texas credit enhancement program information sessions
TRANSCRIPT
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Texas Credit Texas Credit Enhancement Enhancement
ProgramProgram
Texas Credit Texas Credit Enhancement Enhancement
ProgramProgram
Information SessionsInformation Sessions
May 15, 2006May 15, 2006
May 23, 2006May 23, 2006
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Agenda• Introductions and Background• TCEP Grants• Bond Issuance Process• TCEP Application• School FIRST
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Introductions and Introductions and BackgroundBackground
Introductions and Introductions and BackgroundBackground
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TCEP ConsortiumTexas Education Agency
Mary Perry, Erika Pierce, Rita Chase
Resource Center for Charter SchoolsPatsy O’Neill
Texas Public Finance Authority Charter School Finance Corporation Kim Edwards, Judith Porras
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Texas Public Finance Authority
• State Agency• Mission: Provide cost effective
financing for facilities and equipment for other state agencies, as directed by the Legislature
• 15 employees
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Background• Texas Public Finance Authority Charter
School Finance Corporation created pursuant to Texas Education Code, Section 53.351 (76th Legislature passed HB 6 in 2001)
• Issue bonds for open enrollment charter schools for facility financing
• Authorized State Comptroller to establish a fund for Credit Enhancement
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TPFA Charter School Finance
Corporation• Non-profit corporation created by
the Board of Directors of the Texas Public Finance Authority (TPFA)
• CSFC Board of Directors is separate from TPFA Board of Directors
• TPFA staff provides administrative and staff support for the CSFC.
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TCEP GrantsTCEP GrantsTCEP GrantsTCEP Grants
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TCEP Funding• $6.9 million grant from U.S.
Department of Education• $100,000 from Texas Education
Agency• Grant is to provide credit
enhancement to charter schools for facilities funding
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TCEP Grants• $7 million of grant funds will be held by
the State Comptroller• Funds will be allocated to charter
schools for a debt service reserve fund for bonds issued on behalf of the school
• Funds will not be dispersed to schools • The CSFC Board of Directors will award
access to TCEP grant funds.
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Minimum Criteria• Bond Financing• Meet Federal definition of Charter School• Academic Rating of acceptable or higher
for two consecutive years, including 2006• Satisfactory Rating under the 2006
Financial Integrity Rating System of Texas (FIRST) as adapted for charter schools.
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Timeline• September 15, 2006: Applications due• September – December 2006:
Applications will be reviewed by consortium staff and approved by the CSFC board.
• Early 2007: Approved charters notified of access to grant funds.
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TimelineCharter schools should work with their financial advisors, bond counsel and an underwriter to structure their bond issue and prepare preliminary bond documents, prior to submitting the application on September 15, 2006. These services will not be provided by TCEP.
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Additional Resources
The Answer Key: How to Plan, Develop and Finance Your Charter School
Facility
NCB Development Corporation1725 Eye St. NW Suite 600Washington, DC, 20006(202) 336-7680www.ncbdc.org
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Bond Issuance Bond Issuance ProcessProcess
Bond Issuance Bond Issuance ProcessProcess
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Financing Team• Borrower (Charter School)• Issuing Authority (TPFA CSFC or other)• Bond Counsel• School’s Legal Counsel• Underwriter/Financial Advisor• Underwriter’s Counsel• Rating Agency
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Bond Financing Structure
Issuer(CSFC)
Investors$$$
Trustee (Bank)
Borrower(School)
Loan
Bonds
Bonds
UnderwriterLoan Payments &
Bond Proceeds
Loan Payments & Bond Proceeds
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Typical Bond Documents
• Trust Indenture/Bond Resolution• Deed of Trust/Real Property
Financing Documents• Loan Agreement• Official Statement
– Preliminary Official Statement (POS)– Final Official Statement (OS)
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Bond Sale Timeline6-9 months
• Define scope of project, project budget and cost estimates (Refer to chart on “Answer Key” pp. 86-87)
• Select Financing Team: Bond Counsel, Underwriter/Financial Advisor• Prepare Bond Documents • TEFRA Hearing • Meetings/Site Visits with Rating Agencies and Bond Insurance
Companies• Receive Ratings/Insurance Commitment• Distribute final offering documents to potential investors• Price Bonds• School signs loan agreement • Corporation (Issuer) adopts Trust Indenture and Loan Agreement• Closing
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TCEP ApplicationTCEP ApplicationTCEP ApplicationTCEP Application
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TCEP Application• Introductory Information• Section A: Mission Clarity and Fulfillment• Section B: Governance• Section C: Local Characteristics• Section D: Viability and Need for Project• Section E: Financial Strength• Attachments
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Local Characteristics• 2005 School Improvement status -
Districts– http://www.tea.state.tx.us/nclb/PDF/S
IPDistrict.pdf• 2005 School Improvement status –
Campuses– http://www.tea.state.tx.us/nclb/PDF/S
IPCampus.pdf
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Local Characteristics• 2005 & 2006 Accountability ratings
– http://www.tea.state.tx.us/perfreport/account/
• Academic Excellence Indicator System (AEIS) report– http://www.tea.state.tx.us/perfreport/
aeis/
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School FIRSTSchool FIRSTSchool FIRSTSchool FIRST
Rita ChaseRita Chase
Division of Financial AuditsDivision of Financial Audits
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Goals• Achieve Improved Performance In
The Management Of Schools’ Financial Resources
• Facilitate Better Uses Of Financial Resources
• Demonstrate Increases In Fiscal Performance Were Achieved
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Objectives of Financial Accountability Rating
System
• Assess The Quality Of Financial Management
• Publicly Report This Assessment• Assure The Maximum Allocation
Possible For Direct Instructional Purposes
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Objectives of Financial Accountability Rating System
(Con’t)• Implement a Rating System That
Fairly And Equitably Evaluates The Quality Of Management Decisions
• Use Data Currently Being Reported And Available From:– Annual Financial Reports Filed By Schools– Public Education Information Management
System (PEIMS)
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Objectives For Rating System
• Simple And Understandable• Applicable To All Schools• Based On Hard Data• Allows For Self Administrations• Provide An Early Warning• Substantially Within School’s Control
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Objectives For Rating System
• Efficiency Measures• Linkage To Academic Performance
(Recognized or Exemplary Rating Required For Highest FIRST Rating
• Transparency
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Determination Of Ratings
Ratings Points
• Superior Achievement >=70 And Yes Indicator 10• Above Standard Achievement >=60 <70 or
>=70 And No Indicator 10
• Standard Achievement >=50 <60
• Substandard Achievement <50 OR Zero Points For One Default Indicator
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School Ratings• Based Upon 23 Indicators• Ratings Function Of Aggregate Number Of
Points And Answers To Critical Indicators• Five Point Scale For Most Indicators With
Calculated Values– Five Point Scale Based Upon 20% Variance For
Most Indicators With Calculated Values
• Some Indicators Pass/Fail
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School Ratings
• Failing To Pass One Or More Critical Indicators Will Result In Automatic Failing Grade
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Overview of Base Indicators
Critical IndicatorsFiscal Efficiencies And Academic Performance
Fiscal ResponsibilityBudgetingPersonnelCash Management
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Critical Indicators
• Did the School Make Timely Deposits to the Teacher Retirement System and the Internal Revenue Service?
• Was Total Net Asset Balance Greater Than Zero In The Statement of Activities?
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Critical Indicators Con’t
• Were There No Disclosures In The Annual Financial Report And/Or Other Sources Of Information Concerning Default On Debt?
• Was The Annual Financial Report Filed Within One Month After November 27th or January 28th Deadline Depending Upon The School's Fiscal Year End Date (June 30th or August 31st)?
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Critical Indicators Con’t
• Did The School’s Academic Rating Exceed Academically Unacceptable?
• Was There An Unqualified Opinion In Annual Financial Report?
• Did The Annual Financial Report Not Disclose Any Instance(s) Of Material Weaknesses In Internal Controls?
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Fiscal Efficiencies And Academic Performance
• Were Operating Expenditures Per WADA In The General Fund And Special Revenue Fund Less Than Or Equal to $4,700 (Exclude Expenditures Under Object Code 6141 SS/Med, Operating Leases and Function Codes 34, Student (Pupil) Transportation, and 35, Food Services)?
• Were Operating Expenditures Per WADA In The General Fund Less Than Or Equal to $4,000 (Exclude Expenditures Under Object Code 6141 SS/Med, Operating Leases and Function Codes 34, Student (Pupil) Transportation, and 35, Food Services)?
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Fiscal Efficiencies And Academic
Performance Con’t
• Did The School Have A Recognized Or Exemplary Academic Rating?
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Fiscal Responsibility
• Did The Comparison Of PEIMS Data To Like Information In Annual Financial Report Result In An Aggregate Variance Of Less Than 3 Percent Of Expenditures Per Fund Type (Data Quality Measure)?
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Fiscal Responsibility
Con’t• Were Debt Related Expenditures
Less Than $250.00 Per Student? (If The School's Five-Year Percent Change In Students Was A 7% Increase Or More, Then the School Receives 5 Points)
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Fiscal Responsibility
Con’t• Was There No Disclosure In The
Annual Audit Report Of Material Noncompliance?
• Did The School Have Full Accreditation Status In Relation To Financial Management Practices? (e.g., No Conservator Or Monitor Assigned)
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Budgeting Con’t• Was The Aggregate Of Budgeted
Expenditures Less Than The Aggregate Of Total Revenues and Fund Balance in General Fund?
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Budgeting Con’t• Was The Ratio Of Cash And
Investments To Deferred Revenues Greater Than Or Equal To 1:1?
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Personnel• Was The Administrative Cost Ratio
Less Than The Threshold Ratio?• Was The Ratio Of Students To
Teachers Within The Ranges Shown Below According To School Size?
• Was The Ratio Of Students To Total Staff Within The Ranges Shown Below According To School Size?
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Cash Management
• Was the Amount of the Unrestricted Net Asset Balance Equal to at Least 8% of Total Expenses.
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Cash Management
Con’t• Was The Decrease In Net Assets
Balance Less Than 20% Over Two Fiscal Years?
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Cash Management
Con’t• Was The Aggregate Total Of Cash
And Investments In The General Fund More Than $0?
• Were Investment Earnings In All Funds More Than $20.00 Per Student?
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Contacts
Kim Edwards Texas Public Finance [email protected]
(512) 463-5544www.tpfa.state.tx.us
Patsy O’NeillResource Center for Charter
[email protected](210) 348-7890
http://www.charterstexas.org
Mary PerryDivision of Charter SchoolsTexas Education Agency
[email protected](512) 463-9575
Rita ChaseDivision of Financial [email protected]
512-463-7595
http://www.tea.state.tx.us