District/School Administration Administration
The Massachusetts Board of Elementary and Secondary Education

Charter Schools - Approval of Loan beyond Charter Term for Pioneer Valley Chinese Immersion Charter School

Under the charter school statute, G.L. c. 71, § 89(j)(6), a charter school may incur temporary debt in anticipation of receipt of funds, but requires approval of the Board of Elementary and Secondary Education (Board) if it wishes to agree to repayment terms that exceed the duration of the school's charter. Pioneer Valley Chinese Immersion Charter School requests approval to enter into financing agreements that extend beyond the term of the school's current charter.

Proposed Loan

Pioneer Valley Chinese Immersion Charter School (PVCI) is a Commonwealth charter school beginning its second year of operation. The PVCI Board of Trustees requests the Board's approval to enter into loan agreements for up to $2.5 million for a 40 year term in order to exercise an option to purchase the facility it is currently leasing in Hadley. The school is seeking to access the United States Department of Agriculture (USDA), Rural Development Community Programs, which provides a direct loan for one-third of the sale price and guarantees the remaining financing provided by a commercial bank.

The school expects to realize cost savings and increased financial stability by purchasing the building instead of leasing. The Hadley site is large enough to meet anticipated expansion requirements.

PVCI is currently working with Easthampton Savings Bank, which expects to lend the school two-thirds of the roughly $2.5 million purchase price at commercially competitive rates, with the loan guaranteed by the USDA.

All parties, including USDA and the Easthampton Savings Bank, have acknowledged in writing their understanding that the Commonwealth of Massachusetts, including but not limited to the Board and the Department of Elementary and Secondary Education, provides no representations or guarantees with respect to these loans and has no liability for any portion of the loans. They have also acknowledged in writing that specifically and without limitation, the Board's approval of the loan has no impact on any action that the Board may choose to take in the future with respect to probation, revocation, or renewal of the school's charter. The proposed motion approving this loan agreement request is explicitly conditioned upon the inclusion of this language in the loan agreements themselves. These written acknowledgements will be required of any new lenders should there be changes.

The Department has reviewed this request, and it appears reasonable and consistent with the charter school statute and regulations. With the safeguards explained above and agreed to in writing by the schools and its lenders, I recommend that the Board approve this request as presented.

Possible Future Delegation

This agenda item comes to the Board for approval pursuant to G.L. c. 71, § 89(6), which states that "notwithstanding any law to the contrary, the terms of repayment of any charter school's debt shall not exceed the duration of the school's charter without the approval of the board." Each year, the Charter School Office receives approximately four requests of this nature, each of which are placed on the Board's agenda and require a vote. The Board's votes do not serve as approval of the actual terms of the loan negotiated by the school, but rather the language regarding representations and limitations. Because this is standard language and a fairly routine process, the Board might wish to consider delegating approval to the Commissioner now that the Board has explicit authority to delegate such functions to the Commissioner under G.L. c. 15, § 1F ("The board may delegate its authority or any portion thereof to the commissioner whenever in its judgment such delegation may be necessary or desirable. The commissioner shall exercise such delegated powers and duties with the full authority of the board."). The Commissioner would inform the Board of any action taken pursuant to his delegated authority.

If you have any questions regarding this amendment or wish to see the school's full request, please contact Mary Street, Director of Charter Schools, at 781-338-3200; Jeff Wulfson, Associate Commissioner, at 781-338-6500; or me.