Atlanta Charter Schools Default On $18.9 Million Of Construction Bonds

Three Fulton County charter schools – Fulton Science Academy Middle School, Fulton Science Academy High School, and Fulton Sunshine Academy elementary school – have received notice from their construction bond trustee Wells Fargo Bank that they are in default on an $18.9 million construction loan secured by Alpharetta Development Authority bonds. According to the default notice, officials of the middle school had been notified by the Fulton County School System that there were “significant reservations” about renewal of the schools charter before the bonds were issued, but that information was not disclosed to the bank in connection with issuance and sale of the bonds. Wells Fargo contends that failure is a breach of the bond indenture.

The middle school has 507 students, and has received over $30 million in taxpayer funds over the last ten years. Up to $3.7 million per year in public funds could have been available to cover $1.5 million in annual payments due on the bonds over the next ten years, but that funding will end June 30 when the charter contract with Fulton County School System expires. Both Fulton County Schools and the State of Georgia have refused to renew the middle school charter, citing concerns with fiscal and management practices at the facility, including no bid construction contracts entered with companies having ties to school officials. Last week some of the bonds were sold at 69% of face value by worried investors, and the bond rating has been reduced to junk status. The notice of default is the first step in foreclosure on the three schools’ under construction 44 acre campus, including a planned 90,000 square foot instructional building, and seizure of school operating revenues by the bond trustee.

Construction work on the new campus, designed to house all three charter schools, has stopped. When the  10 year charter renewal was rejected, the schools were offered a compromise 3 year charter, but rejected the compromise and determined instead to become a private school on July 1.

School Construction Funding Of $700 Million Approved In Subcommittee

The Senate Labor - HHS Appropriations Subcommittee yesterday approved the fiscal year 2010 appropriations measure for the Labor and Health and Human Services Departments, recommending total appropriations of $163.1 billion for the two Obama administration agencies. The measure specifically includes $700 million for school construction and renovation, an area of funding cut from the American Recovery and Reinvestment Act at the last minute. It seems likely that this bill will pass both houses of Congress before the current appropriations expire. Advancement of this measure on a voice vote is the only good news out of Washington for the construction industry so far this week.

Green Schools Appropriations Pass House

May 14 the House of Representatives passed HR 2187, the 21st Century Green High-Performing Public School Facilities Act. Replacing appropriations cut from the stimulus legislation in the Senate, the bill appropriates $6.4 billion for modernization, renovation and repairs to public school buildings to improve health, safety and energy efficiency. The funds may not be used for building new schools. The money may be used for repairs and upgrades to roofs, HVAC, fire, health, life safety and seismic code requirements, ADA accessibility, asbestos, lead, PBC mold and mildew abatement, noise reduction, reducing consumption of coal, electricity, natural gas, oil or water, post consumer recycled materials on playground equipment, and a few other esoteric "green" modernizations.

There is also a separate appropriation of $600 million over six years for rebuilding schools damaged by hurricanes Rita and Katrina.

Funds may not be used to pay maintenance costs, or for construction of any athletic facility charging admission to the general public. "Buy American" requirements for iron, steel, and manufactured goods are included in the bill, along with contracting preference requirements for local, small business, minority, women and veteran owned contractors. In 2010, 50% of any grant must be used for green construction, with the percentage increasing ten percent a year up to 100% in 2015. Finally, the bill prohibits earmarking of any of the funds.

It will be most interesting to see how this legislation fares in the Senate, which cut these very appropriations from the stimulus bill.

Education Secretary Announces The Obvious

Acknowledging that most of the billions appropriated for education in the economic stimulus package will go to shore up education budget shortfalls in the 50 states, Education Secretary Arne Duncan said thousands of teaching jobs were saved by the measure at a Brookings Institution panel discussion Monday. Department adviser Mike Casserly said, "For those of you who may be looking for how school districts are spending all of their stimulus money ... you are not going to be able to find it yet because it just does not exist at the local levels." So much for transparency and accountability.