SEC.4304.
FACILITIES FINANCING ASSISTANCE
Section Summary
ESSA
SEC. 4304. <<NOTE: 20 USC 7221c.>> FACILITIES FINANCING
ASSISTANCE.
``(a) Grants to Eligible Entities.--
``(1) In general.--From the amount reserved under section
4302(b)(1), the Secretary shall use not less than 50 percent to
award, on a competitive basis, not less than 3 grants to
eligible entities that have the highest-quality applications
approved under subsection (d), after considering the diversity
of such applications, to demonstrate innovative methods of
helping charter schools to address the cost of acquiring,
constructing, and renovating facilities by enhancing the
availability of loans or bond financing.
``(2) Eligible entity defined.--For the purposes of this
section, the term `eligible entity' means--
``(A) a public entity, such as a State or local
governmental entity;
``(B) a private nonprofit entity; or
[[Page 129 STAT. 2005]]
``(C) a consortium of entities described in
subparagraphs (A) and (B).
``(b) Grantee Selection.--The Secretary shall evaluate each
application submitted under subsection (d), and shall determine whether
the application is sufficient to merit approval.
``(c) Grant Characteristics.--Grants under subsection (a) shall be
of sufficient size, scope, and quality so as to ensure an effective
demonstration of an innovative means of enhancing credit for the
financing of charter school acquisition, construction, or renovation.
``(d) Applications.--
``(1) In general.--An eligible entity desiring to receive a
grant under this section shall submit an application to the
Secretary in such form as the Secretary may reasonably require.
``(2) Contents.--An application submitted under paragraph
(1) shall contain--
``(A) a statement identifying the activities that
the eligible entity proposes to carry out with funds
received under subsection (a), including how the
eligible entity will determine which charter schools
will receive assistance, and how much and what types of
assistance charter schools will receive;
``(B) a description of the involvement of charter
schools in the application's development and the design
of the proposed activities;
``(C) a description of the eligible entity's
expertise in capital market financing;
``(D) a description of how the proposed activities
will leverage the maximum amount of private-sector
financing capital relative to the amount of government
funding used and otherwise enhance credit available to
charter schools, including how the eligible entity will
offer a combination of rates and terms more favorable
than the rates and terms that a charter school could
receive without assistance from the eligible entity
under this section;
``(E) a description of how the eligible entity
possesses sufficient expertise in education to evaluate
the likelihood of success of a charter school program
for which facilities financing is sought; and
``(F) in the case of an application submitted by a
State governmental entity, a description of the actions
that the eligible entity has taken, or will take, to
ensure that charter schools within the State receive the
funding that charter schools need to have adequate
facilities.
``(e) Charter School Objectives.--An eligible entity receiving a
grant under subsection (a) shall use the funds deposited in the reserve
account established under subsection (f) to assist one or more charter
schools to access private-sector capital to accomplish one or more of
the following objectives:
``(1) The acquisition (by purchase, lease, donation, or
otherwise) of an interest (including an interest held by a third
party for the benefit of a charter school) in improved or
unimproved real property that is necessary to commence or
continue the operation of a charter school.
``(2) The construction of new facilities, or the renovation,
repair, or alteration of existing facilities, necessary to
commence or continue the operation of a charter school.
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``(3) The predevelopment costs required to assess sites for
purposes of paragraph (1) or (2) and that are necessary to
commence or continue the operation of a charter school.
``(f) Reserve Account.--
``(1) Use of funds.--To assist charter schools in
accomplishing the objectives described in subsection (e), an
eligible entity receiving a grant under subsection (a) shall, in
accordance with State and local law, directly or indirectly,
alone or in collaboration with others, deposit the funds
received under subsection (a) (other than funds used for
administrative costs in accordance with subsection (g)) in a
reserve account established and maintained by the eligible
entity for this purpose. Amounts deposited in such account shall
be used by the eligible entity for one or more of the following
purposes:
``(A) Guaranteeing, insuring, and reinsuring bonds,
notes, evidences of debt, loans, and interests therein,
the proceeds of which are used for an objective
described in subsection (e).
``(B) Guaranteeing and insuring leases of personal
and real property for an objective described in
subsection (e).
``(C) Facilitating financing by identifying
potential lending sources, encouraging private lending,
and other similar activities that directly promote
lending to, or for the benefit of, charter schools.
``(D) Facilitating the issuance of bonds by charter
schools, or by other public entities for the benefit of
charter schools, by providing technical, administrative,
and other appropriate assistance (including the
recruitment of bond counsel, underwriters, and potential
investors and the consolidation of multiple charter
school projects within a single bond issue).
``(2) Investment.--Funds received under subsection (a) and
deposited in the reserve account established under paragraph (1)
shall be invested in obligations issued or guaranteed by the
United States or a State, or in other similarly low-risk
securities.
``(3) Reinvestment of earnings.--Any earnings on funds
received under subsection (a) shall be deposited in the reserve
account established under paragraph (1) and used in accordance
with this subsection.
``(g) Limitation on Administrative Costs.--An eligible entity may
use not more than 2.5 percent of the funds received under subsection (a)
for the administrative costs of carrying out its responsibilities under
this section (excluding subsection (k)).
``(h) Audits and Reports.--
``(1) Financial record maintenance and audit.--The financial
records of each eligible entity receiving a grant under
subsection (a) shall be maintained in accordance with generally
accepted accounting principles and shall be subject to an annual
audit by an independent public accountant.
``(2) Reports.--
``(A) Grantee annual reports.--Each eligible entity
receiving a grant under subsection (a) shall submit to
the Secretary an annual report of the entity's
operations and activities under this section (excluding
subsection (k)).
``(B) Contents.--Each annual report submitted under
subparagraph (A) shall include--
[[Page 129 STAT. 2007]]
``(i) a copy of the most recent financial
statements, and any accompanying opinion on such
statements, prepared by the independent public
accountant reviewing the financial records of the
eligible entity;
``(ii) a copy of any report made on an audit
of the financial records of the eligible entity
that was conducted under paragraph (1) during the
reporting period;
``(iii) an evaluation by the eligible entity
of the effectiveness of its use of the Federal
funds provided under subsection (a) in leveraging
private funds;
``(iv) a listing and description of the
charter schools served during the reporting
period, including the amount of funds used by each
school, the type of project facilitated by the
grant, and the type of assistance provided to the
charter schools;
``(v) a description of the activities carried
out by the eligible entity to assist charter
schools in meeting the objectives set forth in
subsection (e); and
``(vi) a description of the characteristics of
lenders and other financial institutions
participating in the activities carried out by the
eligible entity under this section (excluding
subsection (k)) during the reporting period.
``(C) Secretarial report.--The Secretary shall
review the reports submitted under subparagraph (A) and
shall provide a comprehensive annual report to Congress
on the activities conducted under this section
(excluding subsection (k)).
``(i) No Full Faith and Credit for Grantee Obligation.--No financial
obligation of an eligible entity entered into pursuant to this section
(such as an obligation under a guarantee, bond, note, evidence of debt,
or loan) shall be an obligation of, or guaranteed in any respect by, the
United States. The full faith and credit of the United States is not
pledged to the payment of funds that may be required to be paid under
any obligation made by an eligible entity pursuant to any provision of
this section.
``(j) Recovery of Funds.--
``(1) In general.--The Secretary, in accordance with chapter
37 of title 31, United States Code, shall collect--
``(A) all of the funds in a reserve account
established by an eligible entity under subsection
(f)(1) if the Secretary determines, not earlier than 2
years after the date on which the eligible entity first
received funds under subsection (a), that the eligible
entity has failed to make substantial progress in
carrying out the purposes described in subsection
(f)(1); or
``(B) all or a portion of the funds in a reserve
account established by an eligible entity under
subsection (f)(1) if the Secretary determines that the
eligible entity has permanently ceased to use all or a
portion of the funds in such account to accomplish any
purpose described in subsection (f)(1).
``(2) Exercise of authority.--The Secretary shall not
exercise the authority provided in paragraph (1) to collect from
any eligible entity any funds that are being properly used
[[Page 129 STAT. 2008]]
to achieve one or more of the purposes described in subsection
(f)(1).
``(3) Procedures.--The provisions of sections 451, 452, and
458 of the General Education Provisions Act shall apply to the
recovery of funds under paragraph (1).
``(4) Construction.--This subsection shall not be construed
to impair or affect the authority of the Secretary to recover
funds under part D of the General Education Provisions Act (20
U.S.C. 1234 et seq.).
``(k) Per-Pupil Facilities Aid Program.--
``(1) Definition of per-pupil facilities aid program.--In
this subsection, the term `per-pupil facilities aid program'
means a program in which a State makes payments, on a per-pupil
basis, to charter schools to provide the schools with
financing--
``(A) that is dedicated solely to funding charter
school facilities; or
``(B) a portion of which is dedicated for funding
charter school facilities.
``(2) Grants.--
``(A) In general.--From the amount reserved under
section 4302(b)(1) and remaining after the Secretary
makes grants under subsection (a), the Secretary shall
make grants, on a competitive basis, to States to pay
for the Federal share of the cost of establishing or
enhancing, and administering, per-pupil facilities aid
programs.
``(B) Period.--The Secretary shall award grants
under this subsection for periods of not more than 5
years.
``(C) Federal share.--The Federal share of the cost
described in subparagraph (A) for a per-pupil facilities
aid program shall be not more than--
``(i) 90 percent of the cost, for the first
fiscal year for which the program receives
assistance under this subsection;
``(ii) 80 percent for the second such year;
``(iii) 60 percent for the third such year;
``(iv) 40 percent for the fourth such year;
and
``(v) 20 percent for the fifth such year.
``(D) State share.--A State receiving a grant under
this subsection may partner with 1 or more
organizations, and such organizations may provide not
more than 50 percent of the State share of the cost of
establishing or enhancing, and administering, the per-
pupil facilities aid program.
``(E) Multiple grants.--A State may receive more
than 1 grant under this subsection, so long as the
amount of total funds provided to charter schools
increases with each successive grant.
``(3) Use of funds.--
``(A) In general.--A State that receives a grant
under this subsection shall use the funds made available
through the grant to establish or enhance, and
administer, a per-pupil facilities aid program for
charter schools in the State of the applicant.
``(B) Evaluations; technical assistance;
dissemination.--From the amount made available to a
State through a grant under this subsection for a fiscal
year, the State
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may reserve not more than 5 percent to carry out
evaluations, to provide technical assistance, and to
disseminate information.
``(C) Supplement, not supplant.--Funds made
available under this subsection shall be used to
supplement, and not supplant, State and local public
funds expended to provide per-pupil facilities aid
programs, operations financing programs, or other
programs, for charter schools.
``(4) Requirements.--
``(A) Voluntary participation.--No State may be
required to participate in a program carried out under
this subsection.
``(B) State law.--
``(i) In general.--To be eligible to receive a
grant under this subsection, a State shall
establish or enhance, and administer, a per-pupil
facilities aid program for charter schools in the
State, that--
``(I) is specified in State law; and
``(II) provides annual financing, on
a per-pupil basis, for charter school
facilities.
``(ii) Special rule.--A State that is required
under State law to provide its charter schools
with access to adequate facility space, but that
does not have a per-pupil facilities aid program
for charter schools specified in State law, is
eligible to receive a grant under this subsection
if the State agrees to use the funds to develop a
per-pupil facilities aid program consistent with
the requirements of this subsection.
``(5) Applications.--To be eligible to receive a grant under
this subsection, a State shall submit an application to the
Secretary at such time, in such manner, and containing such
information as the Secretary may require.
NCLB Text
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