Lease aid is a Minnesota state revenue essential to charter school operations since charter schools cannot issue bonds or levy taxes for building space. The application includes a review of the following:
- The reasonableness of the lease price based on current market values
- The extent to which the lease conforms to applicable state laws and rules
- The appropriateness of the proposed lease in the context of the space needs and financial circumstances of the charter school
- Lease includes sum certain cost and closure clause language
All charter schools in Minnesota must apply for lease aid on an annual basis. The Minnesota Department of Education (MDE) encourages charter schools to apply as soon as possible to ensure that timing of cash flow to the school is optimized.
The best scenario for charter schools is to have the application submitted to MDE by June 1 in order to get the lease aid paid on July 15. This means school administrators should be working on the application now in order for it to be placed in the MDE’s application queue as quickly as possible.
The MDE published the Fiscal Year 2020 Charter School Lease Aid Requirements memorandum on April 2. In order for the application process to go smoothly, there are some tips for charter school administrators to consider:
- Review the checklist found on page 14 of the memorandum before starting the process. Since this is an annual application, you may have forgotten about some of the things you will need to provide. Reviewing the checklist first will refresh your memory!
- New charter schools or charter schools with new or expanded facilities need to submit a copy of the lease agreement, a description of construction type, photos of the leased space and a schematic or blueprint of the space being considered. These schools must also provide a certificate of occupancy that is coded “E” for education, have an emergency plan and must pass a fire inspection by the State Fire Marshal. These extra steps will take additional time, so plan accordingly!
- Board members must fill out a conflict of interest form. There are two different forms: one for non-profit landlords and a for-profit landlord form. Also, make sure the board members understand which box to check when they are completing this form.
- Make sure the board member roster submitted with the application matches the signed conflict of interest forms. This is the time of year that board seats typically change, so you may want to wait until your new board is seated to complete this paperwork.
- Remember that a fire inspection report is required every three years. The State Fire Marshal needs to do a new review of the facility. Any issues found in the report must be addressed before funding is issued, so allow for time for the inspection and subsequent corrections to be made.
- Don’t overestimate enrollment for purposes of developing base rent. MDE reviews current enrollment as well as projections so if something looks out of order, your application will likely be delayed.
- Consider having your lease payment due date on the 5th or 20th of the month, as this will help with cash flow since your payments from the state will be made on the 15th and 30th day of the month.
- Find an affordable and flexible space with a landlord who understands the cash flow dynamics of charter schools.
- Think about proper space for school buses to load and unload students in a safe manner if you are looking at a facility that isn’t a traditional school building.
- Don’t lease from a related party or organization. This is a recipe for complications to getting the application approved as there are many stipulations in the statute that have to be met if you choose to lease from a related party.
Not sure where to start? In addition, BerganKDV has a team of charter school experts who can help you and your administrative team navigate the ins and outs of the lease aid application to help get your application approved the first time with minimal back and forth. Want to learn more about what we can do for you? Start here.
Watch our webinar covering the dos and don’ts of filling out the lease aid application to ensure it is approved the first time. WATCH NOW.