Enrolled Copy H.B. 219
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Charter School Funding Revisions
2025 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: R. Neil Walter
Senate Sponsor: Lincoln Fillmore
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LONG TITLE
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General Description:
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This bill modifies provisions in the Charter School Credit Enhancement Program.
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Highlighted Provisions:
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This bill:
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▸ modifies criteria for qualifying charter schools under the Charter School Credit
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Enhancement Program;
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▸ expands evaluation standards for charter school operating history;
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▸ specifies financial metrics for program qualification;
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▸ establishes additional requirements for annual program certification;
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▸ establishes credit rating-based maintenance fees for participating charter schools;
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▸ creates parameters for state appropriation repayment procedures; and
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▸ makes technical changes.
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Money Appropriated in this Bill:
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This bill appropriates $4,000,000 in restricted fund and account transfers for fiscal year
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2026, all of which is from the various sources as detailed in this bill.
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Other Special Clauses:
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This bill provides a special effective date.
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Utah Code Sections Affected:
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AMENDS:
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53G-5-606, as renumbered and amended by Laws of Utah 2018, Chapter 3
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53G-5-609, as renumbered and amended by Laws of Utah 2018, Chapter 3
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Be it enacted by the Legislature of the state of Utah:
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Section 1. Section 53G-5-606 is amended to read: H.B. 219 Enrolled Copy
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53G-5-606 . Charter School Credit Enhancement Program -- Standards for the
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designation of qualifying charter schools -- Debt service reserve fund requirements.
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(1) There is created the Charter School Credit Enhancement Program to assist a qualifying
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charter [schools] school in obtaining favorable financing by providing a means of
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replenishing a qualifying charter school's debt service reserve fund.
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(2) The authority shall establish standards for a charter school to be designated as a
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qualifying charter school.
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(3) In accordance with Subsection (4), in establishing the standards described in Subsection
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(2) the authority shall consider:
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[(a) whether a charter school has received an investment grade rating, independent of
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any rating enhancement resulting from the issuance of bonds pursuant to the credit
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enhancement program;]
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[(b) the location of the charter school's project;]
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[(c) the operating history of the charter school;]
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[(d)] (a) the financial strength of the qualifying charter school, as demonstrated by:
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(i) debt service coverage ratios;
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(ii) days cash on hand; and
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(iii) other financial metrics as determined by the authority; and
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[(e)] (b) any other criteria the authority determines are relevant.
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(4) Excepted as provided in Subsection (12), based on a qualifying charter school's credit
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rating from at least one nationally recognized rating agency, the authority shall:
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(a) for a rating of investment grade:
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(i) approve a qualifying charter school for a bond issuance pursuant to this section;
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and
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(ii) waive the annual maintenance fee;
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(b) for a rating of BB+ or equivalent rating:
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(i) approve a qualifying charter school for a bond issuance pursuant to this section;
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and
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(ii) assess an annual maintenance fee of 0.15% of outstanding debt;
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(c) for a rating of BB or equivalent rating:
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(i) apply the standards described in Subsection (3) in determining whether to approve
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a qualifying charter school for a bond issuance pursuant to this section; and
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(ii) if the qualifying charter is approved in accordance with Subsection (4)(c)(i),
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assess an annual maintenance fee of 0.25% of outstanding debt; and
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(d) adjust any maintenance fee described in this Subsection (4) to reflect a change in the
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qualifying charter school's credit rating.
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[(4)] (5) The bonds [issued by the authority] the authority issues for a qualifying charter
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school are not an indebtedness of the state or of the authority but are special obligations
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payable solely from:
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(a) the revenues or other funds pledged by the qualifying charter school; and
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(b) amounts appropriated by the Legislature pursuant to Subsection [(9)] (10).
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[(5)] (6) The authority shall notify the authorizer of a charter school that the charter school
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is participating in the credit enhancement program if the authority:
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(a) designates the charter school as a qualifying charter school; and
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(b) issues bonds for the qualifying charter school under the credit enhancement program
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described in this section.
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[(6)] (7) One or more debt service reserve funds shall be established for a qualifying charter
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school with respect to bonds issued pursuant to the credit enhancement program.
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[(7)] (8)(a) Except as provided in Subsection [(7)(b)] (8)(b), money in a debt service
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reserve fund may not be withdrawn from the debt service reserve fund if the amount
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withdrawn would reduce the level of money in the debt service reserve fund to less
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than the debt service reserve fund requirement.
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(b) So long as the applicable bonds issued under the credit enhancement program remain
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outstanding, money in a debt service reserve fund may be withdrawn in an amount
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that would reduce the level of money in the debt service reserve fund to less than the
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debt service reserve fund requirement if the money is withdrawn for the purpose of:
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(i) paying the principal of, redemption price of, or interest on a bond when due and if
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no other money of the qualifying charter school is available to make the payment,
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as determined by the authority; or
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(ii) paying any redemption premium required to be paid when the bonds are
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redeemed prior to maturity if no bonds will remain outstanding upon payment
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from the funds in the qualifying charter school's debt service reserve fund.
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[(8)] (9) Money in a qualifying charter school's debt service reserve fund that exceeds the
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debt service reserve fund requirement may be withdrawn by the qualifying charter
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school.
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[(9)] (10)(a) The authority shall annually, on or before December 1, certify to the
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governor the amount, if any, required to restore amounts on deposit in the debt
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service reserve funds of qualifying charter schools to the respective debt service
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reserve fund requirements, which certification shall include:
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(i) detailed calculations supporting the certified amount; and
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(ii) a report on the current status of each qualifying charter school's debt service
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reserve fund.
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(b) The governor shall request from the Legislature an appropriation of the certified
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amount to restore amounts on deposit in the debt service reserve funds of qualifying
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charter schools to the respective debt service reserve fund requirements.
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(c) The Legislature may appropriate money to the authority to restore amounts on
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deposit in the debt service reserve funds of qualifying charter schools to the
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respective debt service reserve fund requirements.
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(d) A qualifying charter school that receives money from an appropriation to restore
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amounts on deposit in a debt service reserve fund to the debt service reserve fund
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requirement, shall repay the state at the time and in the manner as the authority shall
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require, provided that:
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(i) the repayment schedule shall not exceed five years from the date of the
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appropriation;
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(ii) the authority shall establish a minimum annual repayment amount; and
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(iii) the authority shall provide annual reports to the Legislature on the status of all
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outstanding repayment obligations.
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[(10)] (11) The authority may create and establish other funds for its purposes.
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(12) The authority shall waive the annual maintenance fee for a qualifying charter school
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that:
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(a) received bond issuance approval on or before July 1, 2025; and
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(b) has obtained an investment grade credit rating from at least one nationally
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recognized rating agency.
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Section 2. Section 53G-5-609 is amended to read:
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53G-5-609 . Limitation on participation in Charter School Credit Enhancement
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Program.
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(1) In accordance with Subsection (2), on or before January 1 of each year, the authority
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shall determine the credit enhancement program's bond issuance limitation.
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(2) The authority may not issue bonds for a qualifying charter school under the credit
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enhancement program if the total par amount outstanding under the program would
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exceed an amount equal to the product of:
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(a) [1.3] 2.0;
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(b) an amount equal to the quotient of:
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(i) annual charter school enrollment; divided by
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(ii) annual state enrollment; and
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(c) the total par amount then outstanding under the school bond guarantee program
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established in Chapter 4, Part 8, School District Bond Guaranty.
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Section 3. FY 2026 Appropriations.
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The following sums of money are appropriated for the fiscal year beginning July 1,
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2025, and ending June 30, 2026. These are additions to amounts previously appropriated for
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fiscal year 2026.
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Subsection 3(a). Restricted Fund and Account Transfers
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The Legislature authorizes the State Division of Finance to transfer the following
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amounts between the following funds or accounts as indicated. Expenditures and outlays from
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the funds to which the money is transferred must be authorized by an appropriation.
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ITEM 1 To Charter School Reserve Account
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From Public Education Economic Stabilization
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Restricted Account, One-time 4,000,000
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Schedule of Programs:
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Charter School Reserve Account 4,000,000
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Section 4. Effective Date.
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This bill takes effect on July 1, 2025.
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