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Colorado Charter School Market Analysis

Since the September 2023 Charter School Market Report, 5 charter schools have opened in Colorado, while 6 have closed. As of September 2024, 261 charter schools remain operational across the state. For the second consecutive year there has been a net loss in the number of charter schools in Colorado. The market is showing signals of a plateau and beginning to decline, indicated by the negative rate of change in schools opening and closing. As reported in August 2023, financial market pressures, competition from larger schools, and the cost of real estate continues to suppress new school growth and force school closures.

Schools in continuous operation:

- Diversify revenue streams

- Increase market share

- Enlist the services of Financial Planners or Analysts

KEY FINDINGS

Although charter schools face limitations in diversifying their revenue streams, one of the most straightforward avenues is fundraising. Many schools charge families for extracurricular activities like field trips, clubs, and after-school programs. However, many fail to fully engage with their communities to encourage donations. Schools often miss opportunities to host events where patrons can contribute or to seek donations and grants from larger charter networks, affluent community members, or organizations that support charter schools.

Schools that have remained in continuous operation have successfully increased their market share and scaled enrollment to outpace rising costs from inflation, wage growth, and operational expenses. They have expanded by growing in place, relocating to larger facilities, or acquiring additional locations. Of these strategies, expanding in place carries the least risk, while procuring a new facility poses the greatest risk.

Unfortunately, many charter school boards overlook the importance of enlisting financial expertise to guide decision-making and planning. Typically composed of educators and parents, these boards often lack the financial acumen and time necessary to thoroughly assess and manage budgets and forecasts.

Recommendations

Many charter schools face closure due to insufficient enrollment and poor financial planning. Unless charter schools are can overcome policy, financial, and demographic obstacles, the number of authorized schools will continue to decline. Existing Charter schools will continue to decline in the near term, allowing larger established charter schools to consolidate enrollment. New charter schools face significant barriers to profitable, sustained operations and are at high risk for premature closure.

Existing charter schools should:

- Consider approaching smaller schools and negotiate mergers and acquisitions

- Rigorously study their market to understand trends in enrollment and modify grades, courses, and activity offerings

- Thoroughly analyze their internal processes to identify opportunities to increase efficiency

Pre-Market charter schools should:

- Consider the impact of student education and stability on premature closure in their market analysis

- Identify and secure diverse sources of revenue to ensure profitable, sustainable operation

- Build a support network that can be leveraged to aid establishing and growing their school

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Outlook

September 12, 2024

Fort Collins, CO

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