Charter debt ‘stunningly bad’

Source: Ryan Briggs and Alex Wigglesworth, philly.com, September 18, 2015

NEARLY $500 MILLION in expensive and lightly regulated borrowing by Philadelphia charter schools uncovered this week contains some spending that is “not defensible” and “stunningly bad,” according to Gov. Wolf’s top policy official. … Since 2001, $468 million in tax-exempt bonds have been issued to charter schools with help from the Philadelphia Industrial Development Authority, the city’s largest economic-development agency. The bonds frequently carried “junk” ratings, which means much higher interest rates than traditional government borrowing. …

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Building booms over classrooms
Source: Ryan Briggs and Alex Wigglesworth, philly.com, September 14, 2015

… It is also the most conspicuous example yet of a risky, expensive, and fast-growing financial scheme underpinning the rapid expansion of Philadelphia charters — a market now worth nearly $500 million. But the bond financing behind the mountain of money gets little scrutiny on whether the debt is a smart use of Pennsylvania’s limited educational dollars. … Charter schools used to inhabit repurposed supermarkets or old storefronts, but a Philly.com analysis of bond documents showed that an increasing number — one out of three charters today — have bought or constructed newer and larger school buildings with tax-exempt bonds, paying millions in debt and fees to consultants along the way. Bonds — school debt sold to investors who are gradually paid back with interest — have become popular among charters because they allow lower borrowing costs than standard commercial loans. …