Public Charter Schools Borrowing With Tax-Exempt Bonds, Second ...

chapter seven
Investor Perspectives
As described above in Chapter 6, “Credit Considerations,” investors who will
buy a public charter school’s bonds do not rely solely on the assessment of
a credit rating agency, but instead review a breadth of available information
about a school’s bonds. Many investors apply their own unique due diligence
process to determine their own internal credit rating for a public charter school’s
bonds, irrespective of the third-party rating agency’s assessment. In this review
process, investors typically focus on similar categories of information as credit
rating agencies. However, some of the market’s most active institutional public
charter school bond investors indicate that they place emphasis on particular
characteristics of a transaction, as follows: 22
1. Governance and Leadership. The composition of the public charter school’s
leadership team, including the board of directors, is key to investor assessment
and some investors expect to have personal interaction with members of the board
before making an investment decision. Strong leadership includes a board of
directors that is independent from the CEO, with clear separation of duties among
qualified individuals across key areas of expertise necessary to guide the public
charter school, including finance, accounting, management, legal, instructional
background, as well as influential local community members who can assist the
school in navigating local and regional political dynamics that may affect the
program. Strong leadership also includes executive staff or administrators with
requisite programmatic expertise, as well as reasonable expectations about growth.
Growth plans should be supported by an analytical framework, and not simply the
passion of a charismatic school leader.
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