This document provides information about financing options for California charter schools to address state funding deferrals during the COVID-19 pandemic recession. It discusses the current and future challenges California schools face due to state budget impacts. Various financing solutions like lines of credit, tax anticipation notes, and term loans are compared based on factors like flexibility, capacity, certainty, and cost. Attendees learn about flexible funding lines that can provide up to 50% of annual revenue and cover deferred payments at no cost with a locked-in interest rate. Questions from attendees are answered by panelists from financial organizations.

1. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
COMPARISON GUIDE:
California Deferral
Financing Options

2. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
AGENDA
1. Speaker Panel
2. The CA Funding Challenge
3. Financing Solutions: Factors to Consider
4. Solutions Comparison
5. Questions

3. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
TODAY’S PANEL
Paul Khoury
Finance Supervisor
Delta Managed Solutions
Cory Cavanah
President
Creative Back Office
Ryan Eldridge
Sr. New Business Manager
Charter School Capital
Creative Back
Office

4. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
The National Bureau of Economic Research has announced Monday the
U.S. economy is officially in a recession. Economists said the recession is
unusual, but they hope it could end quickly. -- June 8, 2020
IT’S OFFICIAL: A RECESSION
• The negative impact to state budgets
(and therefore charter schools)takes
time to work through system
• During/ after the Great Recession,
the impact to state
education financing lasted four
years
What can we learn from
past recessions?
Source: California Legislative Analyst's Office, 2011

5. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
THE CA FUNDING CHALLENGE
CURRENT FUTURE
• 36% of FY21 LCFF* will be deferred to FY22
• Ongoing deferral of entire June LCFF
• Potential for changes to payment schedule of deferrals
• Site-based schools paid for growth based on lesser of 6/30/20
budget projections and 10/7/20 student count
• Non-classroom based / independent study charters will not be
paid for enrollment growth in FY21
• Additional challenges and potential costs related to COVID-19
preparedness (PPE, technology, enrollment)
• FY22 potential deferrals and/or
budget cuts
• FY21 enrollment reporting changes
(e.g. growth caps)
*LCFF is short for “LocalControl
Funding Formula,” a large portion of
your state receivable.

6. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
• Funding for all deferrals
and other state revenues
• Rate is known and locked
in forall purchased FY21
receivable
• February deferral portion
is advanced at no cost
• Allows a schoolto draw
funds up to a stated limit
• Interestis charged on the
outstanding balance,
typically paid monthly
• Typically available for a
1-3 year term and
principal must be
completelypaid off by the
end of term
• Tax and Revenue
Anticipation Note
• Funds are generally
disbursed at once and
principal is either repaid
as state payments are
released,or held in
reserve and repaid to
investors at the end of
the term
• Loan for a specific
amount, with agreed
upon repayment
schedule
• May be fixed or floating
rate
FINANCING SOLUTIONS
Line of
Credit
RAN or
TRAN
Term
Loan
Flexible
Funding
Line

7. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
FINANCING SOLUTIONS
Factors to consider
2. CAPACITY
3. CERTAINTY
1. FLEXIBILITY
4. COST
Line of
Credit
RAN or
TRAN
Term
Loan
Flexible
Funding
Line

8. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
• Economic uncertainty for charters still exists past
known deferrals - solution needs to be flexible if
situations change during FY21 and beyond
• COVID19 has proven to be challenging and require
schools to be nimble; it has also resulted in some
additional expenses (e.g., PPE, Virtual Learning, etc.)
- having a solution that allows for "course correction"
is important
FINANCING SOLUTIONS
Factors to consider
2. CAPACITY
3. CERTAINTY
1. FLEXIBILITY
4. COST
Line of
Credit
RAN or
TRAN
Term
Loan
Flexible
Funding
Line

9. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
• First, make sure that the solution meets your known
cash needs and for the full period of those needs
• Secondly, with the changes in the past year, having a
solution that covers both deferrals and then some
could help weather unforeseen issues, is prudent
FINANCING SOLUTIONS
Factors to consider
2. CAPACITY
3. CERTAINTY
1. FLEXIBILITY
4. COST
Line of
Credit
RAN or
TRAN
Term
Loan
Flexible
Funding
Line
1. FLEXIBILITY

10. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
• Fixed rates provide greater certainty than floating
rates
• Longer-term arrangements provide greater certainty
• Generally, receiving funds at once provides more
certainty than receiving in installments
• Violating covenants may allow lenders the ability to
"call" financing, this creates uncertainty
FINANCING SOLUTIONS
Factors to consider
2. CAPACITY
3. CERTAINTY
1. FLEXIBILITY
4. COST
Line of
Credit
RAN or
TRAN
Term
Loan
Flexible
Funding
Line
1. FLEXIBILITY

11. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
Interest Rate:
• Can be quoted in annualized terms or in “discount”
• Applied to borrowed funds
Structure:
• How and when the funds are drawn or released​
• How long the funds are outstanding​
Fees:
• Could include any issuance costs (e.g., transaction,
underwriting, legal fees, etc.)
• Any ongoing fees to maintain the credit line (e.g.,
unused balance fees)
FINANCING SOLUTIONS
Factors to consider
2. CAPACITY
3. CERTAINTY
1. FLEXIBILITY
4. COST
Line of
Credit
RAN or
TRAN
Term
Loan
Flexible
Funding
Line
1. FLEXIBILITY
You can’t just look at rate. Run the cost comparison using all three factors
(examples coming next). Or contact Charter School Capital or your back
office provider to do it for you.

12. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
You can’t just look at rate.
Interest Rate:
• Can be quoted in annualized terms or in
“discount”
• Applied to borrowed funds
Structure:
• How and when the funds are drawn
or released​
• How long the funds are outstanding​
Fees:
• Could include any issuance costs (e.g.,
transaction, underwriting, legal fees, etc.)
• Any ongoing fees to maintain the credit line
(e.g., unused balance fees)
COST
Line of Credit TRAN Term Loan CSC
Total Deferrals
Financed
$1.5M $1.5M $1.5M $1.5M
Term N/A 9 Months 12 Months N/A
Up Front Fee 1.00% 1.47%
1.00%
(Capitalized)
None
Example
Interest Rate
4.99% 2.00% 4.99% 6.99%
Includes No Cost
February Deferral
No No No
Yes
($10k savings)
Release of Funds
5 Monthly
Releases
Beginning
2/28/21
Full Amount on
3/31/21
Full Amount on
2/28/21
5 Monthly
Releases
Beginning
2/28/21
Estimated
Total Cost:
$42,000 $45,000 $56,000 $31,500
EXAMPLE
COMPARISON
SOLUTIONS COMPARISON: COST

13. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
COMPARISON MATRIX
PROS
Rates are generally very low
Terms are known prior to close
Flexibility to draw funds when needed
Covers 100% of state deferrals.
Low annualized interest rates
Consistent monthly payment
(interest / principal repayment
are known)
Max available balance is up to
50% of state revenues
Rate is known within 3 days and
locked for purchased FY21
receivables
CONS
Potential covenants including interest
coverage and "zero balance" provision
Typically lines max out at 10-15% of
total revenue, so total capacity may not
fully match total deferrals
Schools are still required to repay
principal balance even if receivable
payments are delayed
Rate may not be known until
close to the time of issuance
Fees can add to total costs
May be difficult to get
additional capital later if needed
Likely to have origination /
underwriting fees
Potentially has restrictive
covenants
If capital needs change, it
could require refinancing
Collateral pools may vary
Receivables purchase model can
be confusing and/or has a bad
reputation with some schools,
boards, or authorizers
CONSIDERATIONS
Check for any mandatory repayment
periods that conflict with when you need
cash
"Revolving" lines allow for greater
flexibility
Make sure that you have a firm
cash flow projection for the
deferral period
Make sure you have a back-up
plan in case issuance rates are
higher than planned
Make sure that you have a firm
cash flow projection for the term
of the loan
Look for flexible structures that
allow for prepayment or
refinancing
Make sure you and your board
understand and are comfortable
with the model
Must have board approval by
12/15/20 to qualify for no-cost
February deferral financing

14. 14
Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
QUESTIONS?
To request a funding estimate
charterschoolcapital.org/ca-remarkable-solutions
or email growcharters@charterschoolcapital.org
Flexible Funding Line
Paul Khoury
Delta Managed Solutions
paul.khoury@charteradmin.com
Cory Cavanah
Creative Back Office
cory@thecbogroup.com
Ryan Eldridge
Charter School Capital
reldridge@charterschoolcapital.org
Creative
Back
Office

15. Copyright © 2020 Charter School Capital, Inc. All Rights Reserved.
MORE INFORMATION
Flexible Funding Line
We’ll cover your deferred February payment at no cost.
Use what you need, when you need it.
We can advance up to as much as 50% of your school’s annual state revenue.
Secure a known, low, locked-in rate through the end of the Fiscal Year 2021 with transparent terms.
The most flexible, reliable, cost-effective solution – the best path to overcoming budget gaps.
Get peace of mind!
Our funding solution acts similarly to a line of credit, providing a safety net in these uncertain times.
✓
✓
See Terms & Conditions atCharterSchoolCapital.org/Remarkable.
Loans made or arranged pursuantto a California Finance Lenders Law license ##603F028
✓
✓