LIIF Lends Over $50 Million to Charter Schools
With a busy year still ahead, the San Francisco-based non profit, Low Income Investment Fund (LIIF), has approved over $50 million to support charter schools in California, providing a much needed funding boost to schools throughout the state.
LIIF’s lending has allowed these schools, the majority of which serve low income students, to enroll over 21,000 students.
For 21 years, LIIF has assisted disadvantaged and underserved populations by channeling private capital into education, community development, child care and affordable housing projects.
“We are thrilled to see private capital put to work for the kids of California,” says Nancy O. Andrews, President and CEO of LIIF, “Charter schools play an important role in offering a quality, educational alternative to low income communities, and LIIF is proud to support their efforts.”
Charters schools are independent public schools that qualify for state and federal funding but cannot raise capital for facilities through local property tax initiatives used by school districts. Recent cuts to state education funding of $9.8 billion over the past four years have led charter schools to stretch already limited public funding to cover their facilities costs. Non profit lenders, like LIIF, have been crucial to their financial assistance.
Since charter schools rarely present the profile of a traditional borrower to commercial lenders, it can be difficult for schools to access this financing. Organizations, like LIIF, have developed a unique expertise in meeting the needs of charter school borrowers, without compromising the technical skills found in conventional lending markets. LIIF has the ability to provide further in depth assistance and more flexible underwriting than most banks.
“What makes us different from banks is that we don’t just rely on traditional lending rules to evaluate loans. We look at the whole school, the quality of its program, partnerships, and impact on the community,” says Andrews.
Charter schools operate under a contract, or “charter” with a school district, for a fixed period of time. They are managed by parents, educators or community advocates who petition their local or county school board to open a school within their community. Though subject to fewer regulations, they are more accountable for student achievement.
Since California’s passage of the Charter Schools Act in 1992, charter schools have garnered momentum and support from parents, educators and legislators who have been frustrated by the lack of education quality within the state. According to a 2004 published report by WestEd, California ranks near bottom in the nation for student achievement in English and Math. Not surprisingly, California also leads the nation in the number of charter schools in operation, with 510 charter schools today, serving more than 180,000 students, as cited by the California Charter School Association.
With research still young, studies increasingly show California charter schools often out-performing traditional public schools. According to a 2005 report by EdSource that compared California student achievement between charter and traditional schools, 60% of charter schools met their academic growth targets compared to 48% of non-charter schools. Further evidence suggests that charter schools may better serve low income and minority students.
“Education investments are vital to the future of our children, especially those who are economically disadvantaged,” says Andrews. “We’ve worked extremely hard with charter schools and education affiliates to provide them with the capital that they are unable get in the private market.”