Escondido Charter High bond sale raises the bar

By: PAUL EAKINS - Staff Writer | Tuesday, July 25, 2006 12:37 AM PDT ∞

Construction has started on Escondido Charter High School which sold $26 million in bonds this month to fund construction of its new theater, gym and warehouse. It was the first charter school in California to have an investment grade rating for its bond sale, which means it opened up the sale to more potential investors.
JOHN KOSTER For The North County Times
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ESCONDIDO -- Although Escondido Charter High School already has a reputation for setting standards of academic excellence in Escondido, the school recently set a standard for the funding of charter schools in California.

Last month, the 900-student school at 1868 E. Valley Parkway completed a $26 million bond sale, the first such sale by a California charter school to receive an investment-grade rating ---- a designation that drew more investors and drove down interest rates on the bonds, according to Scott Rolfs, managing director of the church and school finance division of Ziegler Capital Market Groups, the Milwaukee-based underwriter for the sale.

Charter schools are public schools that operate independently of local school districts.

Standard & Poor's issued the investment-grade rating based on factors such as the school's operational record, its credit and its future earning potential, Rolfs said. The rating couldn't have been achieved without Escondido Charter High's reputation both academically and financially, he said.

"You've got 10-plus years of a great track record there, of stability, of growth, of good management," Rolfs said.

The money from the bond sale, which took place June 20, will be used to refinance the school's higher-interest debt and to fund the construction of an $8.5 million theater, gymnasium and warehouse at the 3-year-old campus, according to school officials. The charter school first opened 10 years ago at another site.

Dennis "Coach" Snyder, the school's executive director, said work on the foundation already has begun and the project is expected to be finished in the spring of next year.

Snyder said last week he was happy to see the results of the school's hard work in the bond sale's success.

"We weren't sure how many people throughout the country would be willing to take a look at it (the bond sale), but we ended up having more people bidding than there were actually bonds for," Snyder said.

Rolfs said the sale may be just the beginning for California charter schools, as others establish themselves as safe investments.

"It's just a natural biproduct of charter schools being accepted," he said.

Gary Larson, spokesman for the California Charter Schools Association, said charter schools are beginning to attract investors not only because of their financial security, but also because investors can feel good about putting their money into a school.

"As the charter school movement matures, investors in the business community are more and more seeing them as credit worthy, and are therefore more and more jumping in to add support to the movement," Larson said. "And in the process, they're feeling better about delivering a high-quality education for kids."

He said this ability to raise funds from investors is important to charter schools because the schools need alternate forms of funding. When a charter school expands its campus or has a jump in enrollment, the additional state money for the extra students doesn't arrive until well after classes have begun, he said.

"It's not necessarily where the money's coming from, it's when," Larson said.

-- Contact staff writer Paul Eakins at (760) 740-5420 or peakins@nctimes.com.

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