New Walton Initiative Funds Charter Schools From the Ground Up
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CONSTRUCTION UNDERWAY AT FUTURE SCHOOL IN FORT SMITH, ARKANSAS. PHOTO: FUTURE SCHOOL
Some school buildings are hulking. Others are dilapidated. Most are grungy from years of student traffic and benign neglect. We don’t tend to think about school buildings much: Even those who spend countless hours inside them—students, teachers, parents—take them for granted as necessary if uninteresting containers for learning. But school administrators will tell you that identifying school sites, constructing or expanding facilities, and maintaining existing structures are an essential—and expensive—element of school operations.
Finding and funding building space presents a particular challenge for public charter schools, because unlike traditional public schools, charters don’t benefit from bonds and other public school funding mechanisms.
That’s why staff at the Walton Family Foundation think about school buildings—a lot. The Walton Foundation was created by the family that built Wal-Mart, and is fueled by its massive fortune. The foundation is a longtime, and very generous, funder of public charter schools. (Over the years, this support has sparked controversy, with some critics, including Randi Weingarten, the president of the American Federation of Teachers, decrying the “Wal-mart-ization of Education.”)
Much of the foundation’s support for charter schools is focused on school facilities. “The greatest challenge that charters face is the inequitable public funding versus district schools for facilities, and that’s why we wanted to focus on that,” Alice Walton announced when the foundation unveiled its Building Equity Initiative in 2016. The initiative seeks “to make it easier and more affordable for public charter schools to find, secure and renovate facilities,” according to a foundation report, and will enable charter schools to serve an additional 250,000 students by 2027.
Private-Philanthropic Partnership
The Facilities Investment Fund (FIF), an arm of the Building Equity Initiative, is a private-philanthropic partnership that provides charter schools five-year, fixed-rate loans for up to 90% of the cost of new construction or facility renovation.
The Facilities Investment Fund recently announced an additional $100 million in funding for loans to charter schools. “The new round of funding will expand the capacity of high-performing public charter schools by 6,500 students and redirect more than $5 million in savings to the education needs of teachers and students,” according to a press release from the fund
Funding for the initiative is provided by the Walton Foundation and PNC Bank. The project is managed by Civic Builders, a nonprofit organization that focuses exclusively on charter school facilities and how to build, expand, refurbish and pay for them. Civic Builders will identify potential participating schools, assess whether they are solid performers, and work with schools to manage the building or renovation projects.
David Umansky, Civic Builders’ founder and CEO, says traditional lenders tend to overestimate the risk of lending to charter schools, because they don’t fit a narrow model of a safe investment. “Most charter schools are fairly new, two to three years old, in many cases, and these building projects can cost $10 to $20 million,” he points out. “Lenders are often concerned about a school’s short track record and are reluctant to provide a loan, or demand high rates if they agree to go forward.”
According to Umansky, Civic Builders, which is almost 20 years old, is skilled at evaluating which schools are a good investment and which are not. “We don’t advocate providing loans to schools indiscriminately,” he says. “We support schools that are doing a great job serving families, and schools where there is the expectation that they will be able to pay back the loan.”
Both Civic Builders and the Walton Foundation are committed to supporting low-income students and students of color, and the new initiative gives priority to schools that face the greatest barriers to borrowing, including those that serve under-resourced communities and those headed by leaders of color.
Future School
The first in line to benefit from the new $100 million initiative is a small school with a gutsy name and big ambitions. Future School of Fort Smith, based in Fort Smith, Arkansas, opened its doors in 2016; it currently includes grades 10 through 12 and has 226 students.
Future School was founded by former teachers Trish Flanagan and Boyd Logan with support from a group of local business and community leaders. Flanagan and Logan share the goal of making school more relevant to students.
“As teachers, both of us spent a lot of time trying to motivate our students,” says Flanagan. “We wanted to answer the question so many students ask: ‘Why does school help me?’” For Flanagan and Logan, the answer was real-world work experience: Future School students all participate in internships with businesses, colleges and other local enterprises that give them solid job skills and experience to put on their resumes. One Future School graduate had an internship at an oil and gas company; another is doing an internship at an airport and learning to fly planes; others have landed internships at graphic design studios, restaurants and at the local college.
The decision to locate Future School in a low-income section of Fort Smith was deliberate: They wanted to attract a diverse student body. Seventy-three percent of Future School students qualify for free and reduced lunch, and 65% are students of color. “These are kids who don’t have connections in the local business community,” Flanagan said. “We want to give them access to opportunities they wouldn’t have otherwise, to open doors that would traditionally be closed to them.”
She explains that this works both ways: The internships create relationships between business leaders and communities they traditionally don’t encounter. Like many cities around the country, Fort Smith has lost manufacturing jobs to competitors overseas in recent years, and the unemployment rate is high. Businesses, in turn, have experienced a talent drain as young people, seeing few opportunities close to home, leave for college or jobs elsewhere and don’t come back.
“Our goal was to bring the community into school, and the school into the community,” says Logan, who now serves as Future School’s superintendent. “Our internships help kids build a sense of connection here. When their internship is over, they have a professional network, which means they’re more likely to come back here after college.”
Future School was the first grantee to get financing through the Facilities Investment Fund’s new round of funding: a $4 million loan to help purchase its current building and to construct an addition. With the funds, the school plans to expand to ninth grade, and boost enrollment at all grade levels to 400 students.
Flanagan and Logan are excited about the opportunity to purchase the Future School building, a former boys and girls club, and to increase their student body. They are also making architectural changes that will better reflect Future School’s goals for its students. “We’re going to have a proper, secure school entrance that will face Fort Smith’s business district and help bridge the gap between the school and the business community,” said Logan. Construction is going on right now, and if all goes according to plan, the new ninth-grade classroom will open its doors at the beginning of the 2021-22 school year.
Philanthropy as a Catalyst
David Umansky, the Civic Builders CEO, hopes projects like the $100 million Facilities Investment Fund initiative will encourage commercial lenders to step up, too. “Philanthropy is taking a risk today that we hope and expect commercial lenders will take tomorrow,” he said. “We hope that leadership by philanthropists like the Walton Foundation will influence the broader market, and commercial lenders will be more willing to make these loans in the future.”
