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Copyright © 2013 Charter School Capital, Inc.
Charter School
Growth
Strategies
Ohio Charter School
Conference
October 16, 2014
Copyright © 2013 Charter School Capital, Inc.
Welcome
3Copyright © 2013 Charter School Capital, Inc.
WELCOME
• Marshall Emerson, Co-Founder and CEO, I CAN Schools
• Peggy Young, Director of Education Division, Buckeye Community
Hope Foundation
• Stuart Ellis, President & CEO, Charter School Capital
Panelists
4Copyright © 2013 Charter School Capital, Inc.
GROWTH STRATEGY
• Charter school growth stages
• Challenges school operators face at each stage
• Best practices and takeaways
What we’ll cover
Copyright © 2013 Charter School Capital, Inc.
5Copyright © 2013 Charter School Capital, Inc.
Focused on Charter Schools
6Copyright © 2013 Charter School Capital, Inc.
WHAT WE DO
• Working and growth capital
– Attendance-based funding
– Receivables purchase model
• Facilities financing
– Expansion and new development
– Relocation and refinancing
– Newly funded $500 million capital pool
• Resource development
– Matching clients with grant, entitlement and philanthropic funds
Provide charter schools access to funding
7Copyright © 2013 Charter School Capital, Inc.
WHO WE ARE
• Specialty finance company empowering charter school growth
• Headquartered in Portland, Oregon
• Began funding charter schools in California in 2007
• More than $800M of funding provided to date
• Team of 40+ professionals dedicated to delivering timely and flexible solutions
• Relationships with over 400 charter schools serving 450,000 students
• Stellar track record with schools and investors
100% dedicated to charter schools
8Copyright © 2013 Charter School Capital, Inc.
WHERE WE ARE
400
5
519,000
1,130
184,400
605
44,100
149
253,245
280239,996
625
141,204
297
119,533
400
130,842
176
Current Clients –
Working Capital +
Facilities
# Students
# Schools
99,328
197
91,813
233
69,392
110
58,933
127
63,175
14554,906
95
58,691
117
47,689
245
35,353
81
31,743
87
34,347
75
29,718
124
19,439
38
22,384
59
19,409
47
21,911
95
26,022
34
16,051
39
10,370
21
10,398
33
15,533
7116,137
25
2,446
11
7,131
18
2,133
19
725
6
315
3
382
4
5,980
27
6,215
19
Anticipated
Working Capital
2014
Facilities
Only
TB
D
31
21,397
52
35,000
57
Copyright © 2013 Charter School Capital, Inc.
Stages of Growth
10Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
# of
Students
Start-up
Survival/Establish
Growth
Flexibility/Stability
Sustainable Maturity
Efficiency
Time
(years)
0 2-3 5-10
100%
Students as
a % of
mature
targets
10-25% 25-90% 90-100%
11Copyright © 2013 Charter School Capital, Inc.
CHALLENGES
Reasons for charter school closures
42%
24%
19%
6%
5%4%
Financial
Mismanagement
Academic
Authorizer Obstacles
Facilities
Other
Source: The State of Charter Schools,
The Center For Education Reform, December 2011
12Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Strategic approach
Start-up Growth Sustainability
Financing
Facilities
Community
involvement
Academic
accountability
Operational
support
13Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Strategic approach
Start-up Growth Sustainability
Financing Any liquidity
Facilities In target locale
Community
involvement
Awareness
Academic
accountability
Establish program
Operational
support
Outside experts
14Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Strategic approach
Start-up Growth Sustainability
Financing Any liquidity Flexibility/scalabil
ity
Facilities In target locale Modular
Community
involvement
Awareness Fulfill the promise
Academic
accountability
Establish program Measure program
Operational
support
Outside experts Transitional
resources
15Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Strategic approach
Start-up Growth Sustainability
Financing Any liquidity Flexibility/scalabil
ity
Cost
Facilities In target locale Modular Curb appeal/cost
Community
involvement
Awareness Fulfill the promise Fabric of
community
Academic
accountability
Establish program Measure program Continuous
improvement
Operational
support
Outside experts Transitional
resources
In-house team
16Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Strategic approach
Start-up Growth Sustainability
Financing Any liquidity Flexibility/scalabil
ity
Cost
Facilities In target locale Modular Curb appeal/cost
Community
involvement
Awareness Fulfill the promise Fabric of
community
Academic
accountability
Establish program Measure program Continuous
improvement
Operational
support
Outside experts Transitional
resources
In-house team
17Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
• Different structures of working capital
– Receivable sale
– Term loan
– Line of credit
• Facilities financing options
– Lease option
– Bond
– Traditional bank loan
• Regarding costs of funds, all costs are NOT created equal
– Evaluate total $ cost rather than % rate
– Consider fixed transactional costs and penalties, in addition to annual rate related to costs
Finance considerations
Copyright © 2013 Charter School Capital, Inc.
The Start-up Phase
19Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Start-up
Common Misperceptions
Founding team to “create” best practices
“If you build it, they will come.”
20Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Start-up
Marshall speak to this series of slides
The Challenges
Finding good leadership and teachers
Securing resources
Finding suitable facilities
Healthy enrollment
Sustaining high performance as network expands
21Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Start-up
Best Practices
Study and meet with schools doing things well
Don’t be a master of everything. Master a few things and do them really well
Build genuine and robust relationship with teachers, leaders, vendors, and external
constituents
Pay close attention to the budget
Pay even closer attention to student progress data
Do not waiver in your belief or mission
Copyright © 2013 Charter School Capital, Inc.
The Growth Phase
23Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Growth
Common Misperceptions
“After the 3rd year, all will be in place and it’s smooth sailing!”
Performance and accountability requirements will be stagnant
Done with professional development
No need to change routines or systems
We’ll have sufficient funds from operating revenue to support expansion
Facility upgrades will be minimal, if at all
24Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Growth
Challenges
Maintaining high expectations and being flexible
Advancing levels of student performance
Managing growth with limited resources
Upgrading systems to support growth
Retaining quality teachers and leaders
Matching capital to operational needs
25Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Growth
Best Practices
Continuous professional development and leadership training
Build on the culture
Focus on individualized instruction and data analysis
Increase visibility in the movement
Copyright © 2013 Charter School Capital, Inc.
26Copyright © 2013 Charter School Capital, Inc.
The Sustainable Maturity Phase
27Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Sustainable maturity
Common Misperceptions
With growth, comes distance
Time to cash in
Challenges decrease as you scale
28Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Sustainable maturity
The Challenges
Developing and executing a sustainable strategic plan
Anticipate challenges
Identify aspiration – mission, vision, core values, SWOT
Right team to implement strategic vision and plan
Reevaluate financing to match your needs
29Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Sustainable maturity
Best Practices
Define your objectives clearly and communicate them extensively both internally and
externally
Celebrate your successes and analyze your failures
Develop data-driven culture and make sure you retain the passion that got you
started
Take what you do seriously with out taking yourself too seriously
Develop pillars that define what you do
Assess performance regularly and use assessment to improve
Copyright © 2013 Charter School Capital, Inc.
Recap
31Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
Recap
Start-up Growth Sustainability
Financing Any liquidity Flexibility/scalabil
ity
Cost
Facilities In target locale Modular Curb appeal/cost
Community
involvement
Awareness Fulfill the promise Fabric of
community
Academic
accountability
Establish program Measure program Continuous
improvement
Operational
support
Outside experts Transitional
resources
In-house team
32Copyright © 2013 Charter School Capital, Inc.
STAGES OF GROWTH
• Stages in charter school lifecycle present very different challenges
• Strategy and focus needs to vary significantly as you grow
• Leverage experts at every stage to allow you to focus on educating kids
• Financial analysis illuminates positive potential impact of growth and scale
Key takeaways
Copyright © 2014 Charter School Capital, Inc. All Rights Reserved.
Questions?
34Copyright © 2013 Charter School Capital, Inc.
Thank YouPresentation available at:
SlideShare.net/CharterSchoolCapital
Marshall Emerson
Peggy Young
Stuart Ellis
877-272-1001