private-sector financing capital relative to the 
amount of government funding used and other-
wise enhance credit available to charter schools, 
including how the entity will offer a combination 
of rates and terms more favorable than the rates 
and terms that a charter school could receive 
without assistance from the entity under this sec-
tion; 
‘‘(E) a description of how the eligible entity 
possesses sufficient expertise in education to 
evaluate the likelihood of success of a charter 
school program for which facilities financing is 
sought; and 
‘‘(F) in the case of an application submitted 
by a State governmental entity, a description of 
the actions that the entity has taken, or will 
take, to ensure that charter schools within the 
State receive the funding the charter schools need 
to have adequate facilities. 
‘‘(e) CHARTER SCHOOL OBJECTIVES.—An eligible en-
tity receiving a grant under this section shall use the funds 
deposited in the reserve account established under subsection 
(f) to assist one or more charter schools to access private 
sector capital to accomplish one or both of the following ob-
jectives: 
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‘‘(1) The acquisition (by purchase, lease, dona-
tion, or otherwise) of an interest (including an inter-
est 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. 
‘‘(2) The construction of new facilities, including 
predevelopment costs, or the renovation, repair, or al-
teration of existing facilities, necessary to commence 
or continue the operation of a charter school. 
‘‘(f) RESERVE ACCOUNT.— 
‘‘(1) USE OF FUNDS.—To assist charter schools 
to accomplish the objectives described in subsection 
(e), an eligible entity receiving a grant under sub-
section (a) shall, in accordance with State and local 
law, directly or indirectly, alone or in collaboration 
with others, deposit the funds received under sub-
section (a) (other than funds used for administrative 
costs in accordance with subsection (g)) in a reserve 
account established and maintained by the eligible en-
tity for this purpose. Amounts deposited in such ac-
count shall be used by the eligible entity for one or 
more of the following purposes: 
‘‘(A) Guaranteeing, insuring, and rein-
suring bonds, notes, evidences of debt, loans, and 
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interests therein, the proceeds of which are used 
for an objective described in subsection (e). 
‘‘(B) Guaranteeing and insuring leases of 
personal and real property for an objective de-
scribed in subsection (e). 
‘‘(C) 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. 
‘‘(D) 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, un-
derwriters, and potential investors and the con-
solidation of multiple charter school projects 
within a single bond issue). 
‘‘(2) INVESTMENT.—Funds received under this 
section and deposited in the reserve account estab-
lished under paragraph (1) shall be invested in obli-
gations issued or guaranteed by the United States or 
a State, or in other similarly low-risk securities. 
‘‘(3) REINVESTMENT OF EARNINGS.—Any earn-
ings on funds received under subsection (a) shall be 
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deposited in the reserve account established under 
paragraph (1) and used in accordance with such sub-
section. 
‘‘(g) LIMITATION ON ADMINISTRATIVE COSTS.—An eli-
gible entity may use not more than 2.5 percent of the funds 
received under subsection (a) for the administrative costs 
of carrying out its responsibilities under this section (ex-
cluding subsection (k)). 
‘‘(h) AUDITS AND REPORTS.— 
‘‘(1) FINANCIAL
RECORD
MAINTENANCE
AND 
AUDIT.—The financial records of each eligible entity 
receiving a grant under subsection (a) shall be main-
tained in accordance with generally accepted account-
ing principles and shall be subject to an annual audit 
by an independent public accountant. 
‘‘(2) REPORTS.— 
‘‘(A) GRANTEE ANNUAL REPORTS.—Each el-
igible entity receiving a grant under subsection 
(a) annually shall submit to the Secretary a re-
port of its operations and activities under this 
section. 
‘‘(B) CONTENTS.—Each annual report sub-
mitted under subparagraph (A) shall include— 
‘‘(i) a copy of the most recent financial 
statements, and any accompanying opinion 
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on such statements, prepared by the inde-
pendent public accountant reviewing the fi-
nancial records of the eligible entity; 
‘‘(ii) a copy of any report made on an 
audit of the financial records of the eligible 
entity that was conducted under paragraph 
(1) during the reporting period; 
‘‘(iii) an evaluation by the eligible en-
tity of the effectiveness of its use of the Fed-
eral funds provided under subsection (a) in 
leveraging private funds; 
‘‘(iv) a listing and description of the 
charter schools served during the reporting 
period, including the amount of funds used 
by each school, the type of project facilitated 
by the grant, and the type of assistance pro-
vided to the charter schools; 
‘‘(v) a description of the activities car-
ried out by the eligible entity to assist char-
ter schools in meeting the objectives set forth 
in subsection (e); and 
‘‘(vi) a description of the characteris-
tics of lenders and other financial institu-
tions participating in the activities under-
taken by the eligible entity under this sec-
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