Since the early 1970s, moral obligation bonds have been used to finance housing, higher education facilities, hospitals, corrections facilities, and more.
As more charter schools access the bond market to finance their facilities, the interest they pay is funded by a school’s operating costs (which are provided through taxpayer dollars), meaning every increase in interest represents fewer dollars available for textbooks, teacher salaries, and field trips. As states seek to use their education budgets more efficiently, moral obligation bonds are an attractive option to lower interest rates without overburdening the state’s balance sheet.
Want to learn more? Click here for a collection of resources on moral obligation bonds.