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U.S. Charter Schools Rating Actions, First-Quarter 2023


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U.S. Charter Schools Rating Actions, First-Quarter 2023

During the first quarter of 2023, S&P Global Ratings changed its rating or revised the outlook on 11 U.S. charter schools, while two ratings were initially assigned, and 40 ratings were unchanged across the sector. The 13 rating actions are broken out as follows.


In January, we published our "Outlook for Charter Schools: Credit Profiles Hold Steady," which highlighted factors that will likely influence the charter schools sector in 2023. In the article, we discuss the positive impact of healthy demand; still-ample federal stimulus that is providing financial flexibility; and how state funding remaining stable, at least for now, has supported overall stability across the sector. However, we also speak to risks related to staffing shortages, inflation, and how COVID-19 pandemic-related learning loss has negatively affected state testing results. S&P Global Ratings also published "U.S. Charter Schools Rating Actions, 2022," reflecting all rating actions in the charter school sector for last year. For the second consecutive year, upgrades outpaced downgrades among charter schools rated by S&P Global Ratings. This is noteworthy since 2021 was the first time in 10 years that this occurred, and because this favorable trend seems to have carried into 2023 so far as well.

The seven positive rating actions taken during the first quarter reflect a solid start to 2023. We raised six ratings during the first quarter, and revised one outlook to stable from negative. These positive rating actions can be attributed to healthy demand and growing reserves, resulting in robust liquidity positions and improved financial operations.

S&P Global Ratings took four negative rating actions during the quarter; three were downgrades, and one was a negative outlook revision. These actions were mostly spurred by deteriorating operating performance, leading to weakened financial metrics, putting greater pressure on the ability of these issuers to make bond payments, and meet other debt service requirements.

In addition, S&P Global Ratings added two new public charter school ratings in the first quarter of 2023, one in California and one in New York.

The following tables summarize S&P Global Ratings' quarterly rating actions, outlook revisions, and unchanged ratings for U.S. charter schools. The rating actions, outlook revisions, and unchanged ratings are based on our "U.S. Public Finance Charter Schools: Methodology And Assumptions" criteria, published Jan. 3, 2017.

Table 1

First-quarter 2023 U.S. charter schools rating actions
Institution State Rating to Rating from Outlook to Outlook from Rating action Description
Camino Nuevo Charter Academy CA BBB- - Stable - Rating assigned New rating
Classical Charter Schools NY BBB- - Stable - Rating assigned New rating
Detroit Serving Learning Academy MI BB BB- Positive Stable Rating raised Sustained trend of solid operating margins and coverage as well as growing liquidity.
Doral Academy of Nevada NV BBB- BB+ Stable Stable Rating raised Solid MADS coverage, liquidity, and positive enrollment trend in recent years.
Golden Rule Schools Inc. TX BB+ BBB- Stable Stable Rating lowered Softening demand and weakened financial profile, with declining liquidity, slim margins and thin MADS coverage, which are expected to continue in fiscal 2023.
GreatHearts Arizona AZ BBB BBB- Stable Positive Rating raised Sustained trend of good operating results, coverage, and liquidity growth, coupled with a sizable and increasing enrollment base.
Harmony Public Schools TX BBB+ BBB Stable Stable Rating raised Exceptional demand profile, robust enrollment base, moderating debt burden, and sustained growth in financial metrics.
Palmetto Scholars Academy SC BB BB+ Negative CreditWatch negative Rating lowered Deterioration in operating performance leading to a DSC violation.
Renaissance Public School Academy MI BB+ BB Stable Stable Rating raised Material improvements in the school's financial position in fiscal years 2021 and 2022.
River Heights Academy MI CC B- Negative Negative Rating lowered RHA's intent and agreement with bondholders to miss its May 1, 2023 interest payment.
Value Schools CA BBB- BB+ Stable Stable Rating raised Material growth in reserves along with strong demand and the successful opening of its newest campus.
MADS--Maximum annual debt service. DCS--Debt service coverage.

Table 2

First-quarter 2023 U.S. charter schools outlook revisions
Institution State Rating Outlook to Outlook from Description
Twin Peaks Charter Academy CO BB Stable Negative Material improvements in enrollment, reserves and operations, which are expected to be sustained.
Universal Academy (LTTS Charter School Inc.) TX BB- Negative Stable Unexpected declines in enrollment and aggressive expansion strategy which could pressures margins and coverage.

Table 3

First-quarter 2023 U.S. charter schools maintained ratings
Institution State Rating Outlook
A+ Charter School Inc. TX BBB- Stable
Aspira of Delaware Inc. DE BB Stable
Braination Inc. TX BBB- Stable
Charter School of Educational Excellence NY BB Stable
Choices In Learning Elementary Charter School FL BBB- Stable
Cityscape Schools Inc. TX BBB- Stable
Eagle Ridge Academy MN BB+ Stable
Early Light Academy UT BB Stable
Friends Of Teaneck Community Charter School NJ BB Stable
Higher Ground Academy MN BB+ Stable
Holly Academy MI BB+ Stable
Idaho Arts Charter School ID BBB- Stable
Jubilee Academic Center Inc. TX BB+ Stable
KIPP SoCal Public Schools CA BBB Stable
Lawndale Educational and Regional Network Charter School IL BBB Stable
Legacy Preparatory Academy UT BBB- Stable
Lincoln Academy UT BBB- Stable
Loveland Classical Schools CO BB+ Stable
Milwaukee Academy of Science WI BBB- Stable
Mission Achievement and Success Charter School NM BB Stable
Monument Academy CO BB Negative
Mountain Island Charter School Inc. NC BBB- Stable
New Branches Charter Academy MI BB- Stable
New Designs Charter School CA BB+ Stable
New Millennium Academy MN B Stable
New Vision Charter School CO BBB- Stable
North Star Academy CO BBB- Stable
Odyssey Academy Inc. TX BB Stable
Penn Hills Charter School of Entrepreneurship PA BB Stable
Philadelphia Electrical And Technology Charter High School PA BB Stable
Platte River Academy Charter School CO BBB- Stable
Ronald Wilson Reagan Academy UT BB Stable
Seven Generations Charter Schools PA BB Stable
South Bronx Charter School for International Cultures & the Arts NY BB+ Negative
Syracuse Arts Academy UT BBB- Stable
University Laboratory School CO BBB- Stable
Uplift Education Inc. TX BBB- Stable
Urban Discovery Academy CA BB- Stable
Village Tech Schools TX BB Stable

Related Research

This report does not constitute a rating action.

Primary Credit Analysts:Jessica L Wood, Chicago + 1 (312) 233 7004;
Avani K Parikh, New York + 1 (212) 438 1133;
Secondary Contact:Ryan Miller, Dallas +1 2148711408;

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