Agenda - Council - 07/12/2022 - Laserfiche WebLink

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Child Left Behind Elementary and Secondary Education Act (NCLB/ESEA), Improving Basic Program, Title II, Part A of the NCLB/ESEA, Teacher/Principal Training and Recruitment, Title II, Part D, Enhancing Education Through Technology, [Title III, Limited English Proficient Students,] and Title V, Part A— Regular Innovative Programs. Prior enrollment history of the Charter School is no guaranty of future enrollment and revenues. In addition, State aid payments are not always received by the Charter School from the State on a timely basis, which may result in late payments by the Charter School under the Leases and Pledge Agreement,which may, in turn,result in late payments by the Company under the Loan Agreement. Future revenues and expenditures of the Company will be subject to the amounts and the timing of future revenues to the Charter School, which cannot be determined with assurance. Prior revenues and expenditures of the Charter School are no guaranty as to future revenue and expenditures of the Charter School or the Company. Historical State Budget Issues Even though the State is experiencing a large budget surplus for the 2021-2023 biennium,the State has experienced budget shortfalls in recent bienniums. Rather than relying upon increased tax revenue to fund K-12 education costs (except for a minor increase of$50 per student in both Fiscal Year 2011 and Fiscal Year 2012),the State Legislature previously enacted a number of funding reductions/spending shifts and holdbacks to close such budget shortfalls. Although the holdback is currently set at 10% for Fiscal Year 2022,the holdback was as high as 35.7% as recent as Fiscal Year 2013. The current State budget biennium runs from July 1,2021 through June 30,2023. During the 2013 Legislative session, the State Legislature made substantive changes in State funding for charter schools, including a change to the Average Daily Membership("ADM")formula to create funding for all-day every- day Kindergarten. The new formula went into effect for the State's Fiscal Year 2015 (commencing in July 2014). The 2019 and 2021 Legislative session added certain slight increases to education funding for public schools, including the Charter School. See "CHARTER SCHOOL FUNDING IN MINNESOTA— State Payments— General Education Revenue"in this Official Statement. Future State budget agreements may involve further revisions to State education funding that cannot be determined at this time. As mentioned above,the COVID-19 pandemic has seen unprecedented changes to education nationally and in Minnesota and no assurances can be given that the resulting economic consequences from the COVID-19 pandemic will not cause the State to take budgetary actions that delay or reduce public education funding in the future. See"—Impact of COVID-19 Pandemic,""—No Taxing Authority; Dependence on State Payments," and "—Changes in Law; Annual Appropriation; Inadequate State Payments" below in this BONDHOLDERS' RISKS section, "CHARTER SCHOOL FUNDING IN MINNESOTA,"and"APPENDIX B—MINNESOTA LAWS RELATING TO CHARTER SCHOOLS" in this Official Statement. No Taxing Authority; Dependence on State Payments The Charter School does not possess any taxing authority and is substantially dependent upon the State to continue to provide funding for public charter schools. Moreover,the Company does not have any taxing authority. The obligation of the State under State law to fund the Charter School is conditioned upon the availability of funds appropriated or allocated for the payment of such obligation. If funds are not allocated and available for the Building Lease Aid or other State aid,no liability accrues to the State in such event.In the event the State were to withhold the payment of money from the Charter School for any reason, even a reason that is ultimately determined to be invalid or unlawful, it is likely that the Charter School would be forced to cease operations. 25