"Clean" State Audit Confirms Success of Charter Facilities Programs

Sacramento, CA—This morning, the California State Auditor released a program audit of the Charter School Facility Grant Program (CSFGP) and Conduit Financing Program, largely confirming that the programs are achieving their intended goals, implemented in accord with the law, and are providing substantial benefit. The Auditor’s findings largely contradict school employee labor unions’ repeated attacks on the programs. 

Background

The CSFGP provides reimbursement for up to 75 percent of eligible schools’ facilities rent, lease, and related costs. It is unique among education funding programs in its intensive, up-front review of applicants’ eligibility. Where most categorical programs provide funding with little conformation of actual eligibility and assume the applicants will spend the funds in accord with the program’s requirements, the CSFGP is different. CSFGP applicants must demonstrate compliance with the bulk of the program’s key requirements before receiving funding, including submitting copies of executed leases, independent appraisals confirming the rent paid reflects market rates, and documentation or certification of compliance with many other requirements.

The Conduit Financing Program is a separate service through which CSFA issues bonds on behalf of charter schools. Using the CSFA as a conduit can have two benefits: first, the bonds may qualify as tax-exempt and, second, the CSFA has the authority to “intercept” debt service payments from schools’ revenue before the school receives them to ensure timely payment to the lenders. Both can substantially reduce the school’s borrowing costs and at no direct cost to the state. The charter schools are solely responsible for paying off the principal, interest, and other fees from school revenues. Here, too, the CSFA implements an extensive, up-front vetting process and other reviews—even though the state is not liable for the bonds issued through the process.

Despite these extensive up-front protections, opponents of the programs, principally school employee unions, have been attacking them from multiple positions. Last year, they sponsored Assembly Bill 2484, legislation that would have...