articles Ratings /ratings/en/research/articles/230313-charter-school-brief-california-12663490 content esgSubNav
In This List

Charter School Brief: California


U.S. Local Governments Credit Brief: New York School Districts


U.S. Not-For-Profit Health Care Rating Actions, February 2023


Bulletin: Houston Independent School District, TX Takeover By Texas Education Agency Does Not Affect Rating


U.S. Local Governments Credit Brief: New York State Counties And Municipalities Means And Medians

Charter School Brief: California

As of March 13, 2023, S&P Global Ratings maintains 40 public ratings on bonds secured by California charter schools. In 1992, California became the second U.S. state to enact a charter school law. Today, it is home to about 1,300 charter schools that serve approximately 12% of the state's kindergarten through 12th-grade (K-12) students.


Overall, 38% of California charter school ratings are investment grade compared with 44% for the sector as a whole. We believe this stems from more charter challenges on average due to the prevalence of district-authorized schools (81% of all charters), demographic challenges, and other case-by-case factors.

Chart 1


Authorizer Framework

  • In most cases, charter schools in California are authorized by the local school district for a maximum term of five years. The state's 40 county school boards and the state board of education may also authorize charter schools. Authorizers receive an oversight fee of up to 1% of revenue. Proposition 39 requires school districts to provide reasonably equivalent facilities to charter schools.
  • We believe the state outlines a clear process for authorization, renewal, revocation, and appeal of charters, although it is more difficult to assess if individual local education agencies apply the process consistently or what criteria each uses to monitor adherence to standards during the charter term. State law requires charter schools to meet a minimum level of academic performance before receiving renewals, and annual site visits by the authorizer, which we view positively.
  • Almost half of the charter schools we rate (19) are authorized by the Los Angeles Unified School District (LAUSD), the second-biggest public school district and largest district charter school authorizer in the nation.

Credit Fundamentals

California charter schools' credit profiles are characterized by ratings ranging from 'B+' to 'BBB', with a median rating of 'BB+'. The majority (35) of our 40 rated charter schools are networks with more than one campus supporting the comparatively higher median enrollment across the rating levels, including the largest network, Aspire Public Schools (BBB/Stable), which serves more than 15,000 students.

Table 1

Fiscal 2022 California Charter School Medians
BBB BBB- BB+ BB BB-/B+ California Medians
Number of ratings 5 10 13 9 3 40
Enrollment (fall 2021) 9,889 1,719 1,522 998 1,165 1,627
Waiting list as a % of enrollment (fall 2021) 34.4 9.2 23.1 4.0 6.4 16.6
Student Retention rate (%) (fall 2021) 90.5 89.5 93.3 87.4 72.0 89.0
Lease adjusted MADS coverage (x) 2.39 1.75 1.90 1.41 0.93 1.67
Lease-adjusted MADS burden (% of total revenue) 6.8 6.4 8.1 9.8 16.7 8.0
Unrestricted cash on hand (days) 162 152 202 170 104 162
Unrestricted cash & investments to debt (%) 47.8 49.7 85.7 37.0 22.4 49.1
Total revenue ($000) 191,806 32,837 26,221 15,230 14,543 25,272
Total debt per student ($000) 16,911 13,181 14,304 21,616 18,549 14,490
Total revenue per student ($000) 18,136 18,533 18,247 17,670 13,685 17,915
MADS--Maximum annual debt service. Financials for fiscal 2022 available for 33 out of 40 entities (83%).

Median days' cash on hand has almost doubled over five years, to 162 days in fiscal 2022 from roughly 87 days in fiscal 2017. This growth in liquidity has been supported by Elementary and Secondary School Emergency Relief (ESSER) funding (which totaled $26.4 billion for all public K-12 schools across California) and per-pupil funding increases. Though schools' total debt is often higher in California due to higher capital costs, the medians show that stronger revenues help keep the lease-adjusted maximum annual debt service (MADS) burden somewhat in check.

Charter schools have benefited from historic funding levels in recent years. Proposition 98 funding (which establishes the minimum funding level for schools and community colleges) grew to an all-time high in fiscal 2022. Then, the approved fiscal 2023 budget reflected another year of historic funding, including a 6.56% cost-of-living adjustment (COLA) and an additional 6.25% increase to the Local Control Funding Formula (LCFF). Looking ahead to fiscal 2024, the governor's initial fiscal 2024 budget proposes an 8.13% COLA for the LCFF, which includes charter schools. Charter schools and district schools are also entitled to supplemental grant increases equal to 20% of the adjusted base grant for the percentage of enrolled students who are English learners, eligible for free or reduced-price meals program, or in foster case. Additionally, the governor's budget includes a one-time $30 million Proposition 98 general fund investment for the Charter School Facility Grant program, which provides funding to charter schools to offset annual facilities costs.

Chart 2


The 2021-2022 school year represented the first year of charter enrollment decline in decades (see chart 2), reflecting a combination of pandemic pressures and broader demographic trends within the state. We saw a similar trend in our portfolio of rated charter schools, with a median year-over-year decline of 1.7% in fall 2021. Pandemic relief funds and funding protections have helped mitigate short-term budgetary risks for schools experiencing declines. As approved under the state's 2023 budget, classroom-based charter schools can now utilize the average daily attendance (ADA) loss mitigation policy, in addition to receiving the fiscal 2022 year benefit of the greater of current-year or prior-year ADA for the purposes of determining funding through the LCFF. Based on preliminary enrollment information for fall 2022 in our portfolio of rated charter schools, we're seeing some stabilization with most schools reporting increases. We will continue to monitor for any signs of persistent weakening demand trends.

What We're Watching

Enrollment trends.  

California's overall K-12 school-age population continues to decline, due to falling birthrates and other demographic factors. The pandemic exacerbated some of these enrollment trends, with both charter school and non-charter school enrollment declining by 1.8% in fall 2021 from fall 2020. Though we are seeing stable demand for most of our rated charter schools as of fall 2022, we will continue to monitor the state's K-12 enrollment trends and charter schools' ability to maintain their momentum in the competition for a shrinking number of students.

Charter renewal risk.    In fiscal year 2022, there were 20 charter school closures across the state; 18 of these closures were voluntary but two closed due to charter revocation or not meeting conditions of approval (these were all unrated charter schools). Though Assembly Bill 130, passed in July 2021, automatically extends by two years the terms of any charter school whose term expires on or between Jan. 1, 2022 and June 30, 2025, which temporarily mitigates renewal risk, ongoing authorizer support in future renewal discussions will remain paramount in the coming years.

Political environment.   Increased competition for a declining school-age population could increase tensions between authorizing school districts and charter schools. In recent years there have been several anti-charter legislative proposals. Assembly Bill (AB) 1505, passed in 2019, makes it more difficult for new or expanding charter schools to get approval from authorizers, although for high-performing charter schools it could mean longer renewal terms or a more streamlined application process. Implementation of AB 1505 has been on hold due to the pandemic. With the release of new data, we expect it to be implemented in 2024.

Modes of instruction.    The pandemic heightened demand for flexible learning models nationwide. While virtual options exist, Section 59 of AB 130 extended the prohibition on the approval of new non-classroom-based charter schools to Jan. 1, 2025. We will watch whether demand for remote learning translates to different legislation beyond 2025.

Labor challenges.    We continue to monitor the influence of inflationary pressures on labor costs and labor shortages, which could pressure school faculty operations. Not all schools have been affected by the teacher shortage equally, and we believe a charter school's ability to attract and retain talented faculty is key to the organization achieving its mission.

Pension funding levels.    The adopted employer pension contribution rates for fiscal years 2020 through 2022 were reduced from the originally projected rates under the California State Teachers Retirement System (CalSTRS) funding plan, providing schools with short-term relief. However, for fiscal 2024 the governor did not propose any additional funding for CalSTRS or California Public Employee Retirement System (CalPERS). Based on current assumptions, CalPERS employer contributions would increase from 25.37% to 27.00% in fiscal 2024, while CalSTRS employer contribution rates remain the same from prior year at 19.10%. We will continue to assess the state's assumptions and schools' contributions and assess how schools manage rising fixed costs.

Long-term use of one-time funds.    ESSER funds have flooded traditional and charter schools with cash. Many schools have used emergency funding to hire additional full- or part-time staff to address learning loss amid the pandemic. As the wave of federal relief expires in September 2024, schools will need to ensure that current spending is sustainable or prove willing to make cuts down the road.

Table 2

Charter School Ratings
Charter School Rating Outlook Charter Authorizer* Charter Renewal **
Albert Einstein Academies BB Stable San Diego USD 6/30/2027
Alliance for College - Gertz-Ressler Richard Merkin 6-12 Complex BBB- Stable LAUSD 6/30/2026
Alliance for College - Patti and Peter Neuwirth Leadership Academy BBB- Stable LAUSD 6/30/2026
Alliance for College - Ready Public Schools BBB Stable LAUSD 6/30/2025
American Heritage Education Foundation BBB- Negative Escondido USD 6/30/2025
Aspire Public Schools BBB Stable LAUSD, Lodi USD, San Juan USD, Oakland USD, Ravenswood City School District, Stockton USD, Sacramento USD, Modesto City High, Modesto City Elementary 6/30/2026
Bright Star Schools BB+ Stable LAUSD 6/30/2024
Caliber Schools BBB- Stable Contra Costa County Office of Education 6/30/2026
Camino Nuevo Charter Academy BBB- Stable LAUSD 6/30/2025
Citizens Of The World Charter Schools - Los Angeles BB- Stable LAUSD 6/30/2024
Classical Academy, Inc. BBB- Stable Escondido Union Elem School District, Escondido Union High School District, San Diego Board of Education and Oceanside USD 6/30/2025
Environmental Charter Schools BB+ Stable Los Angeles County Office of Education, Lawndale Elementary School District 6/30/2025
Equitas Academy Charter School BB+ Stable LAUSD 6/30/2024
Fenton Charter Public Schools BB+ Stable LAUSD 6/30/2024
Granada Hills Charter BBB Stable LAUSD 6/30/2026
Green Dot Public Schools BBB- Stable LAUSD 6/30/2025
Grimmway Schools BB+ Stable Kern County Board of Education and Richland USD 6/30/2024
Hawking STEAM Charter School BB+ Stable Sweetwater Union High School District (SUHSD) 6/30/2024
ICEF View Park Preparatory Accelerated Charter High School BB Negative LAUSD 6/30/2025
ICEF View Park Preparatory Accelerated Charter Middle and Elementary School BB Negative LAUSD 6/30/2024
John Adams Academies Inc. BB Stable Roseville Joint Union High School District, Western Placer USD, and El Dorado County Office of Education 6/30/2026
Julian Charter School B+ Stable Julian Union Elementary School District 6/30/2025
King Chavez Academies BB+ Stable San Diego USD 6/30/2025
KIPP Northern California Schools BBB Stable Oakland USD + 10 different authorizers 6/30/2024
KIPP SoCal Public Schools BBB Stable LAUSD, Compton USD, San Diego USD, and Los Angeles County Office of Education 6/30/2024
Learning Choice Academy BBB- Stable San Diego USD, Chula Vista Elementary and Grossmont Union High School District 6/30/2025
Lifeline Education Charter School BB+ Stable Compton USD 6/30/2024
Literacy First Charter School BBB- Stable San Diego County Office of Education 6/30/2026
Magnolia Science Academy BB Stable LAUSD, Los Angeles County Office of Education, San Diego USD and California State Board of Education 6/30/2024
New Designs Charter School BB+ Stable LAUSD 6/30/2026
Nova Academy BB Stable Santa Ana USD 6/30/2025
PUC Schools BB+ Stable LAUSD 6/30/2025
River Charter Schools BB Stable River Delta USD and Washington USD 6/30/2026
River Springs Charter School BB+ Stable Riverside County Office of Education 6/30/2025
Rocklin Academies BB+ Stable Rocklin USD and Newcastle Elementary School District. 6/30/2025
Santa Rosa Academy, Inc. BB+ Stable Menifee Union Elementary District 6/30/2026
The Palmdale Aerospace Academy BB Stable Palmdale Elementary School District 6/30/2024
Urban Discovery Academy BB- Stable San Diego USD 6/30/2025
Value Schools BBB- Stable LAUSD 6/30/2024
Vista Charter Public Schools BB Stable LAUSD and Orange County Department of Education 6/30/2027
*San Diego Unified School District (USD), Los Angeles Unified School District (LAUSD), Escondido Union School District (USD), San Juan Unified School District (USD), Lodi Unified School District (USD), Stockton Unified School District (USD), Oakland Unified School District (USD), Sacramento Unified School District (USD), Oceanside Unified School District (USD), Richland Unified School District (USD), Western Placer Unified School District (USD), Compton Unified School District (USD), Santa Ana Unified School District (USD), River Delta Unified School District (USD), Washington Unified School District (USD), Rocklin Unified School District (USD). **Charter renewal dates reflect the two-year automatic renewal under Assembly Bill 130.

This report does not constitute a rating action.

Primary Credit Analyst:Adriana Artola, San Francisco + 415-371-5057;
Secondary Contacts:Robert Tu, CFA, San Francisco + 1 (415) 371 5087;
Jessica L Wood, Chicago + 1 (312) 233 7004;
Avani K Parikh, New York + 1 (212) 438 1133;
Research Assistant:Karan Makhija, Mumbai

No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, (free of charge), and (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at

Register with S&P Global Ratings

Register now to access exclusive content, events, tools, and more.

Go Back