0985 School Finance Authority
Program Descriptions

10 - SMART BONDS PROGRAM

Chapter 1438, Statutes of 1985, as amended by Chapter 598, Statutes of 1987, established the California School Finance Authority (CSFA) and authorized the issuance of $400 million in revenue bonds or other debt instruments. The proceeds from the sale of the bonds were available for loans to school and community college districts to assist with the acquisition of equipment and new school sites, construction of new facilities, reconstruction of existing facilities, capital improvements, acquisition of portable/relocatable buildings, and to provide working capital. Effective January 1, 1997, Chapter 1071, Statutes of 1996, authorized the issuance of an additional $400 million in revenue bonds per fiscal year for school districts and county offices of education that agreed to guarantee payment of the bonds with Proposition 98 funds. The total outstanding amount may not exceed $4 billion at any one time. Pursuant to Chapter 741, Statutes of 1998, effective January 1, 1999, the $400 million annual issuance cap was eliminated. Based on program amendments effective January 1, 2007, Chapter 325, Statutes of 2006 (AB 2717), CSFA is initiating financing opportunities for charter schools for capital improvements and working capital needs.

20 - CHARTER SCHOOL FACILITIES PROGRAM

Chapter 935, Statutes of 2002, as amended by Chapter 587, Statutes of 2003, created the Charter Schools Facilities Program, that provides funding for the new construction or renovation of charter school facilities. CSFA and the Office of Public School Construction jointly administer the program. The Charter School Facilities Program through the Kindergarten-University Public Education Facilities Bond Acts of 2002, 2004, and 2006, was funded $100 million in bond proceeds from Proposition 47, $300 million from Proposition 55, and $500 million from Proposition 1D. To date, 34 schools have been awarded funding through the program's first two funding rounds. For the third funding round, 92 Program applications for projects totaling over $1.5 billion have been received and are being reviewed for eligibility.

The program provides a 50% state subsidy for the charter school facilities project costs, with the balance of the project costs being repaid (to the state) by the charter school in the form of a long-term lease. Recipient charter schools must provide site-based instruction, be deemed financially sound by CSFA, and meet other program eligibility requirements.

30 - STATE CHARTER SCHOOL FACILITIES INCENTIVE GRANTS PROGRAM

In 2004, CSFA was awarded a grant under the United States Department of Education's State Charter School Facilities Incentive Grants Program to provide California charter schools with assistance for facilities costs. The $50 million federal grant is being allocated over a five-year period (through 2009) to eligible charter schools. Grant funds are used toward a charter school's cost of rent, lease, mortgage or debt service payments for existing or new facilities or toward the costs of acquiring land and constructing or renovating a facility. Grants are awarded to charter schools based on preference points allotted for the percentage of low-income students, percentage overcrowded, not-for-profit status, and demonstrated student performance. Eligible charter schools must, at a minimum, be in good standing with their chartering authority, provide site-based instruction, and have completed at least one school year of instructional operations. Additional requirements are listed in the program regulations.