School District Debt Financing: The Effects of Public Finance Policies on Private Involvement in Public Education

• In Event: P-20 Education Finance

Abstract

School districts in California use debt financing for short-term cash flow needs and for long-term projects. To issue debt, districts are increasingly entering into expensive contracts with, or paying high fees to, private organizations, including financial advisors, bond counsel, underwriters, disclosure counsel, ratings agencies, and credit enhancement agencies. This empirical paper summarizes results from a one year, exploratory study connecting three strands related to public finance policies: 1) school district debt financing trends in California over time, 2) factors that influence contractual relationships between school districts and private organizations, and 3) the nature and costs of those relationships. This study also explores the potential ethical and political issues arising from the involvement of private organizations in school district debt transactions.

Author

• Marialena Dawn Rivera, University of California - Berkeley