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CO Charter School Politics

House Bill 1363, introduced by Democrats on March 6th, aims to create more transparency and accountability for Colorado’s charter school system. If it passes in the CO House & Senate, it will make its way to Polis’s desk for a likely veto, as he has publicly voiced opposition. Bondholders who invest in the sector would be thoughtful to consider how HB 1363 might impact their investments.

M. Austin evaluates individual charter schools and the CO sector as a whole for investment opportunities within our client portfolios. Refer to our post from February 23rd for an overview of Charter School bonds.

HB 1363

In summary, the proposed bill would aim to increase disclosure requirements, reduce automatic law waivers, mandate parent representation on boards of directors, expand local school districts’ authority over existing charters, as well as adjust cost sharing arrangements between school districts and charter schools. For example, local districts could have increased authority to block approvals of new charter applications due to district wide enrollment trends. Additionally, school districts would have expanded authority to revoke or not renew a school's charter.

HB 1363 is in early stages, and faces strong opposition from Republicans and Governor Polis, so we deem it unlikely to pass this legislative session.

Municipal Bond Considerations

Overall, we assess the bill as marginally negative for the charter school industry despite some potentially beneficial attributes. Nevertheless, it serves as a reminder of the importance to monitor legislative risk in municipal bond portfolios.

Limiting new charter school growth could increase demand for existing charter schools that have a proven track record potentially boosting enrollment, waitlists, etc. On the other hand, reducing per pupil funding and giving local districts increased power to close existing schools would amplify the importance of fundamental research. For example, district-wide enrollment trends could now be of increased importance to consider when assessing a particular charter school’s long-term stability. Lastly, spreads on charter school bonds in Colorado could potentially increase to compensate investors for the additional uncertainty.

Next Steps

We will track HB 1363's developments related to the specific charter schools we follow as well as the broader industry liquidity and yield premiums. Next up: CO House Education Committee is scheduled to meet tomorrow April 11th.



HB 24-1363 Charter Schools Accountability, Legislative Council Staff, 2024;

HB 24-1363, Colorado 74th General Assembly, 2024;



This content has been prepared for informational purposes only and should not be considered as investment, tax, or legal advice. Opinions and forward-looking statements expressed are subject to change without notice. We recommend all investors to consult with a financial and/or tax advisor regarding their individual circumstances before taking investment decisions.

Investing in bonds exposes the investor to the risk of loss of principal. Lower and non-rated securities are more volatile and less liquid than investment grade bonds. Liquidity risk relates to the timing of converting a security into cash without affecting the market price. Municipal bonds and preferred stocks tend to be less liquid than government or corporate bonds. Higher-yielding, longer-maturity, lower-rated, non-rated, or certain bond restrictions (minimum denomination requirements) limit or reduce the liquidity of bond holdings.

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