Buck Financial Blog

On Thursday, October 25, in a move hailed by the Washington State Charter Schools Association, the Washington Supreme Court upheld all of the 2012 Charter School Law except the prohibition on unionization of charter employees.  A majority of the Court rejected the argument made by plaintiffs, such as that bastion of objectivity the Washington Education Association, that charter schools violated the State Constitution because they use public moneys but are not accountable to voters.  The plaintiff’s argument would be comical if it was not just false but also not rooted in a harmful aspect of the traditional system of public education.

Going back to the inception of charter schools, part of the impetus for an alternative to traditional public schools was the lack of accountability on the part of many school districts and school boards.  In particular, the vehicle for “accountability”, public elections, actually serves to promulgate an egregious conflict of interest that would not be tolerated anywhere else.  Unions make political contributions to board candidates sympathetic to their goals, then sit across the table from those candidates that were elected to negotiate a collective bargaining agreement, including pension benefits.  It is no wonder, then, why numerous school districts across the country face crippling unfunded pension liabilities, and why traditional public schools support the effort to reduce or even reverse the number of charter schools.

Charter schools offer a choice to parents, who are also voters and taxpayers.  In Washington State, the parents of 3,400 students have “voted” by enrolling their children in charter schools.  If those schools perform, the families will continue to attend, making those schools highly accountable.  If they don’t perform, the parents will “vote” to leave.  The competition created by charter schools also brings an element of accountability to traditional public schools that had been sorely missing and which is far more effective than perpetuating a harmful conflict of interest.  Congratulations to Washington State parents, taxpayers, and anyone interested in accountability and good government.

In October 2018, Buck Financial Advisors closed two charter school bond issues totaling over $90 million for The Palmdale Aerospace Academy and for Green Dot Public Schools California.  Both issues, one investment grade and one non-investment grade, were well received by bond investors, and were significantly oversubscribed.

The Palmdale Aerospace Academy (TPAA) in Palmdale, CA currently operates a STEM-focused charter school serving grades 6-12.   In early October 2018, TPAA closed its second bond issue to finance its expansion into serving elementary grades to allow TPAA to become a K-12 school.  TPAA enjoys very strong support from the local aerospace industry, which is a large portion of the economy in the Antelope Valley, including operations of NASA and various defense contractors.  TPAA also has strong support from the local city government and the local authorizing school district. It had issued about $45 million of bonds in 2016 for the 6-12 operation, and the 2018 issue approximated $37 million.  TPAA’s issue received over $300 million in orders.  The 2018 financing was rated “BB” by Standard & Poor’s (same as 2016) and will allow TPAA to expand from about 1,600 students to over 2,300 in a few years.

Green Dot Public Schools California (GDCA) is one of the longest-serving CMOs in the Los Angeles, CA region.  It began in operating its first charter school, Animo Leadership Charter High School, in 2000 and now operates 21 charter high schools and middle schools in the greater Los Angeles area serving about 11,500 students.  GDCA had done a number of financings dating back to 2007, mainly New Markets Tax Credits (NMTC), and one stand-alone bond issue for Animo Inglewood Charter High School in 2011.  In 2015, GDCA issued its first obligated group financing for four schools whose purpose was to refinance the NMTC debt prior to the end of their respective compliance periods totaling just over $30 million.  In October 2018, GDCA issued an additional $56 million to add five more schools to the original obligated group, which now totals nine of their 21 schools.  The bond issue was rated BBB- with a positive outlook by Standard & Poor’s.  About $900 million of orders were received for a $56 million offering, and GDCA’s 2018 issue received the 2nd narrowest spread to the MMD for an un-enhanced charter school bond issue ever (the CA CMO which received a narrower spread to the MMD for their 2017 issue carried a higher rating and is also a Buck Financial client).

GDCA’s Animo Oscar de La Hoya Charter High School ranked in the top 10 high schools in all of Los Angeles.  GDCA is well known for its willingness to operate, and success at operating, turnaround schools, having taken over the Alain Leroy Locke High School in 2007, 40 years after it had been opened in 1967 in response to the Watts riots.  Across the board, GDCA’s high schools are ranked in the top 10% nationally by US News & World Report, which is quite an achievement.  GDCA often takes kids into the 9th grade that are several grade levels behind because they do not operate elementary schools and not all high schools have Green Dot middle school feeders.  And yet, they achieve tremendous results, which helps explain why in September 2018 five of their schools were renewed by LAUSD for another five years (on the consent agenda).

Congratulations to TPAA and GDCA for receiving such strong interest and demand from bond investors.  It is a testament to both schools’ strong operations and success in the classroom.  Both organizations are repeat clients, and Buck Financial Advisors is proud to be a small part of their overall success.

IDEA Public Schools (Texas) continues to achieve tremendous academic and financial results despite being the largest and fastest growing CMO in the country.  This year was no exception, and in fact was a record financial year for them, achieving milestones in both profitability and liquidity.  To finance their next phase of their growth, which includes a new region in Tarrant County (Fort Worth), IDEA issued $165,680,000 in Education Revenue Bonds through the Clifton Higher Education Finance Corporation.   This is the second largest charter school bond issue, superseded only by last year’s IDEA financing (which included a refunding component).

The issue was rated AAA by Standard & Poor’s based upon the PSF guarantee under the State of Texas’ Bond Guarantee Program.  IDEA carries a BBB+ underlying rating, one of only a very few charter schools and systems to carry such a high rating, and by far the largest to carry such a high rating.  It also carries an A – Superior FIRST rating, achieving a 92 out of 100 in 2018.  IDEA serves over 40,000 students this school year, and expects to enroll over 50,000 in just a few years.

For the twelfth year in a row (school year 2018), IDEA achieved 100% college acceptance for its graduating class. For the 10th year in a row, IDEA had numerous college preparatory schools ranked among the top performing high schools in the country.  Two of IDEA’s senior leaders, founder and CEO Tom Torkelson, and co-founder and President & Superintendent JoAnn Gama, were inducted into the Charter School Hall of Fame.  Buck Financial served as Co-Financial advisor on this issue, and is proud to be associated with an organization that makes a difference in the lives of so many underserved families.  Congratulations to IDEA and its students and families!