Local governments can issue bonds to secure funding for large-scale capital projects. Bonds are debt obligations issued by municipalities and counties. Investors purchase the bonds, and the municipality or county that issued it agrees to pay back debt with interest by a specific date. Bond proposals must be approved by county commissioners and then by voters.
Several recent local bond proposals, including one proposed in Forsyth County, have focused on new pre-kindergarten classrooms.
How Does it Work?
Generally, the school board is the best place to start to secure bond funds for early childhood. The school board develops a proposal for various bond packages for approval by county commissioners. If approved by county commissioners, voters must approve the final bond package.
A bond is issued against future anticipated revenues. In order to issue a bond, local governments have to prepare a feasibility study showing their capacity to incur new debt and to repay the debt in the future. Bond funds need to be used for physical infrastructure, such as early childhood education facilities, rather than ongoing costs like teacher salaries.
Who Collects it?
Local governments receive funds from issuing bonds. The Local Government Commission at the State Treasurer’s Office provides technical assistance in designing bond packages, ensures the bond sale is scheduled for an appropriate time, and supports local governments in the repayment process.
What is it Used for Now?
Bonds are used for long-term capital investments such as building or renovating roads, water systems, parks, and buildings like courthouses or schools. They cannot be used to fund the day-to-day operations of local government services because the ongoing nature of these needs do not align with the time-limited revenue available from bonds.