Financing small-town schools

In our recent documentary on the schools in Sciotoville, OH, you hear a big-dollar word used over and over: facilities. The Tartans of Sciotoville go to class in a building that dates from around 1914. The community would love a new facility—but bricks and mortar don't come cheap. Ohio community schools (that is, charters) get no state and local funds for facilities, meaning they have to scrimp and save out of operating funds or find private dollars to build.

Down the road from Sciotoville Elementary Academy, which is housed in modulars and packed with students, is a brand-new traditional district school built with public funds and under-enrolled. (Many of the kids it was built to serve go to SEA!) Charters across the country suffer from the same disparities.

Sciotoville school
Maintaining or replacing aging school facilities presents a challenge to many rural communities
 Photo by Joe Portnoy.

It's not only charter school pupils who sit in old, dilapidated buildings, though. Some traditional schools have benefited from a boom in new construction, but others have missed out. The high school my mother attended, which was aging when she graduated decades ago, is still open at the ripe age of 91 today. Small-town superintendents across the country who haven't benefited from tobacco settlements or state largesse can certainly sympathize.

There isn't an easy solution to the financing problem small-town schools and districts face. In shrinking towns and rural areas, consolidation into districts serving large geographic expanses may be the only way to make building new facilities economical, which is unattractive in places where schools are a critical touchstone for the community. Good schools can stem the tide of rural flight in some circumstances, but once the process has reached critical mass, communities may have to dramatically reconfigure.

In some cases, however, obtaining affordable financing alone is a stumbling block. Few folks in education are aware of it, especially in the charter world, but the USDA runs a loan guarantee and direct lending project called the Community Facilities Program. Schools (charter and district alike) can take advantage of the program if they are located in towns or rural areas with fewer than 20,000 people. Banks in a few areas around the country have used the program to support lending to charters. It has not only provided much-needed capital to those schools, but has increased the capacity of those commercial lenders to underwrite loans to charter schools, teaching them about the unique risks (and strengths) of charter schools as borrowers.

Rural and small-town schools face unique challenges. They are charged with educating students in an environment of declining resources, often preparing those youngsters for careers and lives elsewhere in the country. We could use more creative programs like the USDA's Community Facilities lending initiative for easing the burden of inadequate facilities, helping schools develop realistic enrollment projections and obtain affordable space.

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