Over the past few months, school districts have had to transition to distance learning, which meant deploying tablets, computers, Internet hotspots, and other devices to students and teachers. In many cases this was a stopgap measure to continue learning through the end of the school year. However, given the uncertainty surrounding the return to school campuses, distance learning and the required supporting technological resources will remain critical moving forward.
As the General Fund and other fund balances used to make initial purchases face increased pressure from potential State budget cuts, a recurring question we’ve heard is, “I need to purchase more devices and equipment for distance learning, but my General Fund is hurting… Can I use bond funds?”
The answer is Probably Yes - one potential solution for districts with remaining authorization or those seeking bond ballot measures is to fund some of these devices and infrastructure improvements through the issuance of properly structured general obligation bonds.
While most people would not consider taking out a 30-year second mortgage on their home to buy a computer, Proposition 39 school bonds can address technology needs. School bonds do not have a fixed term, like the 15- or 30-year loan term of a home mortgage. Instead, most school bonds are sold as a combination of multiple loans (maturities) beginning with a one-year maturity, and then include additional maturities in 12-month increments all the way to the final maturity.
This flexibility permits a new bond issuance to be structured with bifurcated maturities, where the short-term maturities, typically from one to five years, are sold as a separate series to fund technology, devices and equipment. The longer maturities, those that mature in six years and beyond, are used to fund school facilities construction and modernization projects. This approach, which must be approved by the District's bond counsel, facilitates the purchases of equipment with a short useful life such as tablets and computers with short-term bonds, and funds facility projects with a long useful life using longer-term bonds.
CFW introduced this approach to funding devices and equipment to our clients over a decade ago and can assist your District in tailoring a bond sale to best meet your short term and long-term capital needs. We know that many school districts are struggling with how to support the technology needs of students and families, while contending with unexpected budget cuts, and we know that now, more than ever, you need proven advice to help meet your needs. CFW’s professionals have served California school districts for over 30 years and we are ready to share our experience to assist your District, especially during this challenging time. Feel free to give us a call at (510) 596-8170 or send us an email at info@cfwinc.com.
Best regards,
Khushroo Gheyara
Executive Vice President
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