What is a bond?

A bond is similar to a home mortgage. It is a contract to repay borrowed money with an interest rate over time. Bonds are sold by a school district to competing lenders to raise funds to pay for the costs of construction, renovations, and equipment.

 

What is a bond election?

What is a bond election? It's like asking for permission to take out a loan. School districts, as per state law, need to get approval from voters to sell bonds to investors. This money is then used to renovate existing buildings or build new schools. Just like a family takes out a mortgage loan for their home, a school board calls a bond election for voters to decide if they want to pay for proposed facility projects.

 

Why do school districts need to sell bonds?

Most school districts in Texas use bonds to finance renovations and new facilities. This bond would allow the District to renovate and build District infrastructure, including school buildings, without impacting the District’s Maintenance and Operations funds, which cover things such as school programs, teachers, and staff.

 

How can bond funds be used?

Bond funds can be used to pay for new buildings, additions, and renovations to existing facilities, land acquisition, technology infrastructure, equipment, new or existing buildings, and large-ticket items such as school buses. Bonds cannot be used for salaries or operating costs such as utility bills, supplies, building maintenance, fuel, and insurance.

 

How is the District tax rate configured?

A school district's tax rate is comprised of two components: the Maintenance & Operations tax (M&O) and the Interest & Sinking tax (I&S). The M&O rate is used to operate the school district, including salaries, utilities, furniture, supplies, food, gas, etc. The I&S rate is used to pay off school construction bonds. Bond sales only affect the I&S rate.

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If the bond election is passed, does the school district immediately incur the debt?

The bonds do not cost the District anything until they are sold. Even though the voters approve the bond issue, no costs are incurred until the bonds are sold. This ensures that the District only incurs debt once it approves the sale of the bonds after the election.