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Learning Curve

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Take it to the bank

Still believe that charter schools are about improving education, not maximizing profits?

Maybe your investment broker can change your mind. The Wall Street Journal reports (subscription required) this week that bond investors are increasingly signing on as the charter-school environment expands and investment in construction grows. Nearly $4 billion in charter school construction bonds are now outstanding.

Here's how the business-focused publication explains it:

"And while the relatively high yields are burdening the schools with higher borrowing costs, they are proving particularly enticing to market participants at a time of near-zero interest rates."

Those higher borrowing costs, of course, are covered by public tax dollars. With charter schools overseen by appointed boards, the public accountability for borrowing and spending of public funds is practically nonexistent. Charter school operators believe they are entitled to operate without scrutiny, as this angry response from a public relations firm representative suggests in response to a Journal Gazette editorial. Apparently, Indiana taxpayers are supposed to take the word of this Detroit spokeswoman that the charter school operator who pays her salary only works with schools overseen by "a highly competent group of community leaders."

The tax money flowing largely without oversight to the bond investors, charter school operators and PR flacks is money that doesn't go to the school classroom, of course.

But not everyone on Wall Street is convinced that charter schools are a good investment strategy.

"Jim Dugan, co-chief investment officer at investment manager firm Brown Advisory, shies away from charter-school debt because even the most established operators haven't been around for very long," according to the Wall Street Journal.

Karen Francisco, editorial page editor for The Journal Gazette, has been an Indiana journalist since 1981. She writes frequently about education for The Journal Gazette opinion pages and here, where she looks at the business, politics and science of learning as it relates to northeast Indiana, the state and the nation. She can be reached at 260-461-8206 or by e-mail at