A slowdown could add to pressure on a sector facing belt-tightening
At the Academy for Sciences & Agriculture, highlights of 2023 include improved reading scores and a high-school play based on the board game Clue. Investors are chewing over a less upbeat development at the Minnesota charter school, though: a missed bond payment.
At charter schools, as elsewhere, boom times have given way to belt-tightening, raising questions about who will survive. Higher salaries and dwindling federal Covid aid are stretching revenues and squeezing budgets. Repayment problems are rising in the $30 billion market for the low-rated bonds sold by K-12 public charter schools, according to research firm Municipal Market Analytics.
At the same time, higher rates on ultrasafe bonds have sapped investor interest in risky charter-school debt, limiting stressed schools’ access to new financing. Charter-school bond issuance dropped to $2.8 billion this year through Dec. 13 after averaging $4 billion to $5 billion since 2019, according to a Municipal Market Analytics analysis of Bloomberg data.
The Wall Street Journal
By Heather Gillers
Dec. 15, 2023