by David Safier
With the explicit intent of helping investors "Learn and understand the value of investing in charter schools and best practices for assessing their credit," the event featured experts on charter school investing from Standard & Poor's, Piper Jaffray, Bank of America, and Wells Capital Management, among others.As safe as an investment in charter schools may be, Ducey and the AZ Lege want to make it safer still by creating a $24 million pot of collateral, which Ducey calls the "Arizona Public School Achievement District plan," to guarantee the loans. Details about the plan have not yet been announced, but if I read it right, it's a win-win for charter schools and investors. The only ones at risk are Arizona taxpayers. The collateral brings down interest costs because the loans are secured. Great for charters. Investors know they'll get their money no matter what. Great for investors. But if a charter fails, the state is left paying off the loan and holding the bag. Not so great for the state budget and the taxpayers who fund it.
Hedge funds and other private businesses are particularly interested in the growth and success of charter schools. The growth of charter networks around the US offer new revenue streams for investing, and the sector is quickly growing. Funding for charter schools is further incentivized by generous tax credits for investments to charter schools in underserved areas.
"It's a very stable business, very recession resistant, it's a high demand product. There are 400,000 kids on waiting lists for charter schools ... the industry is growing about 12-14% a year," David Brain, former President and CEO at EPR Properties, told CNBC in 2012.
"It's a public payer, the state is the payer on this category," he added in support of the highly safe investing opportunities in charter schools.