Shawgi Tell has tracked charter school shenanigans for years. In this post, he explains another obscure way in which charters generate financial problems.
Even though they siphon billions of dollars a year from public schools, receive millions more in venture philanthropy, embrace profiteering, and are allowed to float bonds, many charter schools, according to The Bond Buyer, have been in deep financial trouble for some time.
According to the Local Initiatives Support Corporation (LISC), over the years charter schools in most states “have issued more than $40 billion in tax-exempt bonds to finance their facilities.” This helps explain why charter school owners never stop trying to restructure the state in a way that funnels public funds to them for facilities and buildings. In this connection, it is important to note that shady real estate deals are one of the main ways charter schools function as pay-the-rich schemes (see here and here).
Before proceeding any further, let us look at the abbreviated definition of two inter-related financial terms used by the bond market to assess financial viability and credit risk: impairment and default. Impairment is an accounting recognition of potential loss, while default is the actual failure to meet financial obligations.
Both impairment and default refer to a financially distressed state of affairs.
The Bond Buyer reports that, “Nationally, charter school bonds posted the most defaults, six, in the first half of the year, and the greatest number of defaults, 14, in 2025, across Default Trends’ 32 categories.”
In terms of impairments, we learn that, “Charter school bonds also suffered the most impairments, 34, in the year’s first half, easily outdistancing the 16 impairments of the second-place category, land secured bonds, according to MMA. It also had the greatest number of impairments in 2025, 21.”
In other words, during all of 2025 and the first half of 2026, 75 charter schools were officially experiencing financial distress. Not surprisingly, “MMA [Municipal Market Analytics] has a negative outlook on the sector.”
Given the high failure and closure rate of charter schools across the country, financial problems in the charter school sector, aggravated by rampant fraud and corruption, are likely to be much higher than the official data noted above.