As a recent college graduate and new entrant in the charter school facilities finance field, I wanted to share some of the things I learned at my first charter school conference last month at the 2021 Florida Charter School Conference. I hope this can help other people who are unfamiliar with charter school finance.

One informative session I attended was “Setting Your School Up for Success with Long-Term Facility Financing.” The session covered the key considerations school leaders need to know when seeking financing options.

“You are in business until you run out of cash,” said Richard Moreno, president of Building Hope Services. That was one lesson that stood out to him from a Finance professor years ago.

It also leads to our first key takeaway from the session.

Takeaway 1: Understand your current finances and plan for your future.

When a charter school leader is considering long-term financing options—which can range from debt lasting anywhere between 10-35 years—you need to have a good understanding of whether you can continue to operate and pay off your debt obligations. Due to the incredibly low rates today, you may feel the need to act quickly instead of taking your time.

“The market is driven by demand,” was a standout statement from Shannon Falon, senior associate at Equitable Facilities Fund. “Take your time in planning out your future. Make sure you project 5, 10, or 15 years out and update your projections yearly to have a good idea of where you are financially and where you most likely will be. This will equip you with an understanding of how much debt and what kind of debt your school can handle.”

Once you have your projections ready, you can then create a wishlist—write down what your school needs and what would be “nice to haves.” For example, you need ten classrooms and one gymnasium, but you would also like to have a science lab.

Another cost consideration here is to only build spaces that will be used close to 100% of the time. Going back to the science lab on the wishlist, if you build this science lab, but only use it for one hour each day, that’s potentially thousands of dollars towards something that you hardly use—and those funds could be used elsewhere.

Once you know your wants versus needs, you can decide what type of facility option makes the most sense for you.

Takeaway 2: Track enrollment demand.

Tracking enrollment demand—specifically your waitlist—is another metric imperative to your school’s success. If lenders see a high waitlist in comparison to student count, that is a great indication you are a potentially good investment.

When tracking your waitlist, you need to be consistent. This means if you track student enrollment in August in your first year of tracking, then August needs to be your tracking date year-over-year. This is important because lenders loan out money based upon risk. If you have tight and strong data, you appear to be a lower risk and lenders will be more comfortable investing in your school.

Understanding your demand also plays into the accuracy of your projections. Knowing what you can expect in future years for student enrollment will give you clarity around what to expect for your staffing levels and revenue.

Takeaway 3: Perfect telling your school’s story.

“You have to be your best cheerleader,” Tara Tahmosh, Principal of Sarasota School of Arts and Sciences said in reference to selling yourself to lenders and rating agencies like S&P or Moody’s.

You may or may not want to be rated, this is something you and your team need to think about. If you go to the bond market as a school and have an investment grade rating, you will be able to receive lower rates than a non-rated or noninvestment grade school in the bond market.

Assembling a strong team is part of being able to sell yourself and showing how great your school—a central theme in best practices for securing charter school facilities financings. To be your best cheerleader, you need people working at the school who have a strong understanding of your school’s values, the school’s “story,” and your end goals. This means having leaders with diverse skill sets, including real estate experience, legal expertise, or financial background.

Your school’s “story” explains anomalies or numbers that do not make your school look as strong. For example, you may be a K-5 school that just expanded to K-8 due to high demand, but once you made the jump to K-8 your waitlist numbers dropped. This background information is a key part of telling your story. It makes a stronger case for why someone should invest in your school.

If you are able to understand your current finances and plan accordingly for your future, track your demand data, and be a good self-advocate, that will set yourself up for success when dealing with long-term financing.

I look forward to learning more from the experts in the years to come.

Jared Kane is an Investment Analysts at Equitable Facilities Fund (EFF). He is in the inaugural cohort of the Education Finance Analyst program sponsored by EFF and Civic Builders. This is his first entry in a four-part series.