Financial firms drop charter school clients to support districts

Public school districts have gained allies in their fight against charter school expansion in the form of public finance firms that recently dropped their charter school clients. A report from The Bond Buyer​​ notes that Hilltop Securities—​a firm that serves a large number of school districts (including Houston ISD) in financial advisory, asset management, and underwriting—recently stopped representing nine charter schools to support its traditional public school clients.
“Hilltop Securities will continue to honor our commitment to those relationships with Texas Independent School Districts by no longer representing charter schools in Texas as advisor, underwriter, placement agent or investment advisor,” said Hilltop chair Hill Feinberg in a letter to Keller ISD.
BOK Financial Securities, another firm representing school districts, also has decided to decline charter school clients and has developed a marketing program to help districts compete with charter chains, including fact sheets that outline the danger of charter proliferation to the funding of traditional public schools.  BOK notes that while there are 272,835 current charter school students, the Texas Charter School Association has set a goal of one million by 2025. BOK’s report to districts states: “At this time, seven charter operators enroll 52 percent of all charter students and the growth of these operators has been 799 percent over the last 10 years.”
The firms’ decisions did not come without some pushback, however, as the Texas Association of School Boards weighed in with an email to districts saying it would be illegal under state law to screen financial firms by whether they have charter school clients.
Regardless, the Hilltop and BOK decisions are sure to be noticed by district officials across the state who are battling charter expansion.  And the moves come amidst the current turmoil in Houston ISD, which is trying to stave off the closure of 15 schools for not meeting accountability standards, all while facing teacher layoffs and a $115 million budget shortfall. Monday was the deadline for school districts to submit final plans for partnerships with charters, nonprofits or other educational entities under Senate Bill 1882—legislation that suspends accountability interventions (and even takeover of entire districts by the state) for two years and provides additional state funding for struggling schools. Houston ISD did not comply with the deadline after a tumultuous debate over a proposed partnership with a charter group that resulted in no board vote on the proposal. We’ll have more to report in upcoming Hotlines on the Houston ISD situation and other districts using the provisions of SB 1882.