Charter School Technical Advisory 15-02: Approval of Loans Beyond Charter Terms

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Under the charter school statute, G.L. c. 71, § 89(j)(6), the Board of Elementary and Secondary Education (Board) must approve the term of repayment of any charter school's debt if it exceeds the duration of the school's charter. At its meeting on October 21, 2008, the Board voted to delegate to the Commissioner of Elementary and Secondary Education (Commissioner) the authority to approve such loan requests. These requests include instances in which a charter school may guarantee a loan with a repayment term that exceeds the duration of the school's charter. This Technical Advisory outlines the timeline and process required in order to submit such a request for consideration. If approved, the Commissioner informs the Board of such approval.

For the Commissioner to consider approving a loan with a repayment term that exceeds the duration of the school's charter, the school must submit a number of documents to the Office of Charter School and School Redesign. These documents should be submitted at least thirty days before the Commissioner's approval is needed. These documents, submitted under penalties of perjury, include as follows.

• A letter from the school's board of trustees requesting approval of the term of repayment of the charter school debt, addressed to the Commissioner, with a copy to the Office of Charter School and School Redesign. This letter must

  • provide a description of the proposed loan including, but not limited to, its purpose and expected maximum term length, a description of the expected financing arrangements, and a statement about how the loan will benefit the school;

  • include a statement that the school's board of trustees "voted to request approval of the term of repayment of this financing on [DATE] at a meeting held in compliance with the Open Meeting Law;" and

  • include a statement that the board of trustees has authorized the person signing the letter to make the request on their behalf.

• A five-year operating budget for the school that includes repayment of the proposed loan(s).

• Loan agreement(s) or commitment letter(s), if available. The loan agreement(s) or commitment letter(s) must contain the following language:

  The parties to the loan(s) acknowledge and agree that the Commonwealth of Massachusetts including, but not limited to, the Commissioner, the Board, and the Department of Elementary and Secondary Education, provides no representations or guarantees with respect to these loans and has no liability for any portion of the loans. Furthermore, specifically and without limitation, the Commissioner's approval of the loan has no impact on any action that the Commissioner or the Board may choose to take in the future with respect to probation, revocation, or renewal of the School's charter.

• If the loan agreement(s) or commitment letter(s) is not yet available or the language quoted above is not contained therein, a letter from the school's proposed lender(s) outlining the anticipated terms of the loan and the lender's understanding that

  • the Commonwealth of Massachusetts including, but not limited to, the Commissioner, the Board, and the Department of Elementary and Secondary Education, provides no representations or guarantees with respect to these loans and that the Commonwealth of Massachusetts, including but not limited to the Commissioner, the Board, and the Department of Elementary and Secondary Education, has no liability for any portion of the loans;

  • the approval by the Commissioner of the term of repayment of loan(s) has no impact on any action that the Commissioner or the Board take in the future with respect to probation, revocation, or renewal of the School's charter; and

  • any approval of the term of repayment by the Commissioner would be explicitly conditioned upon the inclusion of this language in the loan agreement(s).

Please note that the submission of these documents is required before the Commissioner will consider approving a term of repayment of any charter school debt that exceeds the duration of a school's charter. Resubmitting a request for approval of a loan beyond the term of the charter will not be required if minor changes are made to the expected term and financing arrangements. The suggested timelines are subject to the complexity of the issues involved and the schedule of the Commissioner. Charter schools are strongly encouraged to plan ahead regarding requests for approval of a term of repayment that exceeds the duration of the school's charter. Questions about information contained in this advisory should be directed to Joanna Laghetto at jlaghetto@doe.mass.edu or 781-338-3221.

Last Updated: January 30, 2019