Wednesday, July 15, 2015

Q&A: Financing with Bonds

Question: Do you think school districts should sell bonds to pay for capital improvements or do you think they should have a capital improvement savings fund?

Answer: Governments use bonds for the same reason individuals take out home mortgages. The homeowner gets immediate use of the house and pays for it over the 30 years or so he lives there. Likewise, taxpayers get immediate use of the capital improvements and pay for them over the life of the bond. Without bonds, with a capital improvement savings fund instead, today's taxpayers would foot the bill but future residents would reap the benefit.

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