Public schools receive funding from local, state and federal taxes, but they also use municipal bonds as a key financing mechanism. Bonds allow schools to build projects sooner, expand the breadth of projects and to improve the overall educational offerings they provide to their students. Municipal education bonds are a massive market, with $126.2 billion worth of primary and secondary education bonds issued in 2017. But the market does not function as effectively as it could — public schools need a better deal from the public finance market.
U.S. public schools are increasingly paying substantial costs of capital on new offerings and have one of the highest costs of issuance of any public agency. Increasingly common are stories like that of Chicago Public Schools, which, in the Summer of 2017, made headlines for an adjustable rate issuance that hit 9%. At one point the district was paying $70,000 a day to service its debt across all offerings.
Here at Neighborly we believe communities should have access to the capital they need, when they need it, at low cost, to finance the projects that matter.
There are currently 51 million children in U.S. public schools, which means that there are 51 million reasons to invest in public school-issued municipal bonds. Bonds have a direct and measurable impact on a child’s education. They help districts build classrooms, libraries, laboratories and auditoriums. They help furnish school buses, vans, computers and other technology. They can also help build recreational and athletic facilities, as well as administrative buildings. Issuing bonds also means schools can spread out the cost of purchases over the life of an asset, rather than trying to pay for large expenditures out of a single-year budget. This makes significant expenditures — in other words, significant investment — possible when they otherwise wouldn’t be.
Although school bonds with a 9% return may be an attractive option for institutional investors, at the end of the day it’s the children and the communities who pay the price. Higher costs of borrowing mean that less funding is going toward the things that matter. The Neighborly platform was designed to more effectively connect individual investors with municipal bond offerings in a way that generates financial returns while simultaneously helping public schools — and other world positive projects — advance their mission in a more sustainable manner.
Purchasing municipal education bonds is one of the best ways to provide material and impactful support to school systems while still receiving the tax-free investment benefits that municipal bonds offer. Investing in education is good for your portfolio and it’s also good for students, teachers, communities and our society as a whole.
One offering currently available on Neighborly is a $40 million issuance from the Lafayette School District rated AA by Standard & Poor’s. The district, located about thirty miles outside of San Francisco, is using the proceeds to upgrade aging elementary and middle schools and to modernize classrooms for enhanced curriculum in math, science, technology and the arts. The district plans to repair dilapidated roofs, plumbing and electrical systems, as well as install new laboratories and instructional technology systems. Every time you invest in primary and secondary education bonds you help a district like Lafayette give its students a better, brighter and more fulfilling education.
It’s a good time to invest in education through Neighborly. We have six school districts looking for investors to help them build new classrooms, pioneer charter schools and support the arts and sciences:
- Lafayette School District
- Paso Robles Joint Unified School District
- Oakley Union Elementary School District
- Los Altos School District
- Piedmont Unified School District
- Oakland Unified School District
Invest in the future of your community and the country by investing in education today.
You can start investing directly through the links above, and for more information, read our support section on making an investment.
Investing in securities contains risks, including loss of principal. Please read the official statement or consult a financial adviser before investing. Securities offered through Neighborly Securities, Member FINRA/SIPC and registered with the MSRB