House 4952

2026 REGULAR SESSION

Introduced

House Bill 4952

By Delegate Crouse

[Introduced January 29, 2026; referred to the Committee on Education then Finance]

A BILL to amend the Code of West Virginia, 1931, as amended, by adding a new section, designated §18-5G-4a, relating to the establishment of the Charter School Direct Loan Program and the Charter School Credit Enhancement Program within the West Virginia Economic Development Authority to support the growth of public charter schools.

Be it enacted by the Legislature of West Virginia:

ARTICLE 5G. PUBLIC CHARTER SCHOOLs.

§18-5G-4a. Establishment of the West Virginia Charter School Direct Loan Program and the Charter School Credit Enhancement Program.

(a) Definitions

As used in this part:

(1) "Authority" refers to the West Virginia Economic Development Authority or its designee.

(2) "Charter school" means a public charter school created under this chapter.

(3) "Credit enhancement program" means the Charter School Credit Enhancement Program established in Section (h) of this section.

(4) "Debt service reserve fund" means the reserve fund created or established by, or for the benefit of, a qualifying charter school for the purpose of paying principal of and interest on bonds issued under the credit enhancement program as the payments become due and other money of the qualifying charter school is not available to make the payments.

(5) "Debt service reserve fund requirement" means, as of a particular date of computation, and with respect to a particular issue of bonds, the amount required to be on deposit in the debt service reserve fund, which amount: (a) may be a sum certain or as set forth in a formula; and (b) may not be less than the maximum annual debt service requirement for the related bonds.

(6) "Direct loan program" means the Charter School Direct Loan Program established in Section (g) of this part.

(7) "Obligations" mean any notes, debentures, revenue bonds, or other evidences of financial indebtedness, but do not include general obligation bonds.

(8) "Project" means: (a) any building, structure, or property owned, to be acquired, or used by a charter school for any of its educational purposes and the related appurtenances, easements, rights-of-way, improvements, paving, utilities, landscaping, parking facilities, and lands; or (b) any capital equipment owned, to be acquired, or used by a charter school for any of its educational purposes, interests in land, and grounds, together with the personal property necessary, convenient, or appurtenant to them. A Project as used in this part includes any related costs, such as architectural or engineering fees.

(9) "Qualifying charter school" means a charter school that: (a) meets standards adopted by the West Virginia Economic Development Authority for participation in the credit enhancement program or the direct loan program; and (b) is designated by the West Virginia Economic Development Authority as a qualifying charter school for purposes of participation in the credit enhancement program or the direct loan program.

(b) Authority purpose; services

(1) The West Virginia Economic Development Authority shall govern and oversee the Charter School Direct Loan Program and the Charter School Credit Enhancement Program.  In overseeing these programs, the mission of the authority is to provide an efficient and cost-effective method of financing initiatives related to charter school startup, operation, and facility acquisition and improvement.

(2) Upon request, staff employed by the West Virginia Professional Charter School Board may provide staff support to the authority.

(c) Additional powers and duties of the authority:

(1) In addition to the powers and duties of the authority identified in §31-15-6, as it relates specifically to the oversight of the Charter School Direct Loan Program and the Charter School Credit Enhancement Program, the authority may:

(A) In accordance with Section (h) of this part, designate a charter school as a qualifying charter school for purposes of participation in the credit enhancement program or the direct loan program; and

(B) To the extent practicable, establish geographic preferences in its lending programs to prioritize school development in rural areas of the state.

(2) Except as provided in Sections (g), (h), (i), or (j) of this section, the West Virginia Economic Development Authority may not exercise power in any manner which would create general or moral obligations of the state or of any agency, department, or political subdivision of the state while administering the Charter School Direct Loan Program or the Charter School Credit Enhancement Program.

(3) The authority's area of operation shall include all areas of the state.

(d) Limited obligations:

Except as provided in Sections (g), (h), (i), or (j) of this section, bonds, notes, and other obligations issued by the authority pursuant to this part:

(1) Do not constitute a debt, moral obligation, or liability of the state, or of any county, city, town, school district, or any other political subdivision of the state;

(2) Do not constitute the loan of credit of the state or of any county, city, town, school district, or any other political subdivision of the state; and

(3) May not be paid from funds other than loan payments or lease revenues received from a charter school or other funds pledged by a charter school.

(e) Establishment of funds:

(1) There is hereby created in the State Treasury a special revenue fund designated and known as the Charter School Direct Loan Program Fund. The fund shall be administered by the West Virginia Economic Development Authority. All interest and other returns derived from the deposit and investment of moneys in the Charter School Direct Loan Program Fund shall be credited to the fund. Any balance, including accrued interest and other returns, remaining in the fund at the end of each fiscal year shall not revert to the General Revenue Fund but shall remain in the fund and be expended as provided by this section.

(2) There is hereby created in the State Treasury a special revenue fund designated and known as the Charter School Credit Enhancement Program Fund. The fund shall be administered by the West Virginia Economic Development Authority. All interest and other returns derived from the deposit and investment of moneys in the Charter School Credit Enhancement Program Fund shall be credited to the fund. Any balance, including accrued interest and other returns, remaining in the fund at the end of each fiscal year shall not revert to the General Revenue Fund but shall remain in the fund and be expended as provided by this section.

(3) There is hereby created in the State Treasury a special revenue fund designated and known as the Charter School Facilities Expense Fund. The account shall consist of moneys received pursuant to this section; moneys, if any, transferred from special revenue funds administered by the authority; or any governmental or private grants and any state general fund appropriations, if any, for the direct loan program or credit enhancement program. All interest and other returns derived from the deposit and investment of moneys in the Charter School Facilities Expense Fund shall be credited to the fund. Any balance, including accrued interest and other returns, remaining in the fund at the end of each fiscal year shall not revert to the General Revenue Fund but shall remain in the fund and be expended as provided by this section.

(4) All expenses incurred by the authority in developing and administering the direct loan program or the credit enhancement program shall be payable from the Charter School Facilities Expense Fund.

(5) Expenditures from the Charter School Direct Loan Program Fund and the Charter School Credit Enhancement Program Fund shall be limited to the purposes set forth in this article: Provided, That an amount not to exceed three percent of the funds may be transferred annually to the Charter School Finance Authority Fund to cover the annual administrative costs of the direct loan program and the credit enhancement program.

(f) Charter School Direct Loan Program:

(1) The West Virginia Economic Development Authority shall administer the Charter School Direct Loan Program. The purpose of the direct loan program is to meet charter school building construction and renovation needs, and to pay for expenses related to the startup of a new charter school, the expansion of an existing charter school, or other conditions as the authority may deem appropriate.

(2) The authority shall:

(A) Establish standards for a charter school to be designated as a qualifying charter school to participate in the direct loan program;

(B) Establish the interest rate, amortization schedules, and terms of repayment for loans created pursuant to this section. Except as otherwise provided in this section, in determining the rates and terms of a loan granted to a qualifying charter school, the authority should endeavor to provide low interest options and flexible terms;

(C) Review requests by any eligible applicant for loans under this section, and approve or reject each request in writing.

(D) Ensure that the West Virginia Professional Charter School Board is consulted with respect to each request by qualifying charter schools for loans under this section.

(E) Ensure that each loan issued pursuant to this section is secured by a promissory note, or if applicable a deed of trust, from the applicant.

(F) Require a recipient of a loan issued pursuant to this section to repay the funds if the recipient sells or refinances any collateral associated with the loan.

(3) To be eligible for a loan under this subsection, an applicant shall be one of the following:

(A) A qualifying charter school, as determined by the authority;

(B) A limited liability company that participates in a New Markets Tax Credit program transaction structure with an identified qualifying public charter school or schools; or

(C) A nonprofit corporation that develops and finances a facility that will be occupied by a qualifying charter school throughout the term of the loan: Provided, That in the event the facility financed under this subsection is not occupied by a qualifying charter school, the loan shall be deemed to be in default.

(4) Loans distributed under this section shall not exceed $2,000,000 per qualifying charter school. In the event a qualifying charter school operates more than one campus, it may request a loan pursuant to this section for each campus, subject to the $2,000,000 $2 million cap per qualifying charter school.

(5) Term of loans. The term of a loan within the context of a New Markets Tax Credit as this term is defined in the Internal Revenue Code, may extend to seven years; all other loan terms under this subsection shall not exceed five years.

(g) Charter School Credit Enhancement Program:

(1) The authority shall administer the Charter School Credit Enhancement Program to assist a qualifying charter school in obtaining favorable financing by providing a means of replenishing a qualifying charter school's debt service reserve fund.

(2) The authority shall establish standards for a charter school to be designated as a qualifying charter school pursuant to this part.

(3) In establishing the standards for a charter school to be designated as a qualifying charter school pursuant to this part, the authority shall consider the financial strength of the qualifying charter school, as demonstrated by:

(A) Debt service coverage ratios;

(B) Days cash on hand;

(C) Other financial metrics as determined by the authority; and

(D) Any other criteria the authority determines are relevant.

(4) Based on a qualifying charter school's credit rating from at least one nationally recognized rating agency, the authority shall:

(A) For a rating of investment grade:

(i) Approve a qualifying charter school for a bond issuance pursuant to this section; and

(ii) Assess an annual maintenance fee of 0.10% of outstanding debt;

(B) For a rating of BB+ or equivalent rating:

(i) Approve a qualifying charter school for a bond issuance pursuant to this section; and

(ii) Assess an annual maintenance fee of 0.15% of outstanding debt;

(C) For a rating of BB or equivalent rating:

(i) Apply the standards described in (g)(2) of this section in determining whether to approve a qualifying charter school for a bond issuance pursuant to this section; and

(ii) If the qualifying charter is approved in accordance with Subsection (3)(iii)(1), assess an annual maintenance fee of 0.25% of outstanding debt;

(D) Adjust any maintenance fee described in this (g)(3) of this section to reflect a change in the qualifying charter school's credit rating based on a new credit rating from at least one nationally recognized rating agency.

(5) The bonds the authority issues for a qualifying charter school are not an indebtedness of the state or of the authority but are special obligations payable solely from:

(A) The revenues or other funds pledged by the qualifying charter school; and

(B) Amounts appropriated by the Legislature pursuant to Subsection (10) (11).

(6) If the qualifying charter school is authorized by any entity other than the West Virginia Professional Charter School Board, the authority shall notify such authorizer that the charter school is participating in the credit enhancement program if the authority:

(A) Designates the charter school as a qualifying charter school; and

(B) Issues bonds for the qualifying charter school under the credit enhancement program described in this section.

(7) One or more debt service reserve funds shall be established for a qualifying charter school with respect to bonds issued pursuant to the credit enhancement program.

(8) Except as provided in (g)(11) of this section, money in a debt service reserve fund may not be withdrawn from the debt service reserve fund if the amount withdrawn would reduce the level of money in the debt service reserve fund to less than the debt service reserve fund requirement.

(9) So long as the applicable bonds issued under the credit enhancement program remain outstanding, money in a debt service reserve fund may be withdrawn in an amount that would reduce the level of money in the debt service reserve fund to less than the debt service reserve fund requirement if the money is withdrawn for the purpose of:

(A) Paying the principal of, redemption price of, or interest on a bond when due and if no other money of the qualifying charter school is available to make the payment, as determined by the authority; or

(B) Paying any redemption premium required to be paid when the bonds are redeemed prior to maturity if no bonds will remain outstanding upon payment from the funds in the qualifying charter school's debt service reserve fund.

(10) Money in a qualifying charter school's debt service reserve fund that exceeds the debt service reserve fund requirement may be withdrawn by the qualifying charter school.

(11) The authority shall annually, on or before December 1, certify to the governor the amount, if any, required to restore amounts on deposit in the debt service reserve funds of qualifying charter schools to the respective debt service reserve fund requirements, which certification shall include:

(A) Detailed calculations supporting the certified amount; and

(B) A report on the current status of each qualifying charter school's debt service reserve fund.

(12) The Governor shall request from the Legislature an appropriation of the certified amount to restore amounts on deposit in the debt service reserve funds of qualifying charter schools to the respective debt service reserve fund requirements.

(13) The Legislature may appropriate money to the authority to restore amounts on deposit in the debt service reserve funds of qualifying charter schools to the respective debt service reserve fund requirements.

(14) A qualifying charter school that receives money from an appropriation to restore amounts on deposit in a debt service reserve fund to the debt service reserve fund requirement, shall repay the state at the time and in the manner as the authority shall require, provided that:

(A) The repayment schedule shall not exceed five years from the date of the appropriation;

(B) The authority shall establish a minimum annual repayment amount; and

(C) The authority shall provide annual reports to the Legislature on the status of all outstanding repayment obligations.

(15) The authority may create and establish other funds for its purposes.

(h) Charter School Reserve Account contribution requirements for qualifying charter schools.

(1) When bonds are issued under the credit enhancement program for a qualifying charter school, the qualifying charter school shall contribute money to the reserve account in the amount determined as provided in subsection (2).

(2) The authority shall determine the up-front and ongoing requirements for contributions of money to the reserve account for each qualifying charter school.

(i) Bond issuance:

(1) The state may not alter, impair, or limit the rights of bondholders or persons contracting with a qualifying charter school until the bonds, including interest and other contractual obligations, are fully met and discharged. Nothing in this part precludes an alteration, impairment, or limitation if provision is made by law for the protection of bondholders or persons entering into contracts with a qualifying charter school.

(2) The authority may require a qualifying charter school to vest in the authority the right to enforce any covenant made to secure bonds issued under the credit enhancement program by making appropriate provisions in the indenture related to the qualifying charter school's bonds.

(3) The authority may require a qualifying charter school to make covenants and agreements in indentures or in a reimbursement agreement to protect the interests of the state and to secure repayment to the state of any money received by the qualifying charter school from an appropriation to restore amounts deposited in the qualifying charter school's debt service reserve fund to the debt service reserve fund requirement.

(4) The authority may charge a fee to administer the issuance of bonds for a qualifying charter school.

(j) Limitation on participation in Charter School Credit Enhancement Program.

At the establishment of the credit enhancement program, the authority’s bond issuance limitation shall be $75 million. On or before January 1 of each year, the authority shall determine the credit enhancement program's bond issuance limitation.

NOTE: The purpose of this bill is to establish the Charter School Direct Loan Program and the Charter School Credit Enhancement Program within the West Virginia Economic Development Authority to support the growth of public charter schools.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.