|By PR Newswire||
|November 15, 2012 11:10 AM EST||
Report cites lack of industry disclosure and underwriting standards, emphasizes academic results as key indicator
NEW YORK, Nov. 15, 2012 /PRNewswire-USNewswire/ -- The tax-exempt bond market's first in-depth evaluation of charter school credit quality details stronger-than-expected financial performance, especially among rated borrowers, and challenges market perceptions about charter school financial risk.
The study—Charter School Bond Issuance: A Complete History, Volume 2—debunks some of the myths surrounding charter school finances, according to Reena Bhatia, vice president of education programs at the Local Initiatives Support Corporation (LISC), which released the study today.
"Charter schools had a surprisingly strong 10.9 percent median increase in net assets in 2011, despite a difficult budget environment and several years of cutbacks and freezes in per pupil funding for many," she said.
The study evaluated 2011 financial statements for 300 charter school borrowers and found their overall financial condition to be sound. Debt ratios were superior to general market expectations, with a higher-than-expected median debt service coverage of 1.41x and a lower-than-expected median debt burden of 12.7 percent. Across 22 different financial metrics, the data suggest healthy fiscal conditions.
Notably, academic performance proved to be a critical indicator of credit quality, though that data is often insufficient in charter offerings or misunderstood by the market. The study found that poor academic performance was the primary cause of 73 percent of the defaults by borrowers in the sector, and a likely contributing factor in another 18 percent. The study details ways to evaluate academic performance as part of an overall review of credit quality.
"Most defaults have occurred among schools with sub-par academic programs that compared poorly with other schools in their district and state," said Elise Balboni, one of the study's authors. "Strong academics attract more students and the per pupil funding attached to them. High-performing schools are unlikely to lose their charters, even in contentious districts. In short, better academics make better borrowers."
Some of the study's other key findings include:
- The tax-exempt charter school bond sector grew to approximately 600 transactions totaling $6.4 billion, as of May 31, 2012.
- There were no monetary defaults on the 257 charter school bonds with investment grade ratings, one default among the 44 issues with non-investment grade ratings and 21 defaults among the 284 unrated issues.
- Borrowing costs for charter schools have remained high since the credit crisis. In fact, pricing spreads over AAA debt have been widening, averaging 341 basis points in 2011-12, despite the sector's fiscal health.
- Lack of standardization in measuring charter school risk hampers growth of the sector and negatively affects repayment performance. It discourages high-quality schools from turning to the capital markets for financing, inflates costs for all borrowers, and allows certain charter schools to borrow even though they are not strong enough—either academically or financially—to do so successfully.
Volume 2 is the second installment of LISC's comprehensive review of the charter school municipal bond market. It evaluates offering documents, as well as the credit characteristics of charter school borrowers at the time of issuance, the current financial strength of bond-financed charter schools and repayment performance. The first volume of the study, Charter School Bond Issuance: A Complete History, was released in 2011 and catalogued the size, scope and pricing of charter school bond issues.
"This could be a large, high-performing market segment," Balboni said. "But, less than 10 percent of charter schools are turning to the bond market for financing. We need standardized disclosure and underwriting criteria for borrowers so that strong, credit-worthy charters can access the capital they need and this sector can achieve scale."
The full study, which was funded with support from the Bill & Melinda Gates Foundation, is available at http://www.lisc.org/effc/bondhistoryv2.
LISC combines corporate, government and philanthropic resources to help nonprofit community development corporations revitalize distressed neighborhoods. Since 1980, LISC has raised $12 billion to build or rehab 289,000 affordable homes and develop 46 million square feet of retail, community and educational space. For more information, visit www.lisc.org.
"My role is working with customers, helping them go through this digital transformation. I spend a lot of time talking to banks, big industries, manufacturers working through how they are integrating and transforming their IT platforms and moving them forward," explained William Morrish, General Manager Product Sales at Interoute, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Mar. 27, 2017 09:45 PM EDT Reads: 3,627
The cloud competition for database hosts is fierce. How do you evaluate a cloud provider for your database platform? In his session at 18th Cloud Expo, Chris Presley, a Solutions Architect at Pythian, gave users a checklist of considerations when choosing a provider. Chris Presley is a Solutions Architect at Pythian. He loves order – making him a premier Microsoft SQL Server expert. Not only has he programmed and administered SQL Server, but he has also shared his expertise and passion with budd...
Mar. 27, 2017 09:45 PM EDT Reads: 3,038
Apache Hadoop is emerging as a distributed platform for handling large and fast incoming streams of data. Predictive maintenance, supply chain optimization, and Internet-of-Things analysis are examples where Hadoop provides the scalable storage, processing, and analytics platform to gain meaningful insights from granular data that is typically only valuable from a large-scale, aggregate view. One architecture useful for capturing and analyzing streaming data is the Lambda Architecture, represent...
Mar. 27, 2017 08:15 PM EDT Reads: 6,305
SYS-CON Events announced today that Ocean9will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Ocean9 provides cloud services for Backup, Disaster Recovery (DRaaS) and instant Innovation, and redefines enterprise infrastructure with its cloud native subscription offerings for mission critical SAP workloads.
Mar. 27, 2017 07:45 PM EDT Reads: 2,192
With billions of sensors deployed worldwide, the amount of machine-generated data will soon exceed what our networks can handle. But consumers and businesses will expect seamless experiences and real-time responsiveness. What does this mean for IoT devices and the infrastructure that supports them? More of the data will need to be handled at - or closer to - the devices themselves.
Mar. 27, 2017 07:30 PM EDT Reads: 4,583
In his session at DevOps Summit, Tapabrata Pal, Director of Enterprise Architecture at Capital One, will tell a story about how Capital One has embraced Agile and DevOps Security practices across the Enterprise – driven by Enterprise Architecture; bringing in Development, Operations and Information Security organizations together. Capital Ones DevOpsSec practice is based upon three "pillars" – Shift-Left, Automate Everything, Dashboard Everything. Within about three years, from 100% waterfall, C...
Mar. 27, 2017 06:45 PM EDT Reads: 12,925
Adding public cloud resources to an existing application can be a daunting process. The tools that you currently use to manage the software and hardware outside the cloud aren’t always the best tools to efficiently grow into the cloud. All of the major configuration management tools have cloud orchestration plugins that can be leveraged, but there are also cloud-native tools that can dramatically improve the efficiency of managing your application lifecycle.
Mar. 27, 2017 06:00 PM EDT Reads: 3,007
SYS-CON Events announced today that Juniper Networks (NYSE: JNPR), an industry leader in automated, scalable and secure networks, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Juniper Networks challenges the status quo with products, solutions and services that transform the economics of networking. The company co-innovates with customers and partners to deliver automated, scalable and secure network...
Mar. 27, 2017 03:45 PM EDT Reads: 1,420
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In his Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, will explore t...
Mar. 27, 2017 03:30 PM EDT Reads: 2,963
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
Mar. 27, 2017 02:45 PM EDT Reads: 1,967
SYS-CON Events announced today that Linux Academy, the foremost online Linux and cloud training platform and community, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Linux Academy was founded on the belief that providing high-quality, in-depth training should be available at an affordable price. Industry leaders in quality training, provided services, and student certification passes, its goal is to c...
Mar. 27, 2017 02:30 PM EDT Reads: 4,035
Some people worry that OpenStack is more flash then substance; however, for many customers this could not be farther from the truth. No other technology equalizes the playing field between vendors while giving your internal teams better access than ever to infrastructure when they need it. In his session at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, will talk through some real-world OpenStack deployments and look into the ways this can benefit customers of all sizes....
Mar. 27, 2017 02:30 PM EDT Reads: 4,338
Deep learning has been very successful in social sciences and specially areas where there is a lot of data. Trading is another field that can be viewed as social science with a lot of data. With the advent of Deep Learning and Big Data technologies for efficient computation, we are finally able to use the same methods in investment management as we would in face recognition or in making chat-bots. In his session at 20th Cloud Expo, Gaurav Chakravorty, co-founder and Head of Strategy Development ...
Mar. 27, 2017 02:30 PM EDT Reads: 3,686
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From ...
Mar. 27, 2017 02:00 PM EDT Reads: 2,074
Interoute has announced the integration of its Global Cloud Infrastructure platform with Rancher Labs’ container management platform, Rancher. This approach enables enterprises to accelerate their digital transformation and infrastructure investments. Matthew Finnie, Interoute CTO commented “Enterprises developing and building apps in the cloud and those on a path to Digital Transformation need Digital ICT Infrastructure that allows them to build, test and deploy faster than ever before. The int...
Mar. 27, 2017 01:30 PM EDT Reads: 1,220