Read time 4 minutes

Published On Aug 6, 2024

Did you know that many public K-12 buildings and facilities are funded through voter-approved bond issues?¹ As a taxpayer, it is vital to understand the way a bond works and what your part is before you cast your ballot. If you're wondering, How do school bonds work? our blog will provide a comprehensive guide to help you understand their function, their impact on educational funding and your role in school bonds as a taxpayer.

School Bonds vs. Education Bonds: What’s the Difference?

Understanding the distinctions between education bonds and school bonds is crucial in navigating the diverse landscape of financial instruments used to support educational initiatives and infrastructure projects.

What Is an Education Bond?

Contrary to school bonds, education bonds (also called savings bonds) represent a unique investment tool typically aimed at attracting private capital for educational endeavors. Unlike school bonds issued by districts, education bonds are typically issued by entities such as governments, multilateral development banks and businesses to finance various education initiatives and programs. Education bonds aim to unite investors and education stakeholders to promote universal quality education.²

What Is a School Bond?

School bonds, which are the focus of this discussion, are financial vehicles used by school districts to secure funds for capital projects such as constructing new schools or undertaking significant renovations. These bonds are authorized and issued by school districts, typically requiring approval from voters. The repayment of both the principal and interest on school bonds is funded through property taxes.³

What Do Bonds Fund?

First, when the board of a school meets, they may call for an election of a bond. Upon this, a political action committee (PAC) may be formed, which is a group of volunteers who come together to support the election. They basically raise awareness (and funds) to make these efforts happen and get these measures approved by voters.

Bonds may fund and possibly present the opportunity to:

Build new schools
Make building renovations
Resolve safety concerns
Address technology needs
Provide transportation (like additional buses)
Purchase or lease new equipment

How Do School Bonds Work? Three Considerations

Learn about the intricacies of school bonds and their impact on educational funding with a focus on three key considerations. Understanding how school bonds function is essential for stakeholders involved in education finance and infrastructure development.

1. What Are the Current Needs?

When understanding what a school needs, it is key to consider the condition of the school. Are the buildings safe? Is there capacity for current enrollment? The school may hire architects or planners to estimate costs and determine potential costs.⁴ When you cast a ballot, you may want to ensure that the school has done its homework on what has been done in the projection process. It is not common knowledge that school buildings only have a 50-year life, so designs may need to be updated, replaced or changed for the safety of the students. There may be a true need for the bond to be issued.⁴

2. Does the School Have a Plan?

One may not agree with the details of the plan, but it is helpful to keep the big picture in mind. It is important to realize that the surrounding neighborhood will be affected positively or negatively by the plan and, moreover, that the change may be for the greater good of improving education for the entire school district and, thus, the community.⁴

3. What Is the Cost of the Plan?

The final consideration is the dollar amount needed. How will this cost affect one's taxes? One may argue that the beautification or modernization of a neighborhood school improves property values. Crossland notes that new and renovated facilities are safer and healthier for students, which improves student outcomes.⁴

Your Role in Education Bonds: Why Is This Important to You?

Bonds allow taxpayers to be a part of this development, as they are the final decision-makers in this process. The ongoing facilities development and other capital expenses to be funded is essentially up to the voter. One can decide whether these bonds are worth the amount being sought for approval.⁵

It is important to be aware that a district is not required to spend all the authorized funds but cannot exceed the authorization.⁴ What this means is that a school district can use funds for something not voted upon if:⁵

The voter-approved project is satisfactorily completed
The new project is suited to the bond language
The board authorizes the allocation

The takeaway from this is that, as a voter, it is important to be aware of school bonds and how the funds are allocated. As a taxpayer, one should be educated on the needs/wants of the neighboring districts. In the end, one should look at the schools in their neighborhood as part of the community. The larger picture of how schools impact the community should be taken into consideration — but also, vice versa, how the community can support and help their schools as well.

Earning Your Degree At GCU

For those passionate about shaping young minds and fostering literacy, consider exploring the BS in Elementary Education with a specialization in teaching reading from Grand Canyon University. Work toward advancing your skills in education, while gaining a deeper understanding of the financial mechanisms that support educational initiatives like school bonds or education bonds.