SBOE Warned of Risk in Renting to Charter Schools
State Board of Education member David Bradley, R-Beaumont, thinks Texas' charter schools deserve better than the strip malls, warehouses and vacant churches some of them call home — but the SBOE's lawyers told him and other members Wednesday to proceed cautiously with his proposal for the state to invest about $100 million in facilities to rent to charter schools. The lawyers advised the board to get an opinion from the state attorney general's office or risk litigation down the road.
That's because the SBOE wants to use the $23 billion Permanent School Fund to finance the deals, and ...
Comments (4)
tratliff
So the proposal is for the government to provide low interest loans to customers who have little or no credit history, inexperienced management teams, and short-term licenses in an industry with a 30% failure rate since its inception? Haven't we heard this story before? Can you say Fannie Mae and Freddie Mac?
I find it ironic that a Republican-dominated SBOE is actually considering the creation of a government-subsidized mortgage company.
The two ladies that testified did a wonderful job explaining the challenges of starting a new charter school, which is a business. A business that has the honorable goal of educating kids, but a business nonetheless. Isn't this what the free market is all about? You put together a business plan, you raise money, borrow it yourself, or find a bank to loan you the money based on your business plan, management team, etc.
I congratulate both of those schools for working hard and figuring it out without the need for a low interest loan from the SBOE. They are just two examples of the 200+ charter schools that have done the same thing. As David Dunn stated, Texas has the 2nd fastest growth in charter school enrollment. Obviously, many of these schools have figured out how to get facilities funded in the open market.
Is the concern that they aren't growing as fast as they would like? Is that really the goal of investments from the PSF? There are a lot of honorable small business men and women who would agree their new business isn't growing as fast as they would like, but the SBOE doesn't need to loan them money either.
To be clear, charter schools need facilities funding assistance and I support their role in the education landscape in Texas. I just don't see how this idea makes sense from a FINANCIAL perspective, which is the Constitutional requirement for investments from the PSF. "Maximize return and minimize risk" is what the SBOE's fiduciary counsel said.
Lastly, while $100 million may not seem like much to some members of the SBOE, it is a lot of money to most Texans. It's hard to imagine how this much money can be described as "rounding error".
Please join me in encouraging the SBOE to take a pass on this idea.
tratliff
For those of you scoring at home, the SBOE just voted to forge ahead with this idea. Surprisingly, a member who voted AGAINST the proposal yesterday (which resulted in the proposal being defeated) wasn't in attendance today. This is the same member who was the swing vote when the SBOE fired the previous financial consultant and hired the current one.
In the legislature, there's a term called, "taking a walk" to avoid voting on an issue. Did Mr. Agosto come to the SBOE today with his walking shoes or his dress shoes?
Even more interesting was Mr. Bradley's comments that he wanted to do this to "be fair" to the charter schools and help them with facilities funding. I don't remember the fairness provision in the Texas Constitution with regards to investments in the permanent school fund.
This is "social investing" not "financial investing" and it is a BAD idea. This will just add fuel to the fire for the Texas Legislature to consider taking the PSF away from the SBOE.
January is just 5 months away.
JJ Baskin
I cannot say that I am impressed by the SBOE on this or many other matters.
Isn't this the same group that postponed purchasing textbooks because there weren't enough resources?
I think the other irony is that the state is going into direct competition with private industry. The commercial lending institutions, several of which are forging strategies to fund charter school facilities, have a model that has seen some success for charters and private banks in other states.
John McCoy
Let's collect the $21 million owed before we start even considering doing any more business with charter schools.