What's New with School Bonds?
How passing a school bond has changed over the past decade.
By Brittany Edwardes KeilImagine it’s 2013. For anyone over the age of 35, that probably doesn’t seem so long ago. After all, some things haven’t changed. Taylor Swift is still reigning on the pop charts, and many of us still while away our time watching short, funny videos on our phones — only on TikTok now instead of Vine.
But in some serious ways, the world is a much different place than it was 11 years ago. Gen Z has replaced millennials as the youngest segment of the workforce, and it’s not an overstatement to say that the global pandemic changed everything.
Against this backdrop of sweeping changes, bonds for school districts have changed, too. What was once a humdrum process now has all the markers of fully fledged political intrigue. But what can a school leader do to deal with all these shifts? The first step is learning what has and hasn’t changed over time.
What’s Changed? The Playing Field
During the pandemic, many districts held off on running school bond campaigns, fearing low voter turnout. This led to a rush of bonds in 2022 and 2023 once pandemic restrictions were lifted. And while national analysis about post-pandemic bonds is still very much in the research phase, one certainty is clear: The playing field is different.
The environment is more political. You don’t need us to tell you that the political environment is more polarized than ever. As a result, school bonds and levies have also become more politicized. While most voters have positive perceptions of their local schools, national approval of public schools has decreased since the pandemic, and many districts find themselves having to work harder than ever for stakeholder support.
Politics, of course, don’t stop when you enter your school buildings. Experts are quick to point to one important factor for school referendum success: The unilateral approval of the school board. At a time when some school boards are more fractured than ever, this can be a tall ask for districts. The reality is that most board candidates run for school board with an agenda — and if the details of the bond don’t support their agenda, they likely won’t support the proposal or the campaign.
The act of voting itself has also changed. According to Paul Hanley, the managing director of pre-referendum consulting firm Beyond Your Base, you can no longer count on the majority of voting to happen on Election Day. “More and more voters are voting early, either in person or via absentee ballot,” Hanley explains. “Campaign timelines need to factor in this growing number of early voters. Fortunately, data is often available to determine who voted early in previous elections, at least when it comes to general elections. This allows the campaign to develop two separate timelines — one for early voters and one for Election Day voters.”
All of this speaks to the necessity of crafting a bond campaign that aligns with the goals of both your community and your district. Your bond doesn’t have to please everyone, but it does need to appeal broadly to different parts of your community. And because the timeline itself has changed, you need to build this strategy from the beginning to win over as many voters as possible.
School bond packages are under more scrutiny. Inflation has also impacted the world of school bonds. Throughout his career, Hanley has observed a steep rise in the cost of the average bond campaign, mostly due to inflation. “Driven primarily by construction inflation and aging infrastructure, school bond measures keep getting bigger,” Hanley says. “Referenda between $100 million and $200 million are much more common now than they were just a decade ago.” Furthermore, some districts with long-term bond schedules are finding themselves in an especially difficult predicament: Construction projects that were approved years ago can no longer be completed within their initial budgets.
But inflation isn’t the only reason bonds have gotten so expensive. Hanley explains that many districts have had to contend with aging infrastructures and shrinking enrollment. “Far more bonds are being passed for improvements to existing schools rather than new buildings altogether,” he says.
According to Karen Fitzgerald, chief branding officer at Texas’ Celina ISD, some state laws have also contributed to this dilemma by requiring districts to build hyperspecific bond packages. This can be tricky for districts, especially since messaging for these kinds of bonds requires a lot more nuance. “We support the idea of transparency, but it can be so challenging to educate a community on the general nature of a package,” Fitzgerald explains, “let alone when you are required to go into all of the specifics of each proposition.”
It takes more work to get your word out. There are no doubt far more communications tools now than there were 10 years ago. While the local media once served as the gatekeepers to public awareness, schools now have myriad tools at their disposal, from social media platforms to newsletters. But unfortunately, more tools often mean more work.
It isn’t just families who vote on school bonds — everyone in the community has an equal say about whether or not a referendum should pass. That means you can’t skip any communication method at the risk of alienating an important subset of your voter base. Additionally, some methods of in-person communication just aren’t working like they used to. “Post-COVID, it has been increasingly difficult to get voters to attend open houses, informational presentations, and other in-person events,” Hanley explains. “While these strategies are still used, they are now complemented by online webinars, which are often recorded and posted online.”
As in many communities across the country, Fitzgerald has observed a gradual change in her district’s demographics, especially among families. “We have parents from ages 20 to 60, and each of these generations uses vastly different modes of communication,” Fitzgerald explains. “As a communications director, I can’t disregard any of these channels for fear of missing an important subset of our voting community.”
What’s Changed? The Strategy
Passing a bond has never been easy, but now more strategy has to go into your campaign than ever before. Not every change makes your job harder though; in fact, advancements in voter research and even a resurgence of interest in public schools can be used to your district’s benefit.
You’ve got technology. While the relationship between schools and their communities has changed a lot in the past few years, something else has changed, too: technology. Now, the average school leader can get their hands on a much deeper level of voter analysis. “The quality and amount of voter data is also improving,” Hanley says. “While fewer voters are willing to answer their phones, pollsters are turning to hybrid polls, which also use cell phones and text messaging.”
At Union Public Schools in Oklahoma, Chief Communications Officer Chris Payne, APR, is considered the unofficial local expert on all things bond initiative. He’s helped five bonds pass while serving at various schools in the area. Technology has not only helped Payne communicate with voters but also understand them better. For their most recent bond initiative, Union Public Schools partnered with Thought Exchange, an online platform that can be used to solicit feedback from the public. This helped the district learn how voters felt about different aspects of their bond package before Election Day. “We needed a feedback mechanism, and it’s good to go out there and launch your conversation so you can better understand what your voters want,” Payne explains. “We had done public input meetings before, but this was even better because it would allow them to ask questions even after they left the meeting. Our QR code gave them instant access to the online Q&A where they could log their new question or see answers to what’s already been asked.”
You’ve got attention. Gone are the days when school board elections and bond campaigns went by with only a bit of local attention. The recent political climate surrounding public education means that we’re in an attention economy where schools are, for better or worse, front and center. Just as school board elections have suddenly become newsworthy, school bond elections can serve as indicators of community support in a time when that is no longer a given.
The enhanced scrutiny that referendum packages face means that having strong buy-in, both internally and externally, is now even more essential for passing a bond. For Fitzgerald, this means building a strong strategy for communicating with the district’s most vital advocates — staff. “A lot of teachers live in the communities they serve, and they, too, are investors in our organization,” Fitzgerald says. “We have to be strategic about making sure they have the right messaging, as well as a sense of ownership around the information they’re sharing.”
What Hasn’t Changed? The Results
Despite everything, bonds are still passing all over the country. In 2022, three out of four bond packages passed nationally, and while the number of failed bonds and levies is higher than it was a decade ago, most voters are willing to support their schools. In fact, smaller districts actually fared slightly better than larger districts. This high passage rate may be even more meaningful considering the challenging economic climate and rising cost of the average bond campaign.
According to Payne, the ways districts have passed bonds have certainly changed in the past decade — and especially in the past few years. But when it comes to education, what hasn’t changed?
“While we may have to work harder in some respects to make sure we’re being strategic and strong with our messaging, our profession has learned a lot when it comes to developing a message that will resonate with our individual communities,” Payne explains. “But at the end of the day, a good bond campaign is still a good bond campaign.”
Public finance law firms and financial advisors should guide administrators and boards of education through this legal maze, for rigorous proof of compliance with state and federal laws is necessary before the sale of a debt issue can be closed and the funds made available to the school district. In addition, there should be a schedule and plan to fulfill the district’s post-issuance obligations. A former special education teacher and Fulbright Scholar, Brittany Edwardes Keil is the research and external relations manager for SchoolCEO Magazine. SchoolCEO is published by Apptegy, maker of Thrillshare, a school messaging communications and brand management platform. More information is available at schoolceo.com and at apptegy.com/thrillshare. Reprinted with permission.
An Overview of Bonding in Illinois
The Playing FieldIllinois law establishes limits on a school district’s bonded indebtedness. The limit is calculated in relation to the district’s equalized assessed valuation (EAV). The general limit for a separate elementary and high school district is 6.9% of its EAV. A unit (K-12) district may borrow up to 13.8% of its EAV. Certain “growth districts” may borrow a maximum of 15% of EAV, if special circumstances, spelled out in law, are present. Excluded from the debt limit are revenue anticipation borrowing, funding bonds, alternate bonds generally, working cash bonds — unless property taxes are extended to pay them, and bonds sold to establish an insurance reserve or pay a tort judgment. Alternate bonds are exempt from the debt limit unless property taxes are extended to pay them.
Working cash bonds and funding bonds are similar in terms of their treatment under the debt limit. Both can be issued in excess of the debt limit but, once issued, are included in the calculation for debt when contemplating future debt issues. Thus, it is possible for a school district to have negative debt capacity that would preclude issuing other bonds until its debt capacity returns to positive. Working cash bonds are subject to a working cash limit, which further restrains a district’s ability to issue such bonds. Often districts that have reached their working cash bonding limit will then issue funding bonds. For that reason, funding bonds are most often associated with an exception to the debt limit.
In addition to state law, public borrowing falls under disclosure and tax compliance regulations enforced by the Securities and Exchange Commission and the Internal Revenue Service. These regulations govern the information that must be disclosed to potential buyers, the amount of the borrowing, and the investment of the proceeds prior to their expenditure.
The tax compliance burdens of government borrowers do not cease on the closing date of a tax-exempt debt issue. Tax law imposes significant ongoing post-issuance obligations with respect to record-keeping, investment and expenditures of proceeds, and private activity restrictions until well after the debt has been repaid. Failure to comply could lead to penalties, including revocation of the tax-exempt status of the bonds.
What Has Changed?
The Bond Authorization Act P.A. 103-0591, was signed in June 2024 and effective in July 2024. This Act:
Removes the referendum requirement for new building construction that results in an increase in pre-kindergarten or kindergarten classroom space. This initiative supports the unfunded mandate of requiring full-day kindergarten by the 2027-28 school year.
- Exempts taxes levied for school fire prevention and safety bonds from PTELL.
- Increases the maximum term of school district bonds from 20 years to 30 years.
- Allows districts to increase the amount of bonds by 3% to cover costs of issuance and/or capitalized interest.
The Results
Over the last decade (2014-2024) in Illinois, voters have approved:
- 105 of 206 building bond issues for schools (51%)
- 70 of 136 tax requests for schools (51%)
- 41 of 84 county school facilities sales tax requests (49%)
- 12 of 21 working cash bonds for schools (57%)