Private Schools Tap New Source: Tax-Exempt Bonds

By Laura Miller

Like many private schools, Albuquerque Academy in New Mexico has taken on several big expansion projects over the past 10 years. It added a middle school to its campus in 1985, and half a decade later it built a new library and science facility.

To finance those improvements, which totaled $30 million, the 1,000-student school chose an option that has grown in popularity in recent years: tax-exempt bonds.

An increasing number of private schools are issuing such bonds to finance their capital needs, according to a report released last month by Moody's Investors Service, a...