Reply to Let's start a charter middle school

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[quote=Anonymous][quote=Anonymous]

Point is, it privatizes the financing of education investments. Sure Wall Street makes money off of municipals, but it makes more when there's more collateral (in this case physical properties and cashflows).
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Literally - what?[/quote]

I have no idea either.  My experience is that once you see bogeyman, generalized phrases like "Wall Street", it's a person spouting talking points and not actually doing any analysis.

The cashflows are the same as the cashflows supporting bonds issued to pay for DCPS modernizations- taxes and fees collected by the District government.  In the case of charters they happen to be funneled through a facilities fee payment to a charter and then out to the lender, but it's fundamentally the same thing.

And the collateral for the recent deals are leasehold interests in school buildings.  Not exactly fantastic collateral.

There's a reason the rates for the DC government-backed by bonds are so low- because the debt is AAA rated and therefore very low risk.  Charter loans are higher rates because they are higher risk- you are counting on the school continuing to operate and produce enough revenue to pay you back.  It's a much worse bet than the DC government not collecting enough taxes.  So the rate is higher.  That's the foundation of lending and risk assessment.  It's not some conspiracy.[/quote]

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