Balancing Act

New edtech funding solution protects local taxpayers.

GUEST COLUMN | by Dale Scott

CREDIT EdTech BondsLeaders of school districts and community college districts too often find themselves squeezed between two conflicting responsibilities, especially when it comes to technology. On one hand, they are held accountable for providing the best education possible for our children – a responsibility that requires investments in the latest technology and other critical educational priorities. On the other hand, as elected officials, they are responsible for protecting their district’s voters and taxpayers from costly or financially imprudent decisions.

Nearly every school district across the country is grappling with how to fund educational technology in a way that avoids saddling taxpayers with years of debt.

This is a difficult sea for education officials to navigate and plenty of excesses arise on both sides of the conflict. But one issue seems clear: 20-to-30-year bonds should never be used to pay for iPads and other forms of soon-to-be obsolete technology. Unfortunately, this has been the case in far too many districts across the country.

Think of it this way. In 1988, I bought a technologically innovative product that would help catapult my business into the future – a fax machine. That was just over 25 years ago, which is less time than the repayment term of most K-14 general obligation bonds. If I had financed the fax machine with a general obligation bond, I’d still be paying today for something I recycled 22 years ago; however, that’s exactly what some school districts are doing now to buy the modern equivalent of my first fax machine.

My firm developed and patented a new school bond solution to provide school districts with an ongoing source of funding for educational technology while protecting local taxpayers. This new solution, Ed-Tech Bonds®, is already in use in California and is supported by the California Association of School Business Officials as a replenishable, financially responsible funding source for educational technology.

Ed-Tech Bonds enable school districts to finance the purchase of soon-to-be obsolete educational technology with multiple series of short-term bonds matched to the useful life of the technology. Packaged as a single authorization, this cluster of bonds must be approved only once by voters and remains available for the 15-to-30-year life of the technology financing program. Once voters approve the package, individual series of short-term bonds within the authorization can be sold as needed, approximately every three years over the life of the authorization.

By eliminating long-term debt to fund quickly fleeting technology, Ed-Tech Bonds slash borrowing costs down to near-zero. In addition, Ed-Tech Bonds ensure 90 percent or more of each taxpayer dollar directly funds educational technology, whereas in a typical school bond measure, 50 cents or more of every taxpayer dollar must be used to pay interest.

Funding covers not only today’s educational devices, Internet connectivity and underlying infrastructure, but also tomorrow’s upgrades and new technologies, enabling school districts to develop a long-term, comprehensive educational technology strategy.

Nearly every school district across the country is grappling with how to fund educational technology in a way that avoids saddling taxpayers with years of debt payments for out-of-date equipment. In the meantime, our public education system is falling further behind other countries. California, once the gold standard on education spending, now ranks near the bottom in funding education. We can’t expect to remain competitive in the international marketplace without adequately preparing our children today for the economy, and technology, of the future.

Our school districts need to give their students access to up-to-date classroom technology while still protecting the interests of local taxpayers. Ed-Tech Bonds solve this problem and level the playing field by providing all school districts with the resources needed to ensure the next generation is prepared for the 21st Century economy.

This solution has already proven to be effective by several school districts in California and dozens of districts in the state are considering placing Ed-Tech Bonds on the general election ballot this November. While our focus has been on California, we plan to expand the use of Ed-Tech Bonds to other states soon.

All school district and community college district leaders must choose what works best for them. As is the case with any funding solution for school districts, we must balance the best education for our children while protecting not only today’s taxpayers, but also those same children who will become the taxpayers of tomorrow.

Dale Scott is the president of DS&C, an independent financial advisory firm based in San Francisco, and author of “Win Win: An Insider’s Guide to School Bonds,” which is now available on Amazon.com

 

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