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COMMENTS

U.S. Charter Schools Rating Actions, First-Quarter 2020


U.S. Charter Schools Rating Actions, First-Quarter 2020

During the first quarter of 2020 (Jan. 1-March 31), S&P Global Ratings changed its rating or revised its outlook on 18 charter schools while maintaining 43 ratings.

The biggest proportion of rating or outlook changes were negative; and common themes included enrollment declines and weakening liquidity positions. The four positive rating actions in the first quarter of 2020 were driven by persistent enrollment growth and improving operating performance.

Of particular importance, all of the actions taken during this period were assessed under different economic conditions and before the mass school closures as the full impacts of COVID-19 hit charter schools across the country. On April 1, following mobility restrictions and the closure of large segments of the economy due to COVID-19 and the swift onset of the recession, S&P Global Ratings revised all its sector outlooks in U.S. public finance to negative, including the 2020 outlook on the charter school sector to negative from stable. (See "All U.S. Public Finance Sector Outlooks Are Now Negative," published April 1, 2020, on RatingsDirect.) Our revision to a negative outlook for the charter school sector reflects operating risks stemming from the rapidly evolving COVID-19 pandemic and the current recessionary environment, which could lead to state funding cuts. Charter schools at the lower end of the rating scale remain more vulnerable to revenue, debt service coverage, and covenant pressure than higher-rated schools, which tend to have some fundraising capabilities and greater liquidity. We will continue to monitor how all the charter schools we rate grapple with COVID-19 related expenses, and budget for uncertain per-pupil funding in fiscal 2021 in the next several months. We expect more negative than positive rating actions in 2020, a view reflected in our recent sector outlook revision.

The following table summarizes S&P Global Ratings' quarterly bond rating actions, outlook revisions, and maintained ratings for U.S. charter schools. The credit rating actions, outlook revisions, and maintained ratings are based on our "U.S. Public Finance Charter Schools: Methodology And Assumptions" criteria, published Jan. 3, 2017. We continue to assess the COVID-19 outbreak's impact on the creditworthiness of the charter school sector.

Table 1

U.S. Charter Schools Rating Actions And Outlook Revisions, First Quarter 2020
School State Rating To Rating From Outlook To Outlook From Rating Action Description

A.W. Brown Fellowship Charter School

TX BB- BB Stable Stable Rating lowered Sharp enrollment declines, weakened liquidity position, and continued operating deficits

ASPIRA of Delaware Charter Operations, Inc.

DE BB BB+ Negative Negative Rating lowered Decline in days' cash on hand to a level below the school's required covenant, along with substantially weakened pro forma lease-adjusted maximum annual debt service (MADS) coverage

Arizona Autism Charter School

AZ BB - Stable - Rating initially assigned New rating for series 2020 bonds

Carolina International School

NC NR BB+ NR Stable Rating suspended Suspension based on lack of timely information

Children of Promise Preparatory Academy

CA CCC+ BB+ Negative Stable Rating lowered; outlook revised to negative Imminent school closure following non-renewal of charter

Delaware Military Academy

DE BBB- BBB- Negative Stable Rating maintained; outlook revised to negative Weakening financial operations causing a deterioriation in lease-adjusted MADS coverage

Fenton Charter Public Schools

CA BB+ - Stable - Rating initially assigned New issuer

Flagstaff Academy

CO BBB BBB Negative Stable Rating maintained; outlook revised to negative Weaker lease-adjusted MADS coverage due in part to rising pension expenses related to contributions

Hmong American Peace Academy

WI BBB - Stable - Rating initially assigned New issuer

Julian Charter School

CA B+ B+ Stable Negative Rating maintained; outlook revised to stable Improved enrollment and financial performance

KIPP North Star Academy

MN BB- - Stable - Rating initially assigned New issuer

Landmark Academy

MI BB BB- Stable Stable Rating raised Improved enrollment, liquidity position, and lease-adjusted MADS coverage

Pinecrest Academy of Nevada

NV BB+ BB+ Negative Stable Rating maintained; outlook revised to negative Increased leveraged following the school's 2020 debt issuance

Rocklin Academies

CA BB+ BB+ Stable Positive Rating maintained; outlook revised to stable Expectation of weaker financial performance in fiscal 2020

Scuola Vita Nuova Charter School

MO BB+ - Stable - Rating initially assigned New issuer

Summit Academy

MI B+ B+ Negative Stable Rating maintained; outlook revised to negative Significant enrollment declines since fall 2016, as a result of demographic shifts in Wayne County

Trinity Basin Preparatory

TX BBB - Stable - Rating initially assigned New issuer

Voyageur Academy Public School

MI B- B- Positive Stable Rating maintained; outlook revised to positive Enrollment growth coupled with improving operating performance
NR--Not rated.

Table 2

U.S. Charter Schools Ratings Maintained, First Quarter 2020
School State Rating Outlook

Acero Charter School Inc.

IL BB+ Stable

Albuquerque School of Excellence

NM BB Stable

Aspen Ridge Preparatory School

CO BB Stable

Castle Rock Lifelong Learning Center

CO BBB Negative

Cheyenne Mtn Charter Academy

CO BBB- Negative

Chicago Charter Sch Foundn

IL BBB Stable

Classical Academy Charter School

CO BBB Stable

Compass Public Charter School

ID BB Stable

Creative Montessori Academy

MI BBB- Negative

Eagle Ridge Academy

MN BB+ Stable

Friends of Teaneck Community Charter School

NJ BB Stable

Frontier Acad

CO BBB- Stable

GreatHearts Arizona

AZ BBB- Stable

Idaho Arts Charter Sch

ID BBB- Stable

King Chavez Academies

CA BB+ Stable

LTTS Charter School, Inc. dba Universal Academy

TX B+ Stable

Lakes International Language Academy

MN BB+ Stable

Lee Cnty Charter Schs

FL BB- Stable

Liberty Charter Sch

ID BBB Stable

Life School of Dallas

TX BBB- Stable

Littleton Preparatory Charter Sch

CO BB+ Stable

Mater Academy of Nevada

NV BB Stable

Meridian World Sch

TX BB+ Stable

Mountain Island Charter School, Inc.

NC BBB- Stable

Navigator Pointe Academy

UT BBB Stable

Newark Charter School, Inc.

DE BBB+ Stable

Noah Webster Academy

UT BBB- Stable

Noah Webster Basic Schools, Inc.

AZ BB Stable

Noble Network of Charter Schs

IL BBB Stable

Nova Academy

TX BB Stable

Odyssey Academy, Inc.

TX BB Stable

PACT Charter School

MN BBB- Stable

Paradigm High Sch

UT BB Stable

Quest Academy

UT BBB- Stable

Ronald Wilson Reagan Academy

UT BB Stable

Ser-Ninos, Inc.

TX BBB- Stable

Star International Academy

MI BBB Stable

Summit Acad North

MI BB Stable

Tacony Academy Charter School

PA BB+ Stable

Universal Learning Academy

MI BB+ Stable

University Laboratory Sch

CO BBB- Stable

Winfree Academy Charter Schools

TX BB- Stable

Xavier Public Charter School

ID BBB Stable
dba--Doing business as.

This report does not constitute a rating action.

Primary Credit Analysts:Jessica L Wood, Chicago (1) 312-233-7004;
jessica.wood@spglobal.com
Peter V Murphy, New York (1) 212-438-2065;
peter.murphy@spglobal.com
Research Assistant:Mikayla Mahan, Centennial

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