Earlier this month, the U.S. House of Representatives passed the INVEST in America Act (H.R. 2)—a $1.5 trillion bill designed to upgrade a wide range national infrastructure while also stimulating the economy. While it is not likely to be signed into law any time in the near future, it is important to understand the provisions that could potentially benefit charter schools. Some of these provisions could wind up moving as standalone provisions or part of bills in coming years, such as permanent authority for New Markets Tax Credits (NMTC).
The six ways the INVEST in America Act could specifically benefit charter schools are as follows:
1. Direct grants for high need schools
The INVEST in America Act includes $100 billion (from Fiscal Year 2020 through Fiscal Year 2024) in state formula grants targeted at high-poverty schools with facilities that pose health and safety risks to students and staff. Charter schools are included as local educational agencies. District authorized charters would have to receive funds through their district, which makes it less likely they would receive funds. The language prohibits funds from being used by “schools operated by a for-profit entity”. States would have the option of including, as eligibility criteria, whether an LEA is among those with the greatest need for school facilities improvement and whether it is among those with the most limited capacity to raise funds for the long-term improvement of school facilities. It also prohibits funds from being used for charter schools that lease their facility from an individual or private entity that has a direct or indirect interest in the schools and has a governance role in the school.
2. Bonds for school construction and renovations
The bill includes two bond provisions that have the potential to provide significant assistance to meet the facility needs of charter schools:
The bill would reauthorize the Qualified Zone Academy Bonds (QZABs) authority, which existed from 1997 until 2016, after which it was repealed by Tax Cuts and Jobs Act. It makes funds easier to use by expanding its use to cover construction costs. ($1.4 billion per year)
The bill would also create—through the Internal Revenue Code—a new tax-credit bond authority called School Infrastructure Bonds (SIBs), which would have the same general financing structure as QZABs. SIBs would be a 100% tax credit on interest paid up to the state’s share of $10 billion each year for fiscal years 2020, 2021, and 2022.
3. Permanent authority for New Markets Tax Credit and Increased Allocation
NMTC provides significant support to meet the needs of charter schools. Making its authority permanent means that Congress will not need to renew it each year or for certain time frames, which will help build the pipeline of allocations for this program.
4. Reinstatement of advanced refunding bonds
The bill would reinstate advanced refunding bonds, an important tool for charter schools to reduce the cost of their bond financing when interest rates drop. This provision was eliminated in the 2017 tax reform bill.
5. Technology access and broadband infrastructure
The bill authorizes a significant investment—$100 billion—in the nation’s broadband infrastructure, including increased allocations for E-Rate and funds for devices for students.
$5 billion is authorizes for E-rate and there are state (formula) and local (competitive) grant funds of $685 million and $625 million respectively for digital equity grants to address broadband access.
$85 billion to build out broadband networks to underserved areas.
Earlier this year, the National Alliance used U.S. census tracts to map the lack of access to technology and devices for charter school students and found that at least $243 million is needed to close the device and connectivity gaps for students in charter schools.
6. Childcare infrastructure
Charter schools that provide childcare would be able to access funds from a $10 billion federal investment designed to leverage additional state and local funding that will address structural challenges and upgrading childcare facilities to ensure are safe, appropriate, and able to comply with current and future public health directives. The U.S. Department of Health and Human Services would distribute grants to states based upon a needs assessment regarding facilities of childcare providers and would award grants to intermediaries (including CDFIs) to assist providers with technical assistance and financing.
Regardless of the bill’s outcome, the National Alliance will continue to advocate on behalf of policies that will improve access to facilities and reduce facility costs for charter schools.
Christy Wolfe is the vice president of policy and planning at the National Alliance for Public Charter Schools
Learn more about the National Alliance’s policy proposals for facilities and see the Charter Schools Facility Center at the National Alliance for Public Charter Schools for resources.