The Charter School Credit Enhancement Program provides qualifying Utah charter schools with a means of obtaining more favorable financing and can result in a savings of hundreds of thousands of dollars over the life of a bond.
Under the Credit Enhancement Program, the State commits a moral obligation pledge to draw on its general fund if sufficient funds are not available from the school-funded dedicated reserve fund, or to issue general obligation bonds, if necessary, to cure a debt service shortfall of a participating charter school.
In order to take advantage of the favorable financing rates offered through the credit enhancement program, charter schools must submit a qualifying application to the UCSFA and utilize UCSFA as the conduit to issue the bonds.
1) Availability of the Utah Charter School Credit Enhancement Program (Program) is limited to those Applicants issuing bonds through the Utah Charter School Finance Authority (UCSFA).
2) The Applicant must be in compliance with all chartering requirements under the Utah Code and all terms of the charter agreement between the Applicant and its chartering entity. The UCSFA will obtain from the Applicant’s chartering entity a certificate that verifies :
- The charter is in place;
- The Applicant is in good standing and meets all chartering requirements and criteria established within the charter agreement;
- There are no serious outstanding or unresolved concerns relative to the Applicant; and
- In the case of Applicants chartered by the State Charter School Board (SCSB), there are no outstanding deficiencies as defined within R277-481.
3) Except as provided below, the Applicant must obtain an underlying investment grade rating from Fitch Ratings, Moody’s Investors Service, or S&P Global. The Applicant will provide a copy of the rating report, verifying that the rating is in place for the bonds the UCSFA is being asked to issue. The Applicant must provide a copy of its most recent rating agency presentation upon request of the UCSFA. The UCSFA will analyze the ratings report to note any credit weaknesses outlined therein, and will take such credit weaknesses into account in determining the Applicant’s eligibility for participation in the Program
- If an Applicant with annual enrollment of not more than 450 students has not been assigned an underlying investment grade rating for the proposed bond issue, UCSFA may consider an application for the issuance of bonds under the Program, in a principal amount not to exceed $10,000,000, if the Applicant meets all of the following requirements (Alternative CEP Requirements):
- The Applicant must have completed at least 10 years of operation as of the date of issuance of the bonds;
- The Applicant must have a waitlist that is at least equal to 35% of total enrollment;
- The Applicant must show steady or increasing enrollment for the last three consecutive years preceding application; and
- The Applicant must (A) have received an “A” or “B” grade from the Utah State Board of Education for the most recently completed school year for which such grades are available, or
- Demonstrate that the Applicant’s overall academic performance for the most recently completed school year for which applicable data is available ranks in the top 25% of comparable schools within a five-mile radius of the Applicant.
*For Applicants applying for the issuance of bonds under the Program pursuant to this exception, the Alternative CEP Requirements supersede any less restrictive requirements with respect to the same measures set forth within these Standards for Participation.
4) The Applicant must demonstrate a stable or improving financial operating history for at least three years and provide independently audited financial statements for the most recent five years (if the Applicant has been in operation that long).
5) The Applicant must provide a statement explaining its approved mission and describing any special emphasis offered within its curriculum.
6) The Applicant must certify that either it has or has not previously borrowed proceeds from a tax-exempt or other tax-advantaged financing, and that it is not in default under any of the covenants into which it has entered related to such financing, including, but not limited to, continuing disclosure filing obligations, arbitrage rebate calculations, and filing of Form 990 (as applicable).
All Charter Schools
All schools intending to use UCSFA as the conduit issuer must complete the financing application below:
Credit Enhancement Program
Schools who have been given an investment grade rating by a nationally recognized NSRO may apply for Credit Enhancement using the Application Addendum below: