Bond for Early Childhood

Local governments can issue bonds to secure funding for capital projects to build new or renovate existing facilities. Bonds are debt obligations by municipalities and counties. Investors purchase the bonds that are paid back by a municipality or county with interest by a specific date.

A number of 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 source of 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 and thus local governments are required to prepare a feasibility study of their capacity to incur new debt and demonstrate an ability to repay the debt.

Who Collects it?

While not technically collecting the funds, the Local Government Commission at the State Treasurer’s Office provides technical assistance in the design of the bond, ensures the bond sale is scheduled for the most 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 water systems and buildings like courthouses or schools. They may not be used as a funding source for the day-to-day operations of local government programs or services because the ongoing nature of this need does not align with the time-limited revenue available from bonds.