A Senate committee unanimously approved a bill Thursday that could save charter schools and the state millions of dollars on buildings by allowing them to get the state's backing when bonding.
Now charter schools, which are public schools, may bond to help pay for facilities, but they typically pay higher interest rates than school districts largely because they can't raise taxes, said Chris Bleak, president of the Utah Association of Public Charter Schools, which helped work on the bill, SB152, now on it's way to the full Senate. The bill would allow charter schools that meet certain requirements to get the state's backing, which would raise their credit ratings, allowing them to pay lower interest rates.
"In the case of charter schools, we pay tax dollars for financing we should not have to pay for," said bill sponsor Sen. John Valentine, R-Orem. "On a typical $10 million school, we will pay over $7 million more in financing charges than we should have to pay."
Sen. Lyle Hillyard, R-Logan, questioned whether the state could suffer if a charter school wasn't able to pay off a bond if, for example, it lost students and consequently lost state funding.
Bill supporters, however, emphasized that only charter schools that are investment-grade rated would be allowed to take part. Also, participating charter schools would have to pay money into a reserve account that would act as a safety net should a charter school not be able to continue payments on a bond. The bill proposes the state put $3 million into that fund as a start.
Kory Holdaway, with the Utah Education Association, questioned whether it might be a good idea to put a system in place for new charters as well, but called the bill "a move in the right direction."
The bill now moves to the Senate floor.