A Bond is a long term loan that allows school districts to fund capital projects. This would include the acquisition of property, renovations and additions to existing structures, construction of new facilities and the purchase of equipment. Bond approval is done by a referendum (public vote) that includes the scope of the project, maximum dollar amount that can be spent and all funding sources including the maximum amount that can be bonded. A bond is similar to a home mortgage. It is a contract to repay borrowed money with interest over time. Bonds are sold by a school district to competing lenders to raise funds to pay for the costs of construction, renovations and equipment.
Bond funds can be used to pay for new buildings, additions and renovations to existing facilities, land acquisition, technology infrastructure and equipment for new or existing buildings. Bonds cannot be used for salaries or operating costs such as utility bills, supplies, building maintenance, fuel and insurance.
School districts are required by state law to ask voters for permission to sell bonds to investors in order to raise the capital dollars required for projects such as renovation to existing buildings or building a new school. Essentially, the voters are giving permission for the District to take out a loan and pay that loan back over an extended period of time, much like a family takes out a mortgage loan for their home. A school board calls a bond referendum so voters can decide whether or not they want to pay for proposed facility projects.