Budget & Finance

Market Thaws Some For Districts’ Bonds

By David J. Hoff — March 09, 2009 1 min read
  • Save to favorites
  • Print

When voters in the Salem-Keizer school district in Oregon approved $242.1 million for school construction bonds in November, the market for such bonds was difficult for school districts to navigate.

But by the time the district sold $179 million of bonds in the first round of financing last month, investors were ready to buy.

“I’m glad we didn’t go to sell them in the fall,” said Rich Goward, the chief financial officer for the 42,000-student district, which serves the region around the state capital. The district will pay less interest than it had budgeted—from 1.5 percent for the one-year bonds to 5.8 percent for those that mature in 2030.

Last fall, the demand for municipal bonds was slack as investment banks went out of business or relied on federal help to prop them up. Several school districts were even forced to cancel their bond sales. (“Districts’ Borrowing May Face Hit From Continued Financial Crisis,” Oct. 1, 2008.)

Now, however, Salem-Keizer and other districts that had been frozen out of the bond market are successfully completing sales. On Feb. 4, for example, the Los Angeles Unified School District sold $900 million in bonds.

President Barack Obama has proposed raising tax rates on the upper-income tax brackets, making the tax-free interest payments from municipalities more attractive, Mr. Fabian said. Investors also are looking to bonds to provide income now that many companies have slashed stock dividends.

But not all districts are faring well in the bond market. Districts with bond ratings below AA (the second-highest on the scale) or without stable revenues to pay off the debt still struggle or are paying high interest rates, Mr. Fabian said.

The Salem-Keizer and the Los Angeles districts both received AA ratings from Standard & Poor’s, one of the major raters of municipal bonds.

A version of this article appeared in the March 11, 2009 edition of Education Week


This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Classroom Technology Webinar
How to Leverage Virtual Learning: Preparing Students for the Future
Hear from an expert panel how best to leverage virtual learning in your district to achieve your goals.
Content provided by Class
English-Language Learners Webinar AI and English Learners: What Teachers Need to Know
Explore the role of AI in multilingual education and its potential limitations.
Education Webinar The K-12 Leader: Data and Insights Every Marketer Needs to Know
Which topics are capturing the attention of district and school leaders? Discover how to align your content with the topics your target audience cares about most. 

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Budget & Finance Tutoring Can Be Costly. Here's How to Make It Cost-Effective
As a federal funding cutoff looms, some districts are finding ways to make intensive tutoring sustainable.
9 min read
Phoenix Blalack, 6, works with a tutor on his laptop in his Indianapolis home on March 7, 2023.
Phoenix Blalack, 6, works with a tutor on his laptop in his Indianapolis home on March 7, 2023.
AJ Mast/AP
Budget & Finance District Leaders Want More Time to Spend ESSER Funds—and More Money, Too
On Capitol Hill, superintendents pointed to big wins fueled by federal relief aid, from extended learning time to mental health support.
4 min read
Illustration of a man pushing half of clock and half of a money coin forward on a red arrow
iStock/Getty Images Plus
Budget & Finance Q&A Why Are K-12 Funding Inequities So Pervasive? A French Scholar of U.S. Education Weighs In
Esther Cyna brings a unique perspective as a French scholar studying school finance in the United States.
6 min read
Image of a globe.