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.