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

Charter Schools-Authorization to Commissioner to Approve Charter School Loans Exceeding Duration of Charter

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. Each year, the Department's Charter School Office receives approximately four requests of this nature, each of which is placed on the Board's agenda and requires a vote.

When the Board votes on these matters, it is not approving the actual terms of the loan negotiated by the school. Rather, the vote acknowledges that the school and the lender have included proper representations and limitations in their loan agreement. Specifically, this is the standard language that we require charter schools and their lenders to include in their agreements:

The [parties] explicitly acknowledge and agree that the Commonwealth, including but not limited to the Board and the Department of Elementary and Secondary Education, has no liability for any portion of the loans and provides no representations or guarantees with respect to these loans. Furthermore, the [parties] explicitly acknowledge and agree that the Board's approval has no impact on any action the Board may choose to take in the future with respect to probation, revocation, or renewal of the school's charter.

Because this is standard language and a fairly routine process, the Board discussed at its meeting on September 10, 2008, delegating this approval to the Commissioner under its new authority in G.L. c. 15, §1F, paragraph 3. That provision reads as follows:

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.

I recommend that the Board delegate approval of extended loan terms for charter schools to the Commissioner. The Department would continue to review each request carefully according to the charter school statute and regulations and we would continue to require the charter school and the lender to agree in writing to the conditions set forth above. I would report to the Board any such extended terms for loans that I approve pursuant to my delegated authority. Enclosed is a motion to this effect.

If you have any questions regarding these amendments or require additional information, please contact Jeff Wulfson, Associate Commissioner, at 781-338-6500; Mary Street, Director of Charter Schools, at 781-338-3200; or me.

Enclosure: