Capital Financing of Schools: A Comparison of Lease Purchase Revenue Bonds and General Obligation Bonds

19 Pages Posted: 13 Feb 2003

See all articles by Shama Gamkhar

Shama Gamkhar

University of Texas at Austin - Lyndon B. Johnson School of Public Affairs

Mona Koerner

University of Texas at Austin - Lyndon B. Johnson School of Public Affairs

Abstract

School building construction is on the rise nationwide and Texas has led the nation in outlays on school construction. We consider key factors that distinguish lease purchase revenue (LPR) bonds and general obligation (GO) bonds as debt instruments for financing school facilities in Texas. Our research shows that LPR bonds typically have a higher interest cost than GO bonds and they do not have any advantages over GO bonds in circumventing state restrictions on school district tax and debt authority. Voter approval requirements implicit in the state aid formulae supporting school bond repayments and the bond election requirements are however both less stringent in the case of LPR bonds than GO bonds.

Suggested Citation

Gamkhar, Shama and Koerner, Mona, Capital Financing of Schools: A Comparison of Lease Purchase Revenue Bonds and General Obligation Bonds. Public Budgeting and Finance, Vol. 22, pp. 21-39, 2002. Available at SSRN: https://ssrn.com/abstract=320695

Shama Gamkhar (Contact Author)

University of Texas at Austin - Lyndon B. Johnson School of Public Affairs ( email )

2300 Red River St., Stop E2700
PO Box Y
Austin, TX 78713
United States

Mona Koerner

University of Texas at Austin - Lyndon B. Johnson School of Public Affairs ( email )

2300 Red River St., Stop E2700
PO Box Y
Austin, TX 78713
United States

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