School District Borrowing By Charles K. Trainor Has your school
district ever borrowed money? If the answer is yes, odds are you
have participated in the almost $3 trillion municipal bond
market. Lenders in this market include investment funds
specializing in earning tax-exempt income for investors,
investment banks, insurance companies, and high-net-worth
individuals. Municipalities and school districts that want to
borrow money in this market sell securities. Securities act as
IOUs or promises to repay borrowed money, usually with revenues
from real estate taxes. Naturally, interest is charged on the
borrowed money and is usually paid quarterly or semiannually.
The sale of securities allows school districts to raise either
short-term or long-term cash. In the U.S., securities issued
with maturity dates of between two and 10 years are called
notes. Those with maturity dates longer than 10 years are called
bonds. Some corporations have issued bonds that mature as long
as 50 to 100 years into the future. Would