Just as students returned to their campuses this fall, Responsive Education Solutions (ResponsiveEd) completed the sale of a $65 million bond package that will power the growth of the charter school operator into the next decade.
This year’s sale is the company’s second in two years. In 2015, ResponsiveEd raised $65 million through the sale of bonds to begin construction on several school facility projects, including a new middle school at its Founders Classical Academy in Lewisville and a new elementary and middle school building in Corinth. Both schools are located north of Dallas.
ResponsiveEd’s Chief Financial Officer James Taylor oversaw both bond sales. The 2016 30-year issue sold at a low 3.05 percent effective interest rate, saving the company $4 million over the term of the bond as compared to original projections.
“We are in a position to grow our Texas schools thanks to the company’s strong fiscal management over the past 10 years. We have been careful to ensure communities can sustain schools before investing in costly facilities. Our approach is paying off for us, as evidenced by the strong support from the markets,” he said.
The company’s strategy of starting small and renting space for schools has allowed ResponsiveEd to operate schools within the funds provided by the state of Texas, which averages about $7,200 per student. ResponsiveEd’s leadership team has focused on launching lean schools and developing them as it has grown to more than 21,000 students in Texas and Arkansas.
“Our goal is to provide school choice for parents with a strong emphasis on character-building. Our schools have been successful in our urban centers, suburbs, and smaller communities across the state. It is clear to us that when parents have a range of public school choices, including charter schools, they are willing to make the decisions that they think are best for their children,” said Chief Operating Officer Robert Davison.
ResponsiveEd’s fiscal policies have earned it a Standard & Poor BBB rating, the highest of any Texas charter school operator. It also has the backing of Texas’ Permanent School Fund (PSF), which provides public schools with loan guarantees and gives ResponsiveEd further strength, given Texas’ AAA rating. A portion of the fund is allocated to charters based on student enrollment for facilities financing.
In addition to strong fiscal policies, ResponsiveEd has also minimized risk through operational diversity by developing seven distinct educational models, including classical, early college, STEM, and credit recovery. Investors have expressed confidence in ResponsiveEd bonds, recognizing this track record of innovation and diversity, as well as the financial stability it provides.
“Choice is great if the choice is real. Since all students have different needs and interests, we have created different kinds of schools and cluster them when possible. This allows students to have access to a range of options,” said Anthony Edwards, VP of School Expansions.
ResponsiveEd has established these clusters in places like North Houston, where the company operates a new college prep school, two early college high schools, a classical academy, and a credit recovery campus. In all, the five campuses serve more than 1,500 students.
It is doing the same in Dallas, Austin, and the Rio Grande Valley.
Now that ResponsiveEd has established more than 70 charter school campuses in Texas, it is focusing on improving facilities. The 2016 bond makes funds available to build new campuses in Tyler, Huntsville, Flower Mound, and Lewisville. At the same time, ResponsiveEd will improve several other campuses in the two Texas charter districts it operates. In doing so, the company will add more than 2,500 seats at its upgraded locations in pursuit of its in-state growth goal of 35,000 students.
