Tax Bills' Changes to Debt Could Shrink School Spending, Education Officials Say
That's the view of the Association of School Business Officials International, which represents officials who oversee budgets, capital costs, and maintenance in K-12 and in higher education. Their beef is that the bill would no longer allow districts to get a tax exemption for certain bonds that helps them pay off outstanding debt at lower interest rates.
ASBO's worries deal with "advance refunding bonds." The group say these bonds allow districts more flexibility when refinancing debt and, the group says, ultimately allows more district funding to be spent elsewhere. Under the House and Senate bills, those bonds could still be issued, but they wouldn't be tax-exempt.
Bonds are often associated with school construction and capital costs in general, but the organization argues that no longer allowing these bonds to be tax-exempt would force districts to pay more interest on their outstanding debt regardless of why it was issued. That would leave less money for students and teachers, according to ASBO.
"Any tax policy that reduces local school funding, increases tax burdens on taxpayers, and revokes critical tools districts rely on to manage debt and reinvest in student learning is a disservice to our nation's children, parents, and communities," said John Musso, the executive director of ASBO, in a statement.
In a report published last year that uses 2013 data, the 21st Century School Fund, the National Council on School Facilities, and the Center for Green Schools said that:
- Districts reported carrying $409 billion in long-term debt;
- The debt per student clocked in at $8,465;
- Schools reported paying $17 billion in interest on their long-term debt
Earlier this month, the National Alliance for Public Charter Schools sent a letter to House lawmakers urging them not to restrict charters' ability to refinance existing debt. They also expressed concern about how the House tax bill would end tax-exempt status for private activity bonds, and get rid of Qualified Zone Academy Bonds—charter schools can use both of those types of bonds to construct new facilities. However, the Senate wouldn't change the status of private activity bonds and Qualified Zone Academy Bonds, which the charter alliance applauded.
Separately, there's broader concern among some education advocates that if the GOP tax overhaul is enacted, the changes could lead to less federal spending on education.
And stay tuned: Education Week has a special report coming out very soon about the past, present, and future of school construction and facilities.
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