Even though they siphon billions of dollars a year from public schools, receive millions more in venture philanthropy, embrace profiteering, and are allowed to float bonds, many charter schools, according to The Bond Buyer, have been in deep financial trouble for some time.
According to the Local Initiatives Support Corporation (LISC), over the years charter schools in most states “have issued more than $40 billion in tax-exempt bonds to finance their facilities.” This helps explain why charter school owners never stop trying to restructure the state in a way that funnels public funds to them for facilities and buildings. In this connection, it is important to note that shady real estate deals are one of the main ways charter schools function as pay-the-rich schemes (see here and here).
Before proceeding any further, let us look at the abbreviated definition of two inter-related financial terms used by the bond market to assess financial viability and credit risk: impairment and default. Impairment is an accounting recognition of potential loss, while default is the actual failure to meet financial obligations.
Both impairment and default refer to a financially distressed state of affairs.
The Bond Buyer reports that, “Nationally, charter school bonds posted the most defaults, six, in the first half of the year, and the greatest number of defaults, 14, in 2025, across Default Trends’ 32 categories.”
In terms of impairments, we learn that, “Charter school bonds also suffered the most impairments, 34, in the year’s first half, easily outdistancing the 16 impairments of the second-place category, land secured bonds, according to MMA. It also had the greatest number of impairments in 2025, 21.”
In other words, during all of 2025 and the first half of 2026, 75 charter schools were officially experiencing financial distress. Not surprisingly, “MMA [Municipal Market Analytics] has a negative outlook on the sector.”
Given the high failure and closure rate of charter schools across the country, financial problems in the charter school sector, aggravated by rampant fraud and corruption, are likely to be much higher than the official data noted above.
One of many notable examples of loan defaults in the charter school sector is Destin Charter High School in Florida. While the privately-operated charter school has existed for only a few years, it “defaulted on $20.4 million of bonds in September 2025.” There are about 40 other Florida charter schools “in negative financial positions…. More defaults would not surprise.”
Financial instability in the charter school sector will likely increase for the foreseeable future. “Overall, charter schools in the United States continue to face [financial] pressure,” reports The Bond Buyer. Nationally, “As of May 15 [2026], S&P had negative outlooks on 13% of rated charter school issuers and positive ones on 5%.”
Low enrollment in many charter schools, weekly failures and closures, financial malfeasance, and increased competition among charter schools, homeschooling, and voucher schooling are some of the reasons more charter schools are experiencing impairments and defaults. Mismanagement, high employee turnover rates, and governance scandals are other reasons for financial and operational instability in the charter school sector.
Ever since they emerged 35 years ago, charter schools have wreaked more havoc on education and society than many could have imagined. Every day there is a new scandal, controversy, or crime in this crisis-ridden sector. Privatization always harms the public interest. It violates basic rights and makes things worse for the majority of people. The need is to fully fund public schools and oppose all forms of school privatization. Defunding, vilifying, and privatizing public schools using all kinds of disinformation about failure will not solve any problems in education and society.