December 2014 CR Magazine | Paul Herman, Srdana Pokrajac, J. Brown
Financing Education for Today’s Families and Tomorrow’s Employees
Can muni-bond investors help your firm by helping school districts perform better?
Where is your future workforce coming from? Will it be local to your company or will you need to “import” talent? Are your employees’ younger children and teens today in the best school districts?
If you live in McCall-Donnelly, ID, Beverly Hills, CA or Sanger TX, your school districts are performing quite well, according to the scoring of education-related outcomes. But if you live near San Diego CA, Chino Valley CA or Lebanon OR, then your employees’ children may not be in the most compelling learning environments, comparatively speaking.
As education discipline and culture—and the associated constructive competition—is established early in life, these are important questions to parents, but also to corporate citizens. Educational performance connects to the talent pipeline for your operations local facilities, and possibly headquarters. In addition, it is linked to the health, safety, and productivity of the cities, towns and counties you live in.
More than 91,000 elementary and secondary schools form 14,000 public-school districts. These are funded through federal and state disbursements to local school districts, and by the local entity’s taxing authority, typically cities and towns levying local property taxes. Total school funding for kindergarten through high school graduation (K-12) amounts to over $550 billion a year. The average school district’s annual per student spending is $10,658 (with highs of $40,000 per student in Loving, Texas).
K-12 school districts currently issue more than 25,000 municipal bonds to finance various capital projects. Because issuing a bond for a school district usually means increasing local property taxes in order to repay the bond, bond issue approval is sought through a public vote. Municipal bonds, primarily held by wealthy individual investors, offer tax benefit exemptions from federal and sometimes state income tax. Investors seeking to “do good” and “make money” at the same time can be well served by K-12 mun.
Read the full article HERE.