IRS proposes rules to allow charters to participate in PSF guarantee
(Austin, Texas) — During the Texas State Board of Education committee meeting today, the Texas Education Agency discussed the timeline for SBOE rule-making for the public charter school Permanent School Fund bond guarantee. TCSA expects eligible charters to be able to access the guarantee as early as February 2014. The PSF bond guarantee, signed into law in 2011 for new bonds and 2013 for refinanced bonds, allows immense savings for eligible charter schools by reducing the cost of bond financing through improved investment grade ratings thereby potentially saving millions of dollars over the life of a charter school construction or renovation project.
“This is the first tangible facilities legislation that the Legislature has passed for public charter students, and within the next few months, eligible charters will be able to use the PSF bond guarantee to save money and return those funds for use in the classroom,” said Denise Pierce, TCSA vice president for member services and general counsel, as she testified today on behalf of charter students, parents and operators.
“We thank Rep. Murphy, Sen. Patrick and former Sen. Shapiro for passing legislation to extend the permanent school fund (PSF) bond guarantee to qualified public charter schools. They understand that Texas students deserve an adequate school building — no matter where they choose to attend public school,” said David Dunn, executive director of the Texas Charter Schools Association.
TEA Commissioner Williams announced on Wednesday that the IRS has proposed federal rules to allow public charter schools to participate in the PSF, and the TEA and SBOE were allowed to move forward immediately with state rules to implement this statute. The amount of the permanent school fund available for the guarantee is limited to the percentage of students enrolled in charter schools — so approximately 3.5-4% of PSF is available for this purpose. HB 885 (83R) provides for refinanced bonds not to exceed one-half of the total amount available for charters under the bond guarantee. Schools will be able to have their bonds backed by the PSF only for charters that receive investment grade ratings (without the guarantee) and satisfy a review conducted by the TEA.