State releases details of charter school loan program

The Indiana State Board of Education on Monday released details of a charter school loan program that was slipped into the state budget earlier this year.

The program gives charters access to $50 million in state-funded loans and comes on the heels of the state’s forgiveness of $90 million in charter school loans in 2013. The last-minute loan program drew the ire of some politicians, who worried Hoosiers would ultimately be on the hook if charters couldn’t repay their loans.

Schools are eligible to receive up to $5 million in loans. If they use that money to construct a facility, the state is able to collect on the proceeds of that building if the charter fails to repay the loan.

A school is eligible to apply for the loan if it receives at least a C school accountability grade; is in its first or second year of operation; primarily serves special-needs students; is located in an innovation network; or doesn’t qualify to receive a grade. Schools that receive a D or F accountability grade automatically qualify if that grade is equal to or better than their closest comparable traditional public school.

Per guidelines sent out by the state board, the loans carry a 1 percent interest rate and are due within 10 years.

The board must receive loan applications by Oct. 15, and after being vetted, each application will receive a public hearing.

The board is slated to take formal action on the loan program at its meeting Wednesday.

Call Star reporter Kris Turner at (317) 444-6047. Follow him on Twitter: @krisnturner.