Sen. Lorraine Inouye was confident Hilo High School would have a new parking garage for its gymnasium by the end of 2024. The school, which is over 100 years old, already lacked sufficient on-campus parking, Inouye said, and having a garage was essential in case the gym needed to serve as an emergency shelter during a tsunami or fire. 

An architect had begun drawing up plans for the garage before Inouye learned around November that the Department of Education the $7.4 million allocated for the project — along with over $450 million intended to improve facilities at other schools statewide.

“It’s kind of a crazy situation,” Inouye said.

DOE has over $2 billion in unspent capital improvement program funds at school facilities, but it remains unclear how — or when — the buildup of money will result in campus improvements.

DOE has roughly $880 million obligated in contracts for ongoing projects and another $1.2 billion that will lapse by 2026, . 

DOE leaders have proposed that the Legislature , but the department has until June to spend the money. Some lawmakers have argued that unfinished school projects should take priority in the new year. 

“Before you embark on new projects, you’ve got to take care of the old projects,” Sen. Donna Mercado Kim told DOE leadership at a recent . 

On Oahu, Farrington High School is losing out on over $57 million that would have gone toward the construction of a new gym, music building and other campus facilities. The lack of resources for schools, like Farrington, that serve low-income communities only increases families’ distrust of public schools and encourages flight from the public education system, said Rep. Ernesto “Sonny” Ganaden, who represents the Kalihi district. 

“For many of us who represent Title I schools, the CIP list isn’t pork barrel, it’s not pet projects,” Ganaden said. “These are necessary updates to infrastructure.”

While CIP funding for schools has increased in recent years, DOE’s spending has been unable to keep pace. The Covid-19 pandemic only worsened matters, introducing additional delays in the permitting and construction process for school projects. 

At this time, the department has approximately 180 projects under construction and an unspent $130 million in planned projects that it was unable to start over the past three years.

Increasing Funds, Declining Expenditures 

While senators recently criticized DOE’s limited oversight and communication when it comes to handling CIP projects, legislative appropriations may have also contributed to the department’s buildup of funds over time. 

Since 2016, the DOE’s CIP appropriations have steadily increased, with the department receiving nearly $1 billion in the 2021 to 2023 fiscal years. 

Many legislators want to fund attention-grabbing CIP projects, such as new gymnasiums or auditoriums, for schools in their districts, said Cheri Nakamura, director of the He’e Coalition. But, she said, as appropriations for new CIP projects accumulate, it can make it more difficult for DOE to manage projects that are ongoing.  

With approximately 20% of Hawaii schools over a century old, the state needs to better prioritize facility projects, especially when some campuses are to broken bathroom faucets or leaking roofs, Nakamura added.

Legislators also need to balance their own priorities with the DOE’s capacity for construction and project management, added Rep. Amy Perruso. Currently, DOE’s office of facilities and operations has just over 70 job vacancies.

“We do need to make sure that we have the capacity and (the projects) are truly what the school leadership needs and wants, and legislators are not supplanting DOE work with our own projects,” Perruso said. 

As CIP appropriations rose over the past several years, the department’s spending fell. Up until 2018, the department typically spent 70% or more of its appropriated CIP funds. But in the following years, the department spent less and less of its CIP budget, until it spent less than 1% of its appropriations in the 2023 fiscal year. 

Several factors have contributed to the recent spending slowdown, said deputy superintendent Curt Otaguro. In particular, the Covid-19 pandemic created supply chain shortages and delays in the permitting process, he said, adding it could take a year and a half to receive a permit for a school CIP project.

DOE faced another roadblock in spending CIP funds earlier this year when legislators denied the department’s request for nearly $150 million in project completion funds. While these funds help to cover unexpected costs that may arise in the construction process, the Legislature appropriated no money in the 2023-25 biennium budget.   

House finance chair Kyle Yamashita said in an emailed statement that the decision stemmed from legislators’ concerns that the department had too many inefficiencies and improper project planning when it came to building school facilities. DOE’s CIP budget already far surpassed the funding allocated to other departments, he said. 

“The denial of the funding aligns the DOE with other Departments in executing its capital improvement projects in a prudent and consistent manner,” Yamashita said. 

Potential Solutions 

Not all state departments have faced the same challenges with spending their CIP funds in recent years. 

During the pandemic, the University of Hawaii went “gangbusters on construction,” said Jan Gouveia, vice president for administration. With the exception of two projects, the university plans to encumber the entirety of its CIP budget totaling over $300 million, Gouveia said.

“We don’t lapse money,” Gouveia said, although she acknowledged the university has seen a decline in its CIP appropriations in recent years. 

Gouveia attributes the university’s success to the reorganization of its facilities and procurement offices in 2016. Before the reorganization, Gouveia added, there was no way to easily track the status of ongoing CIP projects and appropriated funding. 

DOE now faces similar considerations around its possible reorganization. 

In last month’s Senate briefing, Otaguro said no one in the department is responsible for overseeing CIP projects from beginning to end. Senators pointed to DOE’s lack of central organization as contributing to the department’s struggles to spend its CIP funds. 

At the briefing, Ways and Means Chair Donovan Dela Cruz said senators may introduce legislation in the coming weeks proposing changes to DOE’s office of facilities and operations. 

But some officials are more hopeful about the department’s ability to improve.

Over the past few months, DOE has worked on a comprehensive review of its facilities and real estate assets, said Board of Education Chair Warren Haruki. From this review, the department can revise its processes of encumbering and spending its CIP funds as necessary, Haruki added. 

“It’s going to take a long period of time to reap the benefits of this,” Haruki said. 

Chad Farias, executive director of the School Facilities Authority, believes his agency can also help to expedite the spending of CIP funds and the completion of school projects in the coming years. 

SFA was created in 2020 with the intention of overseeing schools’ CIP projects. Right now, Farias said, SFA primarily handles construction projects for charter schools . But as the agency expands, it intends to take responsibility for all CIP funds allocated for public schools within the next two years, Farias said. 

He said he plans to revise the process of selecting vendors for CIP projects, using a prequalified construction method that could reduce the time for awarding bids by up to 80%. DOE already uses this process for smaller projects, Farias added, but he’s hopeful that SFA could scale up this approach and apply it to more CIP projects. 

These changes will take time, Farias said. But he believes Hawaii schools have the ability to spend all of the CIP funds they receive from the Legislature.

“I’m not afraid of failing,” Farias said. “I’m only afraid of not getting the opportunity to try.” 

In Los Angeles, the school board is expected to vote this fall on a measure that could significantly limit the practice, known as co-location. 

And in New York, the United Federation of Teachers a judge’s Aug. 11 that allowed Success Academy, a large and high-performing charter network, to open new schools in two district facilities.

“In both New York City and L.A., the general relationship between traditional public and charter schools is not great, so asking schools from these two different sectors to share a building could be contentious,” Sarah Cordes, an associate professor at Temple University who has studied co-location, told ����Ӱ��. “If schools view each other as competitors rather than collaborators, it will make co-location challenging.”

Charter schools have long faced challenges securing facilities and financing renovations. California voters that requires districts to provide facilities for charters, including through co-location. shows the policy can work if district and charter leaders are willing to compromise, and can even benefit district students. But such partnerships are hard to come by in cities with strong teachers unions, where disputes over issues like parking and access to the gym can spark resentment between charter and district families.

Co-location bubbled up as a major issue in United Teachers Los Angeles’s strike against the district in 2019. Following the strike, board President Jackie Goldberg and fellow Board Member Nick Melvoin pushed through a $5.5 million on facility upgrades that could make co-location more tolerable, such as designated entrances for charter students and staff and separate drop-off and pick-up areas. But that wasn’t enough to overcome the argument that charters take space away from district students.

For Board Member Rocio Rivas, who wrote the proposed resolution with Goldberg, the current proposal is a step toward fulfilling a promise to her supporters during last year’s campaign. In an interview for Jacobin, a , she called co-location ”a cancer that comes in and then metastasizes and spreads.

A draft of the resolution says the practice “has a tangible negative impact” and would require Superintendent Alberto Carvalho to write a new policy that would prohibit co-locations at the district’s 55 , which offer food pantries, health clinics and other services for families. The resolution, which the board is expected to discuss Sept. 19, would further bar co-location at the district’s 100 low-performing “priority” schools and those targeted by the .

Those special programs shouldn’t displace charter students who need classrooms for “core educational coursework,” wrote the California Charter School Association. The group would consider suing the district if it moves forward with the policy. The association has over the issue before. The proposal, the group says, would lock charters out of at least 236 schools and impact 28 facilities that are currently co-located.

Charter parents said animosity toward their schools, including outside the school gates in recent years, has affected students. 

“It’s simmered over into the community,” said Angelica Solis-Montero, who has two children at Gabriella Charter School, which shares a campus with Logan Elementary in the Echo Park neighborhood. “These families shop in the same places; they access the same public resources. One group of students has been pitted against another group of students.”

But charter advocates aren’t the only ones opposed to the proposal as currently written. Twenty-six organizations, including Educators for Excellence Los Angeles and the Los Angeles Urban League, wrote a letter to the board, saying the resolution is filled with “hateful rhetoric.” 

“The charter fight is over. [Charters are] under enrolled. They’re not growing,” said Ana Teresa Dahan, managing director of GPSN, one of the nonprofits that signed the letter. “We need to really focus on improving the experience for kids in all our public schools.”

‘In limbo’ 

Co-location is a more recent policy in New York. A 2014 permits new charters or those adding grade levels to access space in district buildings. But in allowing Success Academy to move into those two buildings, UFT said New York Supreme Court Judge Lyle Frank didn’t consider a that sets caps on class sizes, putting an even greater premium on available classrooms. 

While the dispute focuses on just two schools, it exemplifies the challenges that arise when multiple schools occupy the same building.

Ken Zhang, principal at Success Academy Rockaway Park Middle School, said it’s taken about four years to get a permanent site. Until this year, his students shared a building with another Success Academy elementary and two district schools. Now they’ve moved into P.S. 225 in Queens, site of the district’s Waterside Leadership School. 

“We were in limbo at every turn,” he said. Co-location can work, he said, when principals are clear about what’s important to them — for him, it’s access to the stage for his theater students — but are willing to bend in other areas. “I’m not going into these meetings looking to take space away from their kids.”

But Elli Weinert, a district music teacher and one of the plaintiffs in the UFT lawsuit, said just because a building has unused space doesn’t mean it’s suitable for young students. She teaches at Professional Pathways High, one of three small schools serving high school students or adults in the Frank J. Macchiarola Educational Complex in Brooklyn. 

Success Academy Sheepshead Bay, a K-4, moved into a space in the Macchiarola complex previously occupied by another high school. 

“We do need something in that space,” said Weinert. “But it was built for the young adults in that neighborhood.”

She’s not opposed to co-location in general. Staff and students from the four schools within the Macchiarola complex, she said, learned to accommodate each other “like roommates.” 

“At first it wasn’t easy — four different schools with four different visions,” she said. “We’ve been able to work through some difficult stuff.”

Sharing space with a charter can actually boost math and reading performance among students in traditional schools, according to research Cordes published in 2017. 

But she agreed that given the practical challenges co-located schools face, it can be hard to “maintain a unique school climate.” 

“I’m not sure anyone has created a framework for how to make this kind of arrangement successful,” she said. “There needs to be a lot more work done in this area.”

Correction appended

Five Idaho charter schools are saving millions of dollars in facilities costs and pouring those funds into programs for students thanks to a 2019 state law that allows public charter schools to use the state’s creditworthiness to borrow money at discounted interest rates.

Charter schools in Idaho and across the country typically find themselves in a financial hole before they open their doors because the cost of borrowing money to refurbish or build facilities is prohibitive, meaning the schools often have to go deeply into debt.

The five schools have been able to mitigate those costs through various means facilitated by , a Boise nonprofit that partners with charter schools to offer support and expertise, and funded by Idaho’s and , a D.C.-based national nonprofit that offers loans and financial services to charter schools. 

But Idaho’s , which provides “credit enhancement” to charters, is arguably the most powerful tool available for long-term financing of facilities.

“Under the program, the state basically guarantees that if things should go totally wrong, the state would step in and protect the bondholders,” said Keith Donahue, Bluum’s director of school strategy and operations. “This ups schools’ credit rating on bond deals, allowing charters to go from unrated to just a tick or two below a traditional school district, and that results in a lower interest rate for the school.” 

To qualify, a school must demonstrate to the Idaho Finance and Housing Association that it is in good standing both financially and academically. “The fact that they have gotten over this bar means they are outstanding schools,” said Bluum CEO Terry Ryan. “They’ve had to go through an underwriting process. They’ve had Moody’s [credit rating] involved.”

And, school leaders say, the beauty of the program is that the savings are real, immediate, and help schools serve their students better. Because the low interest rates are locked in, those savings will continue through the 35-year term of the loans.

, a K-5 charter school in Idaho Falls, provides a good example. Alturas purchased the 93-year-old O.E. Bell school building in 2016. The school had been sold by the district the previous decade and converted to offices. Alturas converted it back, but couldn’t afford either to add a kitchen or upgrade the building’s heating and cooling systems.

In February, Alturas closed on a refinance, using the state charter facilities program to reduce its interest rate to 3.79%. The $8.2 million loan included an additional $1 million in cash for improvements. Even with that extra debt, the school is saving $42,000 a year on its mortgage payments.

The refinance will directly benefit the school’s neediest students because it will allow Alturas to build a kitchen and cafeteria. This will make it possible for the school to enroll in the federally subsidized lunch program. For the first time, Alturas’s low-income students will receive free, hot meals at school.

“We tried hard for years to get the free and reduced lunch program here, but without a cafeteria it’s impossible,” Alturas’s executive director and founder Michelle Ball said. “It feels really good that we will be able to put that program in place.”

The kitchen will also serve Alturas International Academy’s sister school, the grades 6-12 Alturas Prep.

The new cash will also allow the school to make much-needed upgrades to the old building’s heating and cooling systems. And with the $42,000 in savings, Ball said, Alturas will be able to purchase curricular upgrades, launch more afterschool clubs without charging students and to pay teachers to staff those clubs, provide afterschool tutoring  and summer school instruction.

The savings made all the paperwork involved more than worth it, Ball said, adding that Bluum was a huge help in that regard. 

“We are a school that believes so strongly in community and people working together,” she said the day after Alturas closed on its new loan.  “When I saw all these different communities working to support us, I just paused and thought, ‘Oh my word.’”

Here are the ways other Bluum-partner charter schools have benefited from the Idaho charter facilities program.

Gem Prep Charter schools; Nampa, Meridian North, Pocatello

The growing network of charter schools closed on the refinance of three of its campuses in early February: Gem Prep Nampa, Gem Prep Meridian North and Gem Prep Pocatello. The network is saving a total of $248,000 per year on its payments as a result.

Each campus has its own story and particular set of circumstances, said network Chief Financial Officer Bryan Fletcher. Nampa was new construction, designed by  Bluum and Building Hope. Refinancing the Nampa facility at 3.57% took annual payments down from $631,636 to $510,760, an annual savings of $120,876, or 19%.

Gem Prep Meridian North encompasses two adjacent buildings. One belonged to Broadview University, a defunct private, four-year college, and the other is a new building Gem Prep built next door. 

The network also runs a large online school, housing its online staff in the Broadview building, as well as administrative staff and its Meridian secondary school. The new building, completed two years ago, is home to the elementary school. The Meridian North refinancing at 3.49% led to a 6% reduction in payments, from $547,944 per year to $514,974.

In Pocatello, Gem Prep took over an old Sears department store in the Pine Ridge Mall. “As malls have fallen out of favor due to the retail apocalypse, the Sears building became available and we bought it,” Fletcher said. “It’s got high ceilings and a lot of open space. It’s a nice facility.”

The network undertook an extensive remodeling and opened a K-12 school there. Parts of the mall still operate, but Gem Prep has a separate entrance for the school. Refinancing the loan at 3.54% reduced annual payments from $462,019 to $367,656, a 20% decrease.

Fletcher said Gem Prep will use the savings realized across the three deals to hire additional teachers and paraprofessionals, strengthen curriculum and purchase more and better classroom supplies.

 “There are a number of ways we might deploy these funds in a way that enhances what we’re able to provide for our students,” he said. Some money will also be used to establish a reserve, or rainy day,  fund.

Idaho Arts Charter School, Nampa

Idaho Arts is a well-established, 16-year-old charter school serving students in grades K-12, on two campuses —  elementary and secondary — that are about a mile apart. “We just keep expanding,” Executive Director Jackie Collins said with a laugh.

The latest expansion, adding a wing onto the elementary school, was completed on time for the start of the current school year. It has increased enrollment across the two campuses by about 225 students, to a total of just over 1,500, making it one of the largest brick-and-mortar schools in Idaho. 

Because Idaho Arts borrowed almost $2.5 million in new money to fund the expansion, there is no before-and-after savings comparison. But at 3.05%, the loan was at below-market rates. And, Collins said, the school also took the opportunity to refinance some 2012 bonds using the state credit enhancement, for a $212,289 savings.

Collins is a veteran at financing bonds for Idaho Arts. The school opened in the former Lakeview Elementary School, the oldest school building in Nampa.

“We remodeled that building, then we built an additional wing, and then another wing,” Collins said. “Then we built the elementary campus a mile away and bonded for that. Then we just bonded again and built the [newer] wing. So we’ve been through four fundings, and at least one refinancing as well.”

Sage International School, Boise 

is a K-12 International Baccalaureate school established in 2010. In 2015, Sage became the first school to purchase its facility, the former Parkcenter Mall, using a five-year financing program through Building Hope.

Sage borrowed $12.5 million to purchase and convert the mall into a school. Previously, the school had been split between two locations; a portion of the mall and a building two-and-a-half miles away.

Payments on the Building Hope loan saved the school $360,000 per year compared to what it would have owed in rent.

Then, in 2020, Sage achieved another first: It became the first school to refinance its debt using the Idaho charter facilities program. That move allowed Sage to release $400,000 it held in a reserve account for lease payments, as well as saving the school an additional $115,000 per year.

“We’ve gotten ourselves to a place where we’re now financially really strong,” said Sage Chief Financial Officer Emily Downey.

The annual savings will allow Sage to add staff and lower student-teacher ratios. “We’ve been able to take that additional cash and really utilize it instead of having to spend it on our debt,” Downey said. “We’re able to put it directly towards our mission of serving kids. Adding paraprofessionals and educational assistants helps us to pull kids out who may need some remedial work because of learning loss from the pandemic.”

Anser Charter School, Garden City

, a pre-K-8 school opened in 1999, is one of the oldest charter schools in Idaho. During its first decade, it moved to three different locations. It settled into its current facility in 2009, but as the school added classes, space became extremely tight.

In April 2021, Anser closed on a $11.4 million loan through the charter facilities program, at a credit-enhanced interest rate of 2.68%. A significant addition is under construction and is slated to be completed in time for the start of the 2022-23 school year.

Anser’s  interest rate is the lowest rate a school has received under the program, according to Bluum’s Donahue.

Future Public School, Garden City

opened in 2018 as an elementary and middle school with a focus on science, technology, engineering and math.

Future did not qualify for the Idaho charter facilities program, but was able to refinance its $9.4 million building debt in February with Bluum’s technical assistance, reducing its interest rate to 4.16% and saving the school $135,000 a  year for the next 34 years.

Amanda Cox, Future’s executive director and co-founder, said the additional funds will allow the school to “keep doing what we’re doing in a sustainable way.” Cox said a key part of the school model, serving a lower-income student population, is to provide students with intensive academic interventions, as well as arts, movement and computer science.

“This refinance certainly gives us a little bit of breathing room,” she said.

Correction: Sage International used a five-year financing program through Building Hope to buy the former Parkcenter Mall. An earlier version of this story misidentified the funding source.

Disclosure: Walton Family Foundation provides financial support to Building Hope and to ����Ӱ��.