PART VI. LOUISIANA CHARTER SCHOOL
START-UP LOAN FUND
§4001. Louisiana Charter School Start-Up and Expansion Loan Fund; creation; purpose;
distribution
A.(1) The Louisiana Charter School Start-Up and Expansion Loan Fund, hereafter
referred to as the "fund", is hereby created within the state treasury for the purposes of
providing a source for funding loans to assist eligible charter schools to expand existing
operations and facilities or establish new operations and facilities with initial start-up
funding, including funding for eligible costs associated with facility predevelopment,
development, and associated financing activities.
(2) For purposes of this Section, "eligible charter school" shall mean an existing or
new Louisiana public charter school authorized by either a local school board or the State
Board of Elementary and Secondary Education pursuant to R.S. 17:3971 et seq. An affiliated
supporting organization as defined in Section 509(a)(3) of the Internal Revenue Code or a
charter school's wholly owned, nonprofit corporation real estate entity is eligible to apply for
a loan or facilitate the use of a loan for the benefit of an eligible charter school.
B. All monies appropriated to the fund and any grants, other donations, or other
sources of financial assistance directed to the fund shall be deposited into the fund. Monies
in the fund shall be subject to appropriation by the legislature and shall be appropriated to
the division of administration for allocation as loans for the purposes provided in Subsection
D of this Section. Expenses incurred by the division of administration in administrating the
fund shall be reimbursable from the fund. All unexpended and unencumbered monies
remaining in such fund at the end of each fiscal year shall remain in the fund. The monies
in such fund shall be invested by the state treasurer in accordance with state law, and interest
earned on the investment of these monies shall be credited to the fund, after compliance with
the requirements of Article VII, Section 9(B) of the Constitution of Louisiana, relative to the
Bond Security and Redemption Fund.
C.(1) The division of administration shall administer the use of the monies
appropriated from the fund and may enter in contracts and other agreements in connection
with the operation of the fund.
(2) The division of administration, in consultation with the State Board of
Elementary and Secondary Education, shall adopt rules in accordance with the
Administrative Procedure Act to implement the provisions of this Section. The rules shall
include but not be limited to the following:
(a) Charter school eligibility requirements.
(b) Processing procedures for loans and a loan application that includes a per pupil
funding calculation.
(c) Security and collateral requirement provisions.
(d) Terms of the loan agreement, including the manner of execution, repayment
schedule, redemption features, the maximum principal amount of the obligation, the
maximum interest rate to be incurred or borne by the obligation, the maximum repayment
term of the loan which shall not exceed the term of the charter agreement, and default
provisions.
(e) Provisions defining eligible costs to include predevelopment costs of construction
prior to construction, such as property or land acquisition, feasibility and site studies, design
and engineering fees, legal costs, permitting, review, and inspection fees, surveys, utility
assessments, financing costs and other eligible project costs as determined by the division
of administration.
(f) Provisions defining development costs to include the costs of construction, labor
and materials, site acquisition, construction administration, financing, equipment,
demolition, infrastructure, required off-site improvements, and other related costs as
determined by the division of administration.
(g) Provisions defining eligible renovations to include material additions and
renovations to existing buildings, general environmental abatement, systems, code and
life-safety upgrades, and other types of renovations as determined by the division of
administration.
D.(1) No loan shall be made without the approval of the division of administration.
Loans shall be executed through a loan agreement between the division of administration and
the eligible charter school and shall be used solely for the following purposes:
(a) To pay for charter school start-up and early operating expenses.
(b) To purchase tangible items such as equipment, technology, and instructional
materials.
(c) Land acquisition and facility predevelopment and development costs, including
construction hard and soft costs.
(d) Facility acquisition, upgrade, repairs, and other eligible renovations.
(e) Any other purposes approved by the division of administration that are related
to the start-up, operation, expansion, or renovation of an eligible charter school.
(2) In order for an eligible charter school to qualify for a loan pursuant to the
provisions of this Section, the eligible charter school shall comply with all of the following:
(a) The eligible charter school shall demonstrate sufficient financial resources and
a detailed financial strategy for repayment of the loan.
(b) The eligible charter school shall complete and submit the supplemental reporting
schedule as mandated in R.S. 24:514(I)(2) as part of its annual financial reporting to the
legislative auditor pursuant to R.S. 24:513 et seq.
(3) An eligible charter school is limited to one loan from the fund, which shall not
exceed five million dollars per loan; however, once all of the principal, interest, and any
other obligations due under the loan agreement are paid in full, the eligible charter school
may apply for a new loan.
(4) No money lent as provided in this Section may be used to pay prior debts of the
nonprofit corporation which formed the eligible charter school, any of the natural persons
principally involved in forming the eligible charter school, or any former or current business
or nonprofit venture of any such natural persons for any purchase not related to the creation
of the eligible charter school or predevelopment and development costs of the eligible charter
school facility, or to pay to members of the immediate family of any such natural persons,
or to make any investments.
(5)(a) Loans to eligible charter schools shall be repaid in accordance with the terms
of the loan agreement as approved by the division of administration and the rules adopted
pursuant to this Section. Nothing herein shall limit the ability of a loan to be subordinated
to a senior loan, to be paid off prior to maturity, or to charge variable interest rates. All
interest and principal payments on loans shall be repaid and deposited back into the fund and
made available for additional loans.
(b) Loan repayment may occur by having the state Department of Education
automatically reduce the last state payment or payments for each eligible charter school in
accordance with the terms of the loan agreement. The state Department of Education may
instead deposit those funds with the state treasury in the Louisiana Charter School Start-up
and Expansion Loan Fund.
(6) The division of administration shall not knowingly approve the loan portion of
any eligible charter school's budget proposal if the background checks required by the state
board reveals that any person principal to the charter school proposal has been convicted of
any felony related to misappropriation of funds or theft.
(7)(a) If the charter agreement of any eligible charter school is revoked or the school
ceases to operate during the term of the loan agreement and the loan is not fully repaid, all
cash assets, equipment, property, facilities or other physical assets purchased or constructed
with loan funds shall be transferred in accordance with the loan agreement and the rules
adopted by the division of administration.
(b) The state may, by suit, action, mandamus, or other proceedings, protect and
enforce any rights to assets or security provided in connection with a loan agreement
authorized pursuant to this Section.
E. Eligible charter schools shall comply with applicable laws related to public bids
for the erection, construction, alteration, improvement, or repair of a public facility or
immovable property pursuant to R.S. 17:3996(B)(19).
F. The division of administration shall submit an annual report to the legislature, on
or before December thirty-first, relative to fund activities for the prior fiscal year, including
but not limited to the following:
(1) The number of loan applications filed in the preceding year.
(2) The number of loans executed in the preceding year, the amounts loaned to each
eligible charter school, and the total amount of loan funds expended in accordance with the
provisions of this Section.
(3) The collection rate of the loans.
(4) The balance of the fund at the time such report is submitted and the viability of
the fund at that time.
(5) An evaluation of financial accountability measures and the effectiveness of the
loan program.
Acts 1997, No. 477, §1, eff. June 30, 1997; Acts 1999, No. 757, §1, eff. July 2, 1999;
Acts 2001, No. 1182, §2, eff. July 1, 2001; Acts 2012, No. 2, §1; Acts 2012, No. 811, §5, eff.
July 1, 2012; Acts 2016, No. 497, §1, eff. June 14, 2016; Acts 2025, No. 413, §1, eff. June
20, 2025.