Florida charter schools reflect the sector’s problems
Cumberland Advisors
Florida charter schools haven’t escaped the growing trend of charter schools nationally entering default and impairment, data and analysts indicate.
Processing Content
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.
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.
Charter school bonds’ impairment rate showed the most growth of any sector since mid-2022, according to Default Trends.
“U.S. charter schools’ median financial performance metrics weakened in fiscal 2025, with margins declining and lease-adjusted maximum annual debt service coverage falling back to pre-pandemic levels, due to the rolloff of [federal] Elementary and Secondary School Emergency Relief funding,” S&P said in a June report.
MMA has a negative outlook on the sector.
Florida charters have not been immune.
Tallahassee Classical School became Florida’s latest defaulting charter school early this month when it made a partial payment on its Series 2021B bonds. The bonds were issued in two series totaling $14.1 million. The school administration didn’t immediately respond to an inquiry.
“
“A trend to watch is how state budgets and competing funding priorities will affect budgeting for charter schools in the medium term,” Rattner said. “States with a growing K-12 population — including Florida, Idaho, Utah and Texas — will likely fare better.”
But, the situation may not be as dire in Florida as it appears, some say.
“I think a lot of [Florida charter school] impairments fall into the more technical areas of late filings or sometimes late payments,” said John Mousseau, executive vice president and chief investment officer of Cumberland Advisors. “The problem is the market sometimes treats this as ‘where there’s smoke, there’s fire.'”
Charter schools face other disadvantages, he said, including internal controls that are inferior to public schools and more well-funded private schools. “Also, enrollment targets, when not met, can also trigger debt service coverage ratio [issues].”
Attendance at Florida charter schools increased substantially during and right after the COVID-19 pandemic, Mousseau said.
Since 1996, when the first one opened, the number of charter schools in the state grew to 739 in school year 2025-2026, according to the Florida Consortium of Public Charter Schools.
The state’s Republican party has promoted student access to charter schools while the Democrats have generally been skeptical.
The increased number of schools “has probably contributed to the financial issues,” Mousseau said.
Muni Credit News Publisher Joseph Krist attributed the state’s charter school problems to several factors. “Expansion of the state voucher program [in school year 2023-2024] made traditional private and religious schools more affordable. That hurt demand, along with homeschooling.”
Additionally, he said, “State aid has not kept up with inflation.”
“There are some 40 [Florida charter] schools in negative financial positions,” Krist said. “More defaults would not surprise.”
Fitch Ratings Senior Director Emily Wadhwani said, “Florida’s charter schools have benefited from a favorable policy environment and demographics.” Some district school closures are equalizing supply with demand, she said.
However, “school choice options are intensifying,” Wadhwani said.
“Charter school defaults appear to be driven more by school-specific factors — local demographics, competition, enrollment trends, academic performance — than by statewide sector weakness,” Wadhwani said. “With many issuers dependent on growth expectations to meet relatively high debt service loads, there leaves little room for error, making management execution and foresight, sometimes in the form of early covenant breaches, key differentiators.”
Overall, charter schools United States continue to face pressure.
“U.S. charter schools generally face credit risks that traditional U.S. K-12 public schools do not,” said Moody’s Ratings Executive Director Geordie Thompson. “These include typically small scales, a lack of taxing authority, the requirement to renew their charters every few years, highly competitive markets and dependence on enrollment growth to increase revenues.”
“We’ve seen increased pressure for charters in states [like Florida] with robust school choice programs,” said Dora Lee, partner and director of research at Belle Haven Investments. “The expansion of school vouchers and charters have really increased competition for charter school enrollment. As a result, many charters have not been able to meet their enrollment targets, which has resulted in large funding gaps with no real alternative funding sources. Charters who are particularly vulnerable have been start-up charters and those with middling academic track records.”
The Florida charter schools Moody’s has a speculative rating on are: BridgePrep Academy Inc. Obligated Group (Ba1 stable), Cornerstone Classical Academy (Ba3 positive),
Only two states — California and Texas — boast more charter schools than Florida.
Florida was second in overall defaults in 2025 and was tied for third in 2026 through July 7, according to Default Trends.
In the 12 states in which S&P has the most rated charter schools, Florida’s median charter school rating of BB-plus is in the middle, with five other states, below three and above three, according to a June report.
In the report, S&P said negative rating actions on charters were more common than positive ones between 2025 and the first quarter of 2026. “Enrollment softness in certain markets, rising personnel and operating costs, and increased debt burdens contributed to weaker financial performance for several issuers. … Struggles have been most evident among schools with smaller enrollment bases or limited ability to absorb unexpected financial stress.”
As of May 15, S&P had negative outlooks on 13% of rated charter school issuers and positive ones on 5%.
On a positive note, medians for liquidity have increased substantially, “with median days’ cash on hand in fiscal 2020 near 126 compared with 149 reported in fiscal 2025,” S&P said.
“We view intensifying competition including homeschooling, online programs, private schools, and expanding voucher-driven school choice, as rising risks especially in areas with shrinking school-age populations,” S&P said. “Furthermore, attendance downturns since the pandemic are also a concern, particularly in states where funding is tied to daily attendance.”
“Management quality is increasingly critical as charter schools are facing more frequent event risks, including operational threats, such as cyberattacks, leadership turnover, governance scandals and severe weather,” S&P said.
