But an unlikely source of new capital has emerged to fill the gap: foreign investors. Wealthy individuals from as far away as China, Nigeria, Russia and Australia are spending tens of millions of dollars to build classrooms, libraries, basketball courts and science labs for American charter schools.
The reason? Under a federal programme known as EB-5, wealthy foreigners can in effect buy US immigration visas for themselves and their families by investing at least $500,000 in certain development projects.
In the past two decades, much of the investment has gone into commercial real-estate projects like luxury hotels, ski resorts and even gas stations.
Lately, however, enterprising brokers have seen a golden opportunity to match cash-starved charter schools with cash-flush foreigners in investment deals that benefit both.