During the first quarter of 2025 (January 1 to March 31), S&P Global Ratings changed its rating or revised the outlook on 20 U.S. charter schools while assigning two new ratings and maintaining 47 ratings across the sector. The rating actions are broken out as follows:
In January, we published "U.S. Charter Schools 2025 Outlook: Stability For Now, With Pockets Of Pressure" (Jan. 22, 2025, on RatingsDirect), which highlighted factors likely to influence the charter school sector in 2025, such as how demographic trends, increased competition for students, and the expansion of voucher programs across the country could affect charter school enrollment, as well as how changes in education policy at the federal level could affect charter schools. On the financial front, state per-pupil funding has generally remained stable or grown modestly. We also published "U.S. Charter Schools Rating Actions, 2024" (Jan. 29, 2025), which outlined all rating actions in the charter school sector for 2024, wherein S&P Global downgraded twice the number of ratings (14) that it upgraded (seven) over the course of the year.
S&P Global Ratings took five positive rating actions during the quarter, raising three ratings and revising two outlooks to positive from stable. These actions mostly reflected our view of improved financial performance, including healthier excess margins and growing liquidity amid maintenance of solid enrollment and sound demand profiles.
We took 15 negative rating actions during the quarter, downgrading nine ratings, revising five outlooks to negative from stable, and revising one outlook to stable and removing it from CreditWatch with positive implications. These actions were primarily a result of persistent enrollment declines that led to full-accrual operating deficits in fiscal 2024; deteriorating maximum annual debt service coverage; lower liquidity; and, in some instances, technical covenant violations that triggered heighted uncertainty regarding potential bondholder actions.
In addition to the actions described above, S&P Global Ratings assigned two new charter school ratings, one in Illinois and the other in Utah.
The following tables summarize S&P Global Ratings' first-quarter 2025 rating actions, outlook revisions, and unchanged ratings for U.S. charter schools, based on our "U.S. Public Finance Charter Schools: Methodology And Assumptions" criteria, published Jan. 3, 2017.
Table 1
First-Quarter 2025: U.S. charter schools rating actions | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Institution | State | Rating to | Rating from | Outlook to | Outlook from | Rating action | Description | |||||||||
Aspen Ridge Preparatory School | CO | BB+ | BB | Positive | Positive | Rating raised | Improved operating performance resulting in a sustained trend of stronger MADS coverage and healthier liquidity. | |||||||||
Aspire Public School | CA | BBB- | BBB | Stable | Stable | Rating lowered | Weak lease-adjusted MADS coverage and softening liquidity from already-modest levels. | |||||||||
Candeo Schools Inc. | AZ | BB+ | BBB- | Stable | Stable | Rating lowered | Declining enrollment that negatively affected margins in fiscal 2024, resulting in significant budget cuts for fiscal 2025. | |||||||||
Crossroads Charter Academy | MI | B- | B | Negative | Negative | Rating lowered | Persisting enrollment declines leading to two consecutive fiscal years of operating deficits, and pressured financial metrics. | |||||||||
Eagle Advantage Academy | TX | BB | BB+ | Stable | Stable | Rating lowered | Continued enrollment declines and weak operating performance leading to a strategic partnetship being formalized with Village Technical Schools. | |||||||||
Esperanza Elementary School | UT | BB | - | Stable | - | Rating assigned | New rating | |||||||||
Explore Knowledge Foundation | NV | BB | BB+ | Stable | Stable | Rating lowered | Enrollment decreases that led to weak financial performance and declining liquidity in fiscal 2024. | |||||||||
Global Community Charter School | NY | B+ | BB+ | Negative | Stable | Rating lowered | Rapid weakening of financial profile, with full-accrual operating deficits resulting in violations of DSC and DCOH covenants in fiscal 2024. | |||||||||
KIPP Jacksonville | FL | BB+ | BBB- | Negative | Negative | Rating lowered | Weak operating results in fiscal 2024 and deteoriating liquidity that are expected to persist through fiscal 2025. | |||||||||
LEAP Academy University Charter School | NJ | BB | BB- | Stable | Stable | Rating raised | Sustained trend of solid operating surpluses, improving MADS coverage, and consistent growth of unrestricted reserves. | |||||||||
MaST Community Charter School | PA | BBB | BBB- | Stable | Stable | Rating raised | Succesfully execution of a five-year charter renewal with its authorizer, along with consistently healthy operating margins that have improved key financial metrics. | |||||||||
Math and Science Academy | MN | BB | BB+ | Negative | Stable | Rating lowered | Increased leverage following new debt issuance, which negatively affected liquidity and pro forma lease-adjusted MADS coverage metics. | |||||||||
Northern Kane Educational Corp. | IL | BB+ | - | Stable | - | Rating assigned | New rating | |||||||||
Tacony Academy Charter School | PA | BB | BB+ | Stable | Stable | Rating lowered | Material deterioration in the school's liquidity position, and continued operation under an unexecuted charter agreement. | |||||||||
MADS: Maximum annual debt service. DSC: Debt service coverage. DCOH: Days' cash on hand |
Table 2
First-Quarter 2025: U.S. charter schools outlook revisions | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Institution | State | Rating | Outlook to | Outlook from | Description | |||||||
21st Century Charter School Of Gary | IN | B+ | Stable | CW Positive | Finalization of series 2013 bond amendment, which includes an added payment to support debt serevice with GEO Foundation, the schools CMO. | |||||||
Carolina International School | NC | BB+ | Negative | Stable | Weak operating performance during fiscal 2024 that pressured key financial metrics and is expected to continue in fiscal 2025. | |||||||
Freedom Preparatory Academy | TN | BBB- | Negative | Stable | Shrinking enrollment that adversely affected financial performance in fiscal 2024 and could continue in fiscal 2025. | |||||||
New Millennium Academy | MN | B | Positive | Stable | Improved operating performance and financial metrics, including fiscal 2024 lease-adjusted MADS coverage above 1x that is expected to continue in fiscal 2025. | |||||||
Odyssey Preparatory School | AZ | BB- | Negative | Stable | Enrollment decreases that led to weaker financial results in fiscal 2024 and will likely cause a fiscal 2025 operating deficit. | |||||||
River Springs Charter School | CA | BB+ | CW Negative | Stable | Lack of timely and sufficient information to review the current rating. | |||||||
The Classical Academy, Inc. | CA | BBB- | Positive | Stable | Growing demand that has led to a trend of healthier MADS coverage and cash levels that are expected to be sustained. | |||||||
Triad Educational Services Inc. | NC | BBB- | Negative | Stable | Increased leverage and limited financial flexibilty following the issuance of new debt. | |||||||
MADS: Maximum annual debt service |
Table 3
First-Quarter 2025: U.S. charter schools maintained ratings | |||
---|---|---|---|
Institution | State | Rating | Outlook |
Albuquerque School of Excellence | NM | BB | Stable |
Amplus Academy | NV | BB+ | Stable |
Arizona Agribusiness | AZ | BB+ | Stable |
Arizona School for the Arts | AZ | BB+ | Stable |
Arlington Classics Academy | TX | BBB- | Stable |
Bright Star Schools | CA | BB+ | Stable |
Brighter Choice Charter Schools | NY | BB+ | Stable |
Brookside Charter School | MO | BB | Stable |
Camden Prep Foundation, Inc. | NJ | BBB- | Stable |
Center for Academic Success | AZ | BBB | Stable |
Cesar Chavez Academy | MI | BBB | Stable |
Charter School for Applied Technology | NY | BBB | Stable |
Choice Academies, Inc. | AZ | BB | Stable |
Compass Academy Charter School | TX | BBB- | Stable |
Compass Public Charter School | ID | BB | Stable |
Conner Creek Academy | MI | B | Stable |
DCS Montessori Charter School | CO | BBB- | Stable |
Detroit Service Learning Academy | MI | BB | Positive |
Doral Academy Of Nevada | NV | BBB- | Stable |
Eagle Ridge Academy | MN | BB+ | Stable |
Early Light Academy | UT | BB | Stable |
Fenton Charter Public Schools | CA | BB+ | Stable |
Fit Kids Inc. d/b/a Champion Schools | AZ | BB | Stable |
Friendship Aspire Arkansas | AR | BB | Stable |
Frontier Academy | CO | BBB- | Stable |
Heritage Community Charter School | ID | BB+ | Stable |
Hughen Center Inc. d/b/a Bob Hope School | TX | BBB- | Stable |
Karl G. Maeser Preparatory Academy | UT | BBB- | Stable |
King-Chavez Academy of Excellence | CA | BB+ | Stable |
Lakeview Academy | UT | BBB- | Stable |
Literacy First Charter Schools | CA | BBB- | Stable |
Loveland Classical Schools | CO | BBB- | Stable |
Nova Classical Academy | MN | BB+ | Stable |
Parnassus Preparatory School | MN | BB+ | Stable |
Richfield Public School Academy | MI | BBB- | Stable |
Riverwalk Education Foundation | TX | BBB- | Stable |
Santa Rosa Academy | CA | BB+ | Stable |
Southwest Preparatory School | TX | BB+ | Stable |
Summit Academy | UT | BBB- | Stable |
TEAM Academy Ashland School | NJ | BBB | Stable |
Trinity Basin Preparatory | TX | BBB | Stable |
Tulsa Honor Academy | OK | BB | Stable |
Twin Cities Academy | MN | BB | Stable |
Unity Preparatory Charter School of Brooklyn | NY | BB | Stable |
Utah Charter Academies | UT | BBB- | Stable |
Village Technical Schools | TX | BB | Stable |
Yinghua Academy | MN | BB+ | Stable |
Related Research
Economic Outlook U.S. Q2 2025: Losing Steam Amid Shifting Policies, March 25, 2025
Charter School Brief: California, March 6, 2025
Charter School Brief: Colorado, Feb. 19, 2025
U.S. Local Governments 2025 Outlook: A Stable Start To The Year While Prospects Look Precarious, Jan. 8, 2025
U.S. States 2025 Outlook: Eyes On Washington, Focus On Budgets, Jan. 7, 2025
U.S. Charter Schools Sector Fiscal 2023 Medians: Healthy Financial Metrics Amid Looming Fiscal Cliff, June 25, 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 Analyst: | Ryan Miller, Dallas +1 2148711408; ryan.miller@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 |
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