VIP Focus: Sinking Funds vs. Bonds

DashBoard, Jan. 13, 2016


When you have building and/or site needs and you do not have the money to address those needs through your General Fund, you should consider either a bond issue or a building and site sinking fund.

Both options are similar in that you will be required to go to the voters in your district for approval. The main differences in these options is that the sinking fund millage is assessed every year for however many years the funds are approved. With bond issues, the district receives all the funds from the assessed mills upfront and then it is paid back over a number of years.

Why communities may be more willing to approve a sinking fund request versus a bond issue?
Communities may be more willing to support and approve a building and site sinking fund since the mils are assessed on an annual basis with the school district reporting to the community how the monies were spent. With an annual report given to the community,  and with the understanding that there is no interest being charged in the assessment, most communities appreciate and support this method of funding. Sinking fund millages are generally around three to five years while a bond issue is generally between 25-30 years.

VIP Focus articles are company-sponsored advertisements and do not necessarily reflect the views or positions of MASB. It’s intended to provide Very Important Partners with a space to share information of value to you and your district.

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