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Charter Victory with PSF Expansion

May 25, 2017

There is great news for students on one of the Texas Charter Schools Association’s chief priorities for the 85th legislative session. Earlier this week, the Texas House passed legislation to expand the capacity of the Permanent School Fund Bond Guarantee Program for public charter schools. After a landslide vote of 139 Yeas to 7 Nays, SB 1480 now goes to Governor Greg Abbott’s desk.

We thank the bill authors, Representative Jim Murphy of Houston, District 133, and Senator Bryan Hughes of Mineola, District 1 for championing students at public charter schools and shepherding this legislation through this session. We also thank both Chairman Larry Taylor of the Senate Education Committee and Chairman Dan Huberty of the House Public Education Committee for their support.

The capacity for public charter schools to access the PSF Bond Guarantee Program will go from $1 billion to $4 billion beginning September 1, 2017. This expansion allows charter schools to access the total capacity of the program subject to the percentage of students enrolled in public charter schools.

As background, the Permanent School Fund (PSF) allows schools to participate in a bond guarantee program and in order to be eligible for PSF, public charter schools must achieve an investment grade rating from a national firm before the guarantee of the PSF. Public charter schools then have access to bonds with the full faith and credit of the State of Texas, which gives them the highest bond rating available (AAA). In turn, this lowers the interest rates on bonds issued by public schools.

This results in significant savings for public charter schools so that funds that would have gone to fees and interest, now go towards students for classroom instruction and materials. Public charter schools have more opportunity to grow and provide a quality education to the students of Texas.

Since 2014, public charter schools that meet the eligibility criteria have issued and refinanced bonds with the PSF Bond Guarantee Program. Leveraging the PSF and investing in these excellent schools has already realized a savings of about $10.5 million annually for the next 25 years. We anticipate savings to increase four-fold over the next five years.

Texas has extremely stringent eligibility requirements that public charter schools must meet to access the PSF bond guarantee program. Additionally, SB 1480 includes significant provisions to protect the integrity of the rating for the PSF over time. There is no cost to the state, and no impact to traditional district bond guarantees.

The final passage of SB 1480 was only possible because of the strong grassroots efforts led by charter school advocates and parents. Texas state senators and representatives received hundreds of calls, emails, and visits from charter school advocates on this issue. Thank you for your commitment to ensuring that students come first!

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