Title: Note 4. Assistance from U.S. Department of Education
Accounting Policies: Note 1. Basis of Presentation
The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of Capital Impact Partners and Subsidiaries (the "Organization") under programs of the federal government for the year ended December 31, 2024. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ("Uniform Guidance"). Because the Schedule presents only a selected portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net assets and cash flows of the Organization.
Note 2. Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available.
De Minimis Rate Used: N
Rate Explanation: Note 3. Indirect Cost Rate
The Organization did not elect to use the 10% de minimis indirect cost rate as allowed under Uniform Guidance.
(a) During the year ended December 31, 2003, the Organization received grant funds of $6,400,000 from the United States Department of Education ("USED") under the Credit Enhancement for Charter School Facilities Program. During 2003, the Organization contributed $6,400,000 of grant funds received to Charter School Capital Access Program, LLC ("CCAP") as a capital contribution.
In March 2010, the Organization and Reinvestment Fund, Inc. ("Reinvestment Fund") amended the performance agreement with USED to release $4,732,456 of the approximately $7,500,000 restricted cash and cash equivalents held by CCAP for the first loan loss reserve. The Organization and Reinvestment Fund divided the released funds evenly ($2,366,228 each) and will use the funds flexibly to achieve the performance goals in the agreement dated March 1, 2010.
In February 2016, the Organization and Reinvestment Fund amended the performance agreement with USED to release the remaining restricted cash and cash equivalents held by CCAP. The Organization and Reinvestment Fund divided the released funds of $2,704,678 evenly ($1,352,339 each) and will use the funds flexibly to achieve the performance goals in the agreement dated February 22, 2016.
(b) During the year ended December 31, 2005, the Organization entered into a grant agreement with Reinvestment Fund for Reinvestment Fund to partner with the Organization in sharing grant funds of $3,600,000 awarded by USED under the Credit Enhancement for Charter School Facilities Program. The Organization and Reinvestment Fund have agreed to each utilize $1,800,000 to act as a first loss reserve for the charter school loans originated by each organization. In February 2011, the Organization received approval from the USED to draw down $263,974 from its grant funds for a loss on the credit enhanced portion of a participating note to a charter school.
During the year ended December 31, 2012, the Organization made a cash pledge deposit of $509,837 per a pledge and security agreement dated February 1, 2012, between the Organization and Charter School Financing Partnership ("CSFP"). CSFP used funds borrowed from the Walton Family Foundation to fund a loan to Alliance for College-Ready Public Schools, a charter school operator. The Walton Family Foundation requires CSFP to pledge a percentage of the unpaid principal of the loan to secure repayment of their loan. At December 31, 2024, the balance of the cash pledge deposit was $0.
During 2015, the Organization drew down $185,619 from its grant funds for a loss on the credit enhanced portion of a participating note to a charter school.
During 2017, 2018 and 2019, the Organization drew down $38,888 each year from its grant funds to satisfy a pledge requirement for CSFP. There was an additional draw down for CSFP in 2021 of $39,667.
(c) During the year ended December 31, 2005, the Organization received grant funds of $6,000,000 and $2,000,000 for a total of $8,000,000 from USED under the Credit Enhancement for Charter School Facilities Program. The Organization agreed to utilize funds to leverage funding of charter schools in accordance with the performance agreement. The funds will be utilized in two parts: phase 1 of The Enhancement Fund for Charter Schools (TEF I) and phase 2 of The Enhancement Fund for Charter Schools (TEF II).
During the year ended December 31, 2012, the Organization made a $200,000 cash deposit with Wells Fargo Bank on behalf of Phoenix Collegiate Academy, Inc., a charter school operator. The cash deposit, per the agreement dated November 29, 2012, provided credit enhancement that enabled Phoenix Collegiate Academy, Inc. to finance the cost of acquiring, constructing, improving and equipping the land and building for a middle and high school campus. At December 31, 2021, the balance of the cash pledge deposit was $200,000. As of December 31, 2024, the balance of the cash pledge was $0.
(d) During the year ended December 31, 2018, the Organization received subgrant funds of $2,000,000 from Low Income Investment Fund (LIIF) under the USED Credit Enhancement for Charter School Facilities Program. The Organization agreed to utilize funds to leverage funding of charter schools in accordance with the performance agreement.
The Organization invested the net grant funds of $3,718,567, $1,800,000, $8,000,000, and $2,000,000 described in (a), (b), (c), and (d), respectively, in separate grant reserve accounts in accordance with the requirements of the grants. Such financial assistance is considered federal awards expended based on the amounts in the reserve accounts at the beginning of the grantee fiscal year; plus any funds drawn down and investment income received in the grantee’s fiscal year to add to the reserve account. Therefore, these grants totaling $15,518,567, less amount drawn down of $605,926 and investment income received of $2,543,054, respectively, are included in federal expenditures presented in the accompanying schedule of expenditures of federal awards for the year ended December 31, 2024 under Assistance Listing Number 84.354A as follows:( see the Notes to SEFA for Chart/Table on the attached Financial Statement)
Additionally, the net grant funds passed through of $5,518,567 which consist of grant funds passed through of $3,718,567 described in (a) and the grant funds passed through of $1,800,000 described in (b) are included in federal expenditures under Assistance Listing Number 84.354A.