Charter schools have become progressively favored in recent times as an economical alternative to traditional public schools, providing more flexibility in curriculum and teaching methods, while being independently managed. Nonetheless, establishing and administering a charter school can be quite pricey, particularly when it comes to creating and sustaining a facility. This article delves into the various costs entailed in owning and managing a charter schools facility.
Charter schools and charter school networks confront an extensive range of difficulties when it comes to finding and financing facilities, which often hinder their expansion. Many charter schools invest considerable time and resources into acquiring and maintaining facilities, resources that could be better used for core programming such as staff salaries, instructional supplies, and field trips. Often, charter schools settle for less expensive, smaller, or shared facilities that can limit their capacity to offer diverse programming.
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The National Alliance for Public Charter Schools* discovered that 17% of the 650 charter schools surveyed from 2014 to 2017 had to delay their opening by a year or more due to facilities obstacles. Even when charter schools find facilities, they are frequently inadequate. Research in Idaho discovered that while most charter schools had a computer lab and cafeteria, less than half had a gym, library, or auditorium.
This is an issue that requires attention, particularly as the national conversation focuses on investing in infrastructure. This week, my colleagues and I will be publishing a series of blog posts that aim to:
• Help policymakers, charter supporters, prospective school leaders, and others understand the obstacles charter schools face regarding facilities.
• Offer an overview of private and philanthropic strategies for addressing these challenges.
• Examine state and federal policy levers that can support access and affordability of facilities.
• Introduce a particularly promising solution, charter school loan funds, and inform charter school leaders on what they should know about them.
Establishing a Charter School Facility: Costs and Considerations
The first step in starting a charter school is to secure a facility for the school’s accommodation. The cost of the facility is influenced by various factors, including the building’s location, size, and condition. Here are some of the expenses involved in setting up a charter school facility:
Lease or Purchase Costs: Whether you choose to lease or buy the building will impact the cost. Leasing the building will necessitate monthly rent payments, while buying the building will require the entire cost upfront.
Renovation Costs: The cost of renovations is determined by the building’s state. If the building is in good condition, the renovation expense might not be much. However, if the building is in disrepair, significant expenses may be incurred for renovation work, including repairing the roof, replacing the heating and cooling systems, or installing new flooring.
Equipment Costs: You will need to purchase equipment, such as desks, chairs, and whiteboards, to run a charter school. The equipment’s cost is dependent on the number of students you intend to enroll and the equipment’s quality.
Operating a Charter School Facility: Costs and Considerations
Once you have established a charter school facility, you will incur ongoing operating expenses to maintain the school’s operation. Here are some of the expenses involved in operating a charter school facility:
Utilities: To keep the school operational, you will need to pay for utilities, such as electricity, gas, and water. The utility cost is determined by the facility’s size and usage.
Maintenance and Repairs: You will also need to budget for maintenance and repair expenses for the facility. This may entail regular maintenance, such as cleaning and landscaping, as well as equipment and building system repairs.
Insurance: Charter schools are required to have insurance to protect against liability and property damage. The insurance cost is influenced by the school’s size and the required coverage.
Maximizing Your Budget for Charter School Facility Costs
Starting and running a charter school facility can be expensive, but there are ways to maximize your budget and reduce costs. One way is to prioritize cost-effective solutions that can save you money in the long run, such as energy-efficient lighting and HVAC systems. Furthermore, exploring partnerships with local organizations and businesses can assist you in obtaining funding and donations for the school.
Let’s begin our discussion on charter school facilities by exploring the cost of owning a school building. If you plan to own your building, you will need to account for two primary categories of facilities costs: project costs and maintenance and operations (M&O). Project costs include the cost of acquiring land and/or an existing building, as well as any work done to the site. Work done to the site involves “hard” costs such as construction and “soft” costs such as management, permits, and appraisals. Project cost can be significant and will depend on factors such as the local real estate market, building/lot size, and amenities such as science labs and playgrounds. National facilities support providers suggest that newly constructed charter school buildings cost around $20,000 per student, resulting in a $10 million project cost for a school that serves 500 students. However, project costs can vary significantly based on location, with urban buildings costing up to $40,000 per student and over $20 million in total project costs.
While purchasing and renovating an existing building may seem like a more cost-effective option than new construction, it’s often just as expensive. Buildings available for charter schools to purchase are often former grocery stores, warehouses, office spaces, or churches, which require significant retrofitting and renovating before they can be safe for use as a school.
Maintenance and operations costs, on the other hand, are what it costs to maintain the school building each year, including expenses such as janitorial, utilities, insurance, and routine or small-scale maintenance and repairs. This is essentially all of the annual facilities cost except for the mortgage or debt service, which varies by building size but is typically a much smaller expense relative to the building’s overall cost. For example, the 21st Century Fund found that M&O expenditures across state public schools in FY2017 ranged from $700 to $1,500 per pupil, with an average of $1,128.
So, how do schools pay for these expenses?
Schools may use a mix of upfront cash known as “equity” and loans, also known as “debt,” to fund their multi-million dollar project costs. The diagram below, called the “capital stack,” illustrates the financing sources used to fund a facility project.
Starting and operating a charter school can be a fulfilling and enriching experience, but it necessitates careful planning and budgeting. Understanding the costs involved in owning and operating a charter school facility is critical to ensuring that your school is financially secure and sustainable in the long run. By prioritizing cost-effective solutions and exploring partnerships with local organizations, you can maximize your budget and create a successful charter school that provides quality education to students.
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