Charter Schools as Investments

A private media company, Entertainment Properties, Inc., has purchased 22 charter schools previously owned by Imagine, Inc. Imagine operates 74 charter schools in 12 states, including two in Colorado.

Imagine Classical at Fountain Meadows has just opened in a brand new facility east of Colorado Springs after spending one year in modulars. Imagine at Firestone opened last year in a brand new facility. In order to keep costs down, both of the facilities are identical. The buildings are designed for K-8 systems holding approximately 800 students at capacity.

The demand for the Firestone and Fountain Meadows school has been incredible. In its first year of operation, Fountain Meadows third graders scored 100% on the reading CSAP. This, while holding school in temporary modular structures.

Management company-operated charter schools have the capital to invest in new buildings even before the charter school opens. The charter school typically enters into a contract for the property and assumes ownership over a long-term purchase similar to a mortgage on a house. This enables the charter school to enjoy the new facility without the up-front costs most charter schools must finance.

Schools such as Imagine at Fountain Meadows, in Colorado Springs, are able to serve a new subdivision. In a high-growth district such as Falcon 49, where the Fountain Meadows school is located, this means taxpayers don't have to approve a bond in order for the new subdivision to have its own school and avoid busing students considerable distances.

Entertainment Properties, Inc. investing in charter school facilities is actually very similar to the mechanism used by most charter schools, which is obtaining a bond through the Colorado Cultural and Educational Facilities Authority (CECFA). These CECFA bonds are purchased by private investors and paid back over time. One drawback, however, is that schools must have a three-year credit history and a solid business plan in order to obtain the private bond.

Just as the charter school philosophy to educate students in unique and innovative ways, charter school facility financing, the greatest obtacle most charter schools face, is likewise using a variety of creative methods.

Why Aren't There More Management Companies Operating Charter Schools in Colorado?

Colorado has bucked the national trend for education management organization-operated charter schools since the law was first adopted. According to "The State of Charter Schools in Colorado" report,

"Only 12 schools, about 9% of the total, were operated by national nonprofit or for-profit Education Management Organizations (EMOs). By comparison, a quarter of charter schools natioinwide are managed by EMOs. In Michigan, nearly three out of four charter schools are so managed."

The National Association of Public Charter Schools says 22.5% of the nation's public charter schools are operated by an EMO or CMO (Charter Management Organization).

Colorado has been known to have more "grassroots" or "freestanding" than other states because that's how the movement started. Further, authorizers (local boards of education) were more influenced by their constituents (voters) than by a management company. It wasn't until the 2004 Charter School Institute law passed that management companies made an impact in Colorado.

In Colorado, charter schools are operated by a company include:
Edison: 4
Greater Educational Opportunities Foundation: 1
KIPP: 1
Mosaica: 4
National Heritage Acadmies: 1
White Hat Management: 3

The McREL blog states that the top 10 charter or education management companies are:
Edison Schools (97 schools)
KIPP (82 schools)
Imagine Schools (73 schools)
Big Picture Learning (68 schools)
National Heritage Academies (57 schools)
White Hat Management (51 schools)
EdVisions (40 schools)
Aspire (21 schools)
(tie) Green Dot (19 schools), Charter Schools USA (19 schools)

Due to some problems in the past with certain management companies, many authorizers in Colorado tend to shy away from approving management company-operated charter school applications. Most authorizers require evidence of community support as evidenced by a governing board of people from the local community. Moreover, charter contracts are made between the authorizer and the governing board, specifically excluding the management company as a party to the contract.

Oftentimes laws evolve over time based on a series of events. When the number of new charter schools approved dipped to a low of six in 2002 and five in 2003 lawmakers looked for ways to create more opportunities for charter school applicants to gain approval. Prior to the adoption of the CSI law in 2004 several attempts were made to create an alternative authorizer including institutions of higher ed and municipalities. Both of these models are used in other states, but Colorado ultimately settled on a state authorizing board (CSI).

Now an emerging trend in the state is for replication of existing, successful charter schools. These include the Cesar Chavez Network, W Denver Prep, Denver School of Science and Technology, and KIPP. These replication networks are commonly referred to as charter management organizations. Authorizers are more attracted to approving new charters with people they've already worked with and seen evidence of the school model's success rather than taking a chance on an unproven model or working with an EMO with established practices that may not easily conform to the district's expectations.

While Colorado may have bucked the national trend to use EMOs, it is at the front of the nation in replicating successful models. It's now encumbent upon charter school authorizers to employ best practices in establishing replication schools with true autonomy.