24.4% 0.01 1.54

Moreno Valley High School Colfax NM 801 13.9% 2367 16.7% 0.34 0.83

Mariposa Academy Charter School Washoe NV 3231 36.0% 54071 15.9% 0.06 2.27

Bronx Prep Charter School Bronx NY 592 32.0% 0.00 0.95

Bronx Charter School - Arts Bronx NY 178 32.3% 0.00 0.95

Amber Charter School New York NY 3173 38.9% 429311 27.9% 0.01 1.39

Pinnacle Charter School Erie NY 28 1.5% 0.00 0.36

KIPP Sankofa Charter School Erie NY 121 2.3% 0.00 0.08

Charter School of Educational Excellence Westchester NY 1493 36.5% 132859 14.4% 0.01 2.54

Arthur Academy Public Charter School Marion OR 3455 30.0% 45896 16.1% 0.08 1.86

First Philadelphia Charter School for Literacy Philadelphia PA 832 14.1% 0.00 1.23

Math, Civics, and Sciences Charter School Philadelphia PA 192 24.0% 0.00 2.08

Nueva Esperanza Academy Charter School Philadelphia PA 1252 47.6% 0.01 4.14

Memphis Academy of Health Sciences Shelby TN 0 0.0% 37100 4.1% 0.00 0.00

IDEA Academy Hidalgo TX 1236 14.3% 122014 21.4% 0.01 0.67

East Fort Worth Montessori Academy Tarrant TX 461 9.7% 224431 15.5% 0.00 0.62

Tract Other Race in 2000 County Other Race in 2000

Ratio of 2000 Other Race 

and 2000 Other Race

8424 7.2%

529997 17.3%

159286 18.9%

3911201 41.1%

124658 22.5%

51534 9.0%

37835 7.8%

44469 5.2%

137796 20.0%

107340 9.6%

6889 3.3%

21042 9.4%

175170 11.5%

450284 33.8%

39370 4.1%

Sources: 1. Location of schools: Grantee Annual Performance Reports geocoded by the authors. 

2. Characteristics of Census tracts and counties in which assisted schools were located: U.S. Census 2000. 
100

Exhibit D-9: Percentage of Hispanic residents, as of 2000, in tracts and counties with schools 

assisted by Grantees between FY 2003 and FY 2005

Assisted Schools County State

Raw Count Percentage Raw Count Percentage Raw Count Percentage

Benton County School Of Arts Benton AR 408 6.9% 13214 8.6% 0.03 0.80

Northland Preparatory Academy Coconino AZ 287 8.7% 0.02 0.79

Star School Coconino AZ 783 8.7% 0.06 0.80

Arizona Agribusiness & Equine Center, Paradise Valley Campus Maricopa AZ 858 18.1% 0.00 0.73

Bell Canyon Charter School Maricopa AZ 677 17.0% 0.00 0.68

Excalibur Charter Schools, Avalon Academy Campus Maricopa AZ 890 17.0% 0.00 0.68

West Gilbert Charter Elementary School and West Gilbert Charter Middle School Maricopa AZ 350 11.4% 0.00 0.46

Arizona Agriculture and Equine Charter School Maricopa AZ 595 9.2% 0.00 0.37

Valle del Sol Incorporated Maricopa AZ 1192 21.6% 0.00 0.87

City High School Pima AZ 153 24.9% 0.00 0.85

Calli Ollin Academy Pima AZ 153 24.9% 0.00 0.85

Millsmont Academy (Aspire Public Schools) Alameda CA 2487 32.9% 273887 19.0% 0.01 1.74

Leadership Public Schools Richmond Contra Costa CA 3828 50.4% 168059 17.7% 0.02 2.84

Camino Nuevo Charter Academy High School Los Angeles CA 1624 31.7% 0.00 0.71

View Park Preparatory Accelerated Middle Los Angeles CA 178 3.2% 0.00 0.07

Animo Inglewood High School Los Angeles CA 241 11.4% 0.00 0.26

Camino Nuevo Charter Academy - Middle School Los Angeles CA 1871 41.3% 0.00 0.93

Academia Semillas Del Pueblo Los Angeles CA 3731 78.8% 0.00 1.77

New Academy Of Science & Arts Charter School Los Angeles CA 6230 92.5% 0.00 2.07

Animo Leadership Charter High School Los Angeles CA 496 12.3% 0.00 0.28

Envision Schools San Francisco CA 1222 14.4% 109565 14.1% 0.01 1.02

Highline Academy Denver CO 198 5.9% 0.00 0.19

KIPP Sunshine Peak Academy Denver CO 980 64.9% 0.01 2.05

Carbon Valley Academy Weld CO 1622 23.0% 48898 27.0% 0.03 0.85

Capital City Public Charter School DC DC 2379 50.6% 0.05 6.43

Cesar Chavez Public Policy Public Charter School DC DC 418 17.1% 0.01 2.17

Cesar Chavez Public Charter School for Public Policy (Parkside Campus) DC DC 16 0.5% 0.00 0.07

D.C. Preparatory Academy Public Charter School DC DC 57 2.4% 0.00 0.30

Options Public Charter School DC DC 132 4.1% 0.00 0.52

Sasha Bruce Public Charter School DC DC 63 2.9% 0.00 0.37

Thurgood Marshall Academy Public Charter School DC DC 8 0.3% 0.00 0.04

Community Academy Public Charter School DC DC 577 24.2% 0.01 3.08

Tree Of Life Public Charter School DC DC 132 4.1% 0.00 0.52

Carlos Rosario International Public Charter School DC DC 1264 26.8% 0.03 3.40

Literacy/Leadership/Technology Academy Hillsborough FL 474 26.2% 179637 18.0% 0.00 1.45

Corebridge Educational Academy Palm Beach FL 387 9.8% 140568 12.4% 0.00 0.79

Thomas Jefferson Charter School Canyon ID 1672 28.0% 24503 18.6% 0.07 1.50

Community Montessori Floyd IN 42 0.6% 685 1.0% 0.06 0.62

Charter School of the Dunes Lake IN 356 5.6% 0.01 0.46

Gary Lighthouse Charter School Lake IN 225 3.7% 0.00 0.31

Irvington Community School Marion IN 58 1.1% 0.00 0.28

Indianapolis Lighthouse Charter School Marion IN 15 0.3% 0.00 0.09

Southeast Neighborhood School of Excellence Marion IN 157 4.8% 0.00 1.29

Berkshire Arts and Technology Charter School Berkshire MA 39 1.4% 2223 1.6% 0.02 0.83

Marblehead Community Charter School Essex MA 34 0.4% 79629 11.0% 0.00 0.04

Four Rivers Charter School Franklin MA 77 2.3% 1227 1.7% 0.06 1.34

Holyoke Community Charter School Hampden MA 2532 31.2% 69046 15.1% 0.04 2.06

Community Charter School of Cambridge Middlesex MA 160 7.2% 66436 4.5% 0.00 1.58

Edward Brooke Charter School Suffolk MA 764 17.3% 0.01 1.11

Frederick Douglass Charter School Suffolk MA 764 17.3% 0.01 1.11

Neighborhood House Charter School Suffolk MA 544 14.8% 0.01 0.95

Three Oaks Public School Academy Muskegon MI 547 5.7% 5775 3.4% 0.09 1.68

El Colegio Charter School Hennepin MN 259 8.7% 0.01 2.15

Aurora Charter School Hennepin MN 851 25.7% 0.02 6.32

Augsburg Academy for Health Careers Hennepin MN 194 5.6% 0.00 1.38

Great River School Ramsey MN 73 2.1% 27210 5.3% 0.00 0.40

Academie Lafayette Jackson MO 168 3.3% 34925 5.3% 0.00 0.63

Artspace Charter Buncombe NC 153 2.3% 0.03 0.87

Evergreen Community Charter Buncombe NC 143 1.9% 0.03 0.72

Central Park School for Children Durham NC 434 13.9% 0.03 1.83

Maureen Joy Charter Durham NC 303 9.6% 0.02 1.26

Gaston College Preparatory Gaston NC 83 1.5% 128 0.6% 0.65 2.59

Kinston Charter Academy Lenoir NC 119 2.8% 1852 3.1% 0.06 0.91

Sugar Creek Charter Mecklenburg NC 598 22.6% 44954 6.5% 0.01 3.49

Casa Esperanza Montessori Wake NC 492 5.4% 34135 5.4% 0.01 0.98

Sallie B Howard School Wilson NC 919 14.3% 4122 5.6% 0.22 2.57

Team Academy Charter School Essex NJ 186 7.8% 122770 15.5% 0.00 0.50

Paterson Charter School for Science and Technology Passaic NJ 2478 54.0% 146679 30.0% 0.02 1.80

Moreno Valley High School Colfax NM 2316 40.1% 6742 47.5% 0.34 0.84

Mariposa Academy Charter School Washoe NV 4825 53.8% 56304 16.6% 0.09 3.24

Bronx Prep Charter School Bronx NY 761 41.1% 0.00 0.85

Bronx Charter School - Arts Bronx NY 440 79.7% 0.00 1.65

Amber Charter School New York NY 4719 57.9% 418005 27.2% 0.01 2.13

Pinnacle Charter School Erie NY 8 0.4% 0.00 0.13

KIPP Sankofa Charter School Erie NY 42 0.8% 0.00 0.25

Charter School of Educational Excellence Westchester NY 1882 46.1% 144550 15.7% 0.01 2.94

Arthur Academy Public Charter School Marion OR 4680 40.7% 49005 17.2% 0.10 2.36

First Philadelphia Charter School for Literacy Philadelphia PA 461 7.8% 0.00 0.93

Math, Civics, and Sciences Charter School Philadelphia PA 94 11.7% 0.00 1.39

Nueva Esperanza Academy Charter School Philadelphia PA 1961 74.5% 0.02 8.81

Memphis Academy of Health Sciences Shelby TN 5 0.3% 22322 2.5% 0.00 0.13

IDEA Academy Hidalgo TX 7973 92.3% 503526 88.4% 0.02 1.04

East Fort Worth Montessori Academy Tarrant TX 649 13.6% 285338 19.7% 0.00 0.69

Ratio of 2000 Tract 

Hispanic Origin and 2000 

County Hispanic Origin 

County Hispanic Origin 

in 2000

Tract Hispanic Origin in 

2000

12692

763333

247861

4243487

176063

45015

58798

32188

645222

30760

128300

107352

45424

5469

16994

10.9%

24.8%

29.4%

44.6%

31.7%

7.9%

12.1%

3.7%

48.4%

3.2%

8.5%

15.6%

4.1%

2.7%

7.6%

Sources: 1. Location of schools: Grantee Annual Performance Reports geocoded by the authors. 

2. Characteristics of Census tracts and counties in which assisted schools were located: U.S. Census 2000. 
 

101

Appendix E: Program Grant Recipients: FY 2002–FY 2007 
 

102

America's Charter School Finance Corporation/Building Hope 

910 17th Street, NW, Suite 1100, Washington, DC 20001 

Project Director: Joe Bruno 

FY 2002: $5 million 

Local Initiatives Support Corporation 

501 Seventh Avenue, 7th Floor, New York, NY 10017 

Project Director: Elise Balboni 

FY 2003: $10 million 

FY 2006: $8.2 million 

California Charter Schools Association 

250 E. 1st St., Suite 1000, Los Angeles, CA 90012 

Project Director: Adam Miller 

FY 2005: $10 million 

Low Income Investment Fund 

100 Pine Street, Suite 1800, San Francisco, CA 94111 

Project Director: Susan Harper 

FY 2002: $3 million 

FY 2007: $5 million 

Charter Schools Development Corporation 

7272 Park Circle Drive, Suite 265, Hanover, MD 21076 

Contact person: Michelle Liberati 

 FY 2002: $10 million 

 FY 2004: $5 million 

 FY 2006: $6.6 million 

Massachusetts Development Finance Agency 

160 Federal Street, Boston, MA 02110 

Project Director: Rebecca Sullivan 

FY 2003: $10 million 

Community Loan Fund of New Jersey, Inc. 

16-18 West Lafayette Street, Trenton, NJ 08608 

Project Director: David Scheck 

 FY 2006: $8.15 million 

Michigan Public Educational Facilities Authority 

430 W. Allegan Street, Lansing, MI 48922 

Project Director: Kathleen O’Keefe 

 FY 2007: $6.5 million 

District of Columbia Office of the State Superintendent of 

Education 

441 4th Street, NW, 350 North, Washington, DC 20001 

Contact person: Stefan Huh 

 FY 2004: $5 million 

NCB Capital Impact 

2011 Crystal Drive, Suite 800, Arlington, VA 22202 

Project Director: Annie Donovan 

FY 2002: $10 million 

 FY 2003: $8 million 

Housing Partnership Network, Inc. 

160 State Street, 5th Floor, Boston, MA 02109 

Project Director: Thomas Bledsoe 

FY 2007: $15 million 

Raza Development Fund 

111 W. Monroe Street, Suite #1610, Phoenix, AZ 85003 

Project Director: Mark Van Brunt 

FY 2002: $5 million 

FY 2004: $8 million 

 FY 2006: $1.6 million 

IFF 

One North LaSalle Street, Suite 700, Chicago, IL 60602 

Project Director: Jill Levine 

FY 2005: $8 million 

FY 2007: $ 10 million 

The Reinvestment Fund 

718 Arch Street, Suite 300N, Philadelphia, PA 19106-1591 

Project Director: Donald R. Hinkle-Brown 

 FY 2005: $10 million 

Indianapolis Local Improvement Bond Bank 

200 East Washington Street, 2421, Indianapolis, IN 46204 

Project Director: Barbara Lawrence 

FY 2005: $2 million 

Self-Help 

301 West Main Street, Durham, NC 27702 

Contact person: Jane Ellis 

FY 2003: $8 million 

FY 2006: $ 2.2 million 

KIPP Foundation 

345 Spear Street, Suite 510, San Francisco, CA 94105 

Project Director: Carmen Maldonado 

FY 2006: $6.8 million 

Texas Public Finance Authority 

300 W. 15th Street, Suite 411, Austin, TX 78711 

Project Director: Kim Edwards 

FY 2005: $10 million 
The Department of Education’s mission is to promote student achievement 

and preparation for global competitiveness by fostering educational 

excellence and ensuring equal access.

www.ed.gov