Overview
As of Feb. 3, 2025, S&P Global Ratings maintains 26 public ratings on Colorado charter schools. Colorado has S&P Global Ratings' third-highest number of rated charter schools, after California and Texas. It was the third state in the U.S. to enact a charter school law, and the state's first two charter schools opened their doors in 1993. As of the 2024-2025 school year, Colorado is home to more than 262 charter schools, serving approximately 136,000 students, and representing about 15% of all public school students in the state.
Chart 1
The credit profiles for our rated charter schools in Colorado are generally superior to those of the rest of the sector. About 81% of our ratings on Colorado charter schools are investment-grade, compared with approximately 44% for all other states. (For more information, see our "U.S. Charter Schools 2025 Outlook: Stability For Now, With Pockets Of Pressure," published Jan. 22, 2025, on RatingsDirect.) We believe the stronger ratings distribution is due to positive per-pupil funding trends, and relatively stable-to-growing enrollment, which have supported healthy operations and improving financial resources.
We also attribute our ratings distribution to more supportive and transparent state laws for Colorado charter schools, compared with those of the rest of the country. These include: the lack of a state charter cap; requirements for school districts to share equal funding received from local property taxes generated by mill levy overrides; as well as acceptance of qualifying charter schools into the state's Moral Obligation Program, which can significantly lower a school's capital costs.
Authorizer Framework
- Colorado charter schools are primarily authorized by the local school district for a maximum term of five years, although some authorizers offer longer contracts. The Colorado Department of Education provides clear guidance to district authorizers on the accreditation and appeals process, which we view positively.
- Although competition for students can create an inherent conflict of interest for these entities, we have generally found good working relationships between most of our rated Colorado charter schools and the local district.
- The Colorado Charter School Institute (CCSI) is the state's only non-district authorizer. CCSI can accept applications from schools in districts that do not have exclusive chartering authority or from schools in districts that have exclusive authority but give permission to CCSI to act as authorizer. The institute has a clear application, renewal, and revocation process with well-defined benchmarks and milestones, which we also view positively. CCSI is the authorizer for approximately 8% of our rated charter schools. With the passages of House Bill (HB) 1375 and HB 1394, CCSI-authorized schools now received an equalized level of tax mil levy funding, which has provided increases in CCSI schools in recent years. In addition, recently passed HB 1154 allows charter schools authorized by CCSI to participate in voter-approved bond measures within their district for construction or building-renovation projects.
Credit Fundamentals
Many Colorado charter schools are single-site operators, which constrain median enrollment levels and limit operating budgets compared with medians for the entire sector, which includes many large networks. However, we note Colorado charter schools, in general, continue to have financial flexibility, relative to that of similarly sized peers, supported by healthy per-pupil funding and mill-levy revenue from their local district.
Table 1
| Fiscal 2024 Colorado charter school medians | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BBB+/BBB | BBB- | BB+ | BB | Colorado medians | ||||||||
| Number of ratings | 4 | 17 | 2 | 3 | 26 | |||||||
| Fall 2024 enrollment | 2,033 | 779 | 605 | 1,109 | 902 | |||||||
| Waitlist as % of enrollment | 67.1 | 37.8 | 3.9 | 51.4 | 37.8 | |||||||
| Student retention rate (%) | 93.0 | 91.0 | 93.0 | 90.0 | 90.5 | |||||||
| Lease-adjusted MADS coverage (x) | 2.0 | 2.1 | 1.9 | 0.7 | 1.9 | |||||||
| Lease-adjusted MADS burden (% total revenues) | 8.3 | 7.0 | 13.8 | 15.5 | 7.9 | |||||||
| Days' unrestricted cash on hand | 213 | 184 | 229 | 109 | 184 | |||||||
| Unrestricted cash and investments to debt (%) | 59.2 | 47.8 | 35.9 | 11.4 | 47.8 | |||||||
| Total revenue ($000s) | 29,727 | 11,811 | 9,205 | 17,802 | 12,466 | |||||||
| Total debt per student | 10,769 | 14,192 | 25,802 | 35,106 | 14,528 | |||||||
| Total revenue per student | 14,622 | 14,345 | 15,158 | 14,142 | 14,345 | |||||||
| MADS--Maximum annual debt service. | ||||||||||||
Chart 2
Despite broader demographic pressures, median enrollment at Colorado charter schools within our rated universe held relatively steady in fall 2024 from the previous year. Overall, other demand and financial metrics remained steady, reflecting stability in the state. The total revenue per student increased from the previous year, reflecting a positive funding environment, which is expected to continue, but then moderate in fiscal 2026.
What We're Watching
Funding increases
Colorado's per-pupil funding levels were positive in recent years, which strengthened financial performance for schools. While per-pupil funding differs from school to school, it increased around 10% in fiscal 2024, with a more than 5% increase projected for fiscal 2025. For fiscal 2026, while there is budgetary pressure at the state level, we anticipate that funding for kindergarten-through-12th-grade (K-12) schools will remain a priority as the governor has proposed funding increases for a variety of educational initiatives, although we expect overall funding will rise at a more modest rate than in previous years.
Formula changes
With the 2024 Colorado legislative session, state lawmakers enacted a new school funding formula, effective fiscal 2026. HB24-1448 will add $500 million in education funding to be phased in over a six-year period. Furthermore, the governor has proposed funding for schools based on their current enrollment rather than using a multiyear average, which, if adopted, could result in revenue loss for the schools that are experiencing enrollment declines. The Colorado legislative session is currently in progress and is expected to conclude in May 2025.
Demographic trends
Overall, Colorado's school-age population has remained stagnant, with some counties experiencing declines, while others increase; we expect this trend will continue in the near term. Although total K-12 enrollment declines on a percentage basis remain relatively minimal, they have been concentrated in certain areas, prompting closure of 23 district schools and three unrated charter schools in 2024, predominantly in Denver, Jefferson, and Larimer counties. Should the declining demographics become more widespread across the state, we believe that this trend could pose a challenge to the school's per-pupil-funding revenues and hinder its financial performance, if not addressed appropriately.
Immigration policy changes
Colorado's demographic shifts have somewhat been buoyed by the influx of migrant students in recent years, particularly in the Denver area. We will continue to watch changes to immigration policy with the new administration and how this affects changes in migrant populations and enrollment levels, which might have temporarily cushioned enrollment at certain schools in recent years. We believe schools with healthy market positions, as demonstrated by solid academic performance, and waitlists, will have more flexibility navigating shifting population trends.
Teacher shortage
Colorado is no exception to the national teacher shortage Colorado lawmakers passed HB 1044, which allows retired teachers to work without negatively affecting their retirement benefits. According to the Colorado Department of Education data, the teacher vacancy did improve for the 2023-2024 school year, with 635 vacant positions for teachers, a material 15% decrease from the previous year's vacant teaching position of 748. Not all schools were affected by the teacher shortage equally, and we believe a charter school's ability to attract and retain talented faculty is key to the organization achieving its mission.
Table 2
| Colorado charter schools ratings list | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Charter school | Rating | Outlook | Charter authorizer | Charter contract expiration | ||||||
| Peak to Peak Charter School | BBB+ | Stable | Boulder Valley School District No. RE-2 | June 30, 2025* | ||||||
| Academy Charter Sch (Castle Rock Lifelong Learning Ctr) | BBB | Stable | Douglas County School District | June 30, 2028 | ||||||
| Classical Academy, The | BBB | Stable | Academy School District 20 | Dec. 31, 2038 | ||||||
| James Irwin Charter School | BBB | Stable | Harrison Sch District | June 29, 2034 | ||||||
| Ben Franklin Academy | BBB- | Stable | Douglas County School District | June 30, 2029 | ||||||
| Cheyenne Mtn Charter Academy (includes Vanguard School) | BBB- | Stable | Harrison District 2 | June 30, 2026 | ||||||
| DCS Montessori Charter School | BBB- | Stable | Douglas County School District | June 30, 2025* | ||||||
| Eagle Ridge Academy | BBB- | Stable | Brighton School District No. 27J | June 30, 2028 | ||||||
| Excel Academy Corporation | BBB- | Negative | Jefferson County Public Schools | June 30, 2028 | ||||||
| Flagstaff Academy | BBB- | Stable | St. Vrain Valley School District RE-1J | June 30, 2029 | ||||||
| Frontier Academy High School | BBB- | Stable | Weld County School District 6 | June 30, 2031 | ||||||
| Independence Academy | BBB- | Stable | Mesa School District 51 | June 30, 2028 | ||||||
| Liberty Common School | BBB- | Stable | Poudre School District | June 30, 2029 | ||||||
| Lincoln Academy | BBB- | Stable | Jefferson County Public Schools | June 30, 2025* | ||||||
| Littleton Preparatory Charter School | BBB- | Stable | Littleton Public Schools | June 30, 2028 | ||||||
| Loveland Classical Schools | BBB- | Stable | Thompson Valley School District | June 30, 2029 | ||||||
| New Vision Charter School | BBB- | Stable | Thompson Valley School District | June 30, 2025* | ||||||
| North Star Academy | BBB- | Stable | Douglas County School District | June 30, 2029 | ||||||
| Pinnacle Charter School | BBB- | Stable | Colorado Charter School Institute | June 30, 2027 | ||||||
| Platte River Academy | BBB- | Stable | Douglas County School District RE-1 | June 30, 2025* | ||||||
| University Laboratory Sch | BBB- | Stable | Weld County School District 6 | June 30, 2031 | ||||||
| Aspen Ridge Preparatory School | BB+ | Positive | St. Vrain Valley School District | June 30, 2029 | ||||||
| Community Leadership Academy | BB+ | Negative | Colorado Charter School Institute | June 30, 2028 | ||||||
| Ascent Classical Academy Charter Schools, Inc | BB | Stable | Colorado Charter School Institute | June 30, 2025* | ||||||
| Monument Academy Charter School (Elem) | BB | Negative | Lewis-Palmer D38 | June 30, 2028 | ||||||
| Twin Peaks Charter Academy | BB | Stable | St. Vrain Valley School District RE-1J | June 30, 2025* | ||||||
| *According to management, these renewal processes are underway with no reported issues from the authorizer. | ||||||||||
Related Research:
- Colorado Credit Enhancement Programs, July 10, 2024
- U.S. State Enhancement Programs And Their Impact On Charter Schools, May 7, 2024
This report does not constitute a rating action.
| Primary Credit Analysts: | Joyce Jung, Englewood + 1 (212) 4380629; joyce.jung@spglobal.com |
| Amber L Schafer, Englewood + 1 (303) 721 4238; amber.schafer@spglobal.com | |
| Secondary Contacts: | Jessica L Wood, Chicago + 1 (312) 233 7004; jessica.wood@spglobal.com |
| Luke J Gildner, Columbia + 1 (303) 721 4124; luke.gildner@spglobal.com | |
| Research Contributor: | Nikita Salunkhe, CRISIL Global Analytical Center, an S&P affiliate, Mumbai |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.