CharterFolk Contributor Mike McGregor – NVFF and the Spirit of Partnership: A Charter School Facilities Solution

Good day, CharterFolk.

Today we are pleased to present a Contributor Column from Mike McGregor, Chief Operating Officer at the Equitable Facilities Fund.

We provide a bio for Mike below.

Mike is a high school educator who caught the charter facilities bug somewhere along the way. He is the chief operating officer and a founding team member with the Equitable Facilities Fund (EFF), a national nonprofit with a mission to help high-performing public charter schools spend more on their students and less on their buildings. Since 2018, EFF has committed over $1.2 billion of affordable facility financing to schools serving 80,000 students across 21 states.

Mike previously served as the chief operating officer with the Great Oaks Foundation, where he led the CMO’s business operations as well as facilities procurement and fundraising efforts to support the Great Oaks network’s expansion in Connecticut, Delaware, Newark, and New York City. Earlier in his career, he served as a humanities teacher and leadership team member at Match High School in Boston.

Mike earned a BA in American History from the University of Pennsylvania and an MBA with a concentration in finance and real estate from Columbia University. He serves as board treasurer with Kindle Education Public Charter School in Jersey City, and he co-founded the Education Finance Analyst Program, a collaborative effort between charter school support organizations to recruit and train early-career professionals to succeed in mission-driven finance roles.

NVFF and the Spirit of Partnership: A Charter School Facilities Solution

Anyone who has spent enough time in the sector has at least one facility story. From teachers making creative use of substandard space, to funders seeing grants made to support programming instead get consumed by building expenses, to the leader who pledged his own home as collateral to secure a home for his school, the “facilities problem” drains precious resources from public charter schools. It is a perpetual thorn in the side of operators, advocates, and families seeking access to better public education options.

One of my favorite things about the charter school movement is its belief that problems are meant to be solved – and we owe it to children to identify solutions. Last week, Alan Washington from CSDC gave CharterFolk readers an excellent primer on policy levers that support affordable facilities access. Today, I’m grateful to be able to share thoughts on potential solutions found in the spirit of partnership, something high on my mind after celebrating the launch of the Nevada Facilities Fund earlier this week.

First, some quick personal context. I started grappling with the facilities problem about a decade ago as an erstwhile history teacher charged with patching together financing to convert an abandoned warehouse to a 6-12 school, negotiating leases for hundreds of AmeriCorps members, and going on a years-long wild goose chase to find affordable space for a high school in Manhattan. These and other experiences motivated me to start baking ideas for systemic solutions. Before spending much time in the kitchen, in 2018 I had the good fortune of connecting with my now-boss Anand Kesavan, who was working on his own transformative idea with the nonprofit Equitable Facilities Fund (EFF).

EFF’s solution is not a novel one. Our model is inspired by the EPA’s Clean Water State Revolving Fund Program, an initiative that has deployed federal grants to catalyze over $150 billion of low-cost investments in clean water projects. State Revolving Funds provide financing to organizations and communities that typically borrow at higher interest rates due to perceived credit risk (sound familiar?). By pooling individual loans and grant proceeds, SRFs can provide municipal bond investors with low-risk investment opportunities and thus facilitate access to affordable capital for the aforementioned communities. Thanks to the generosity of funders such as the Walton family, EFF uses philanthropic grants to fuel a similar model for charter school facilities.

Since launching in 2018, EFF has invested $1.2 billion to scale educational excellence across 21 states. These loans will generate $275 million in savings — funds our school partners can re-purpose to better serve more than 80,000 students, over 70% of whom qualify as economically disadvantaged. We are especially committed to investing in schools led by leaders of color who, despite their critical importance to the students they serve and the education ecosystem writ large, continue to endure biases both within our sector and on the capital markets. By the end of the decade, EFF aims to lend a total of $3 billion and work alongside mission-oriented partners to exert market and policy influence so that facilities will no longer be a barrier to quality charter school growth.

EFF’s “regional facilities fund” model drives this vision forward by pairing the strength of our national lending platform with the dedication and expertise of local funders, advocates, and policymakers. We launched our first regional fund in late 2022 with nearly $25 million philanthropy pledged by seven Texas-based foundations. Over time, EFF will leverage this seed philanthropy ten times to administer the Texas Facilities Fund (TFF), a $250 million revolving loan fund for early-phase charters seeking to grow. TFF has already closed six loans for over $100 million, all with interest rates in the 4% range – compared to 7 to 8% or higher offered by other lenders. The fund’s initial round of lending will generate $50 million in facilities savings and support the creation of 10,000 high-quality charter seats.

Since its successful implementation in Texas, this model has caught the interest of stakeholders across the country who are searching for facilities solutions. In its early days, it was met with skepticism from sector partners who were justifiably wary of financial “innovations.” This was not the case with the indomitable Jana Wilcox Lavin of Opportunity 180 and her then-board chair Miles Dickson. Before the end of our first 30-minute conversation mid-2021, Jana and I agreed we needed to bring the model to Nevada. Our early exploration of the idea coincided with the auspicious announcement that the newly-formed State Infrastructure Bank would allocate $15 million for charter school capital projects. Over the next couple years, we worked with Treasurer Zach Conine and his team to structure a partnership that would serve as the basis for the Nevada Facilities Fund (NVFF), and in October, Governor Joe Lombardo approved a first-of-its-kind investment from the Infrastructure Bank.

On Wednesday evening, O180 and EFF hosted a convening in Las Vegas to celebrate NVFF’s launch. We were joined by over 100 school leaders, funders, policymakers, advocates, and supporters.  The program included powerful remarks from the Governor, Treasurer, Jana, and Anand, as well as a panel that EFF’s Shawn McCormack facilitated with the exceptional leaders of Beacon Prep, Futuro Academy, and Mariposa Academy. Speakers highlighted the unique blend of state funding, local and national philanthropy, and bond investments that will support over $100 million of charter school loans. These loans will generate millions in savings — dollars that will be re-invested to support programming and 7,500 seats. This staggering return on investment is attractive to our partners in Arkansas, Tennessee, DC, and New York, where we are raising funds to replicate the regional model.

Reflecting on Wednesday night, I was struck by the feeling of partnership in the room and inherent in the individuals, organizations, and relationships that have made NVFF possible. A Republican Governor and Democratic Treasurer not afraid to transcend party lines to do the right thing for children. The philanthropist with a steely determination to support better public education options. Jana, Miles, and an O180 team that will never stop working on behalf of Clark County’s families. Leaders of organizations such as BLACC, the Diverse Charter Schools Coalition, Freedom Coalition for Charter Schools, and the National Charter Collaborative that move the needle every day in the fight for more equitable representation in school leadership. Representatives from the Walton Family Foundation and the City Fund, forward-thinking organizations willing to invest in bold ideas. My teammates at EFF who relentlessly pursue our North Star – a pathway to affordable facilities for all high-impact public charter schools. The true stars of the show: a dozen or so school leaders who have made it their lives’ work to give Nevada’s children the opportunities they deserve.

NVFF has harnessed the spirit of partnership to do greater things for students and schools. A similar spirit will fuel the launch of new regional funds in 2024 and 2025 thanks to an ever-growing network of partners, including the Stephens and Dillard families in Arkansas, City Bridge and Education Forward in DC, SCORE and the Joe C. Davis Foundation in Tennessee, Education Reform Now and the New York Charter Schools Association in NY, our national partners at the City Fund and the Walton Family Foundation, and numerous others who have committed time, financial resources, and expertise to bring facilities solutions to the aforementioned geographies. They do so knowing that we are strongest when we work together with an unrelenting focus on children’s futures – an understanding that I hope will serve as an anchor for our sector in the months and years to come.