Private Activity Bonds and K-12 School Financing

This guide discusses the implications of proposed changes to private activity bonds (PABs) and their impact on charter and private K-12 schools. The Congressional Budget Office's December 2024 report suggests eliminating tax exemptions for new qualified PABs, which could significantly affect the financing options available to these schools. Over the past decade, charter schools have raised approximately $34 billion through tax-exempt PABs, which have been crucial for financing facility development. The guide outlines how PABs lower borrowing costs, allowing schools to allocate more resources to educational programs. It also details the potential consequences of losing access to PABs, including elevated interest rates, shortened loan terms, and reduced financial flexibility. The guide encourages school leaders and advocates to engage with Congress to emphasize the importance of maintaining PABs for educational facilities. It highlights the need for advocacy and participation in efforts to protect this financing tool, which has been essential for the growth and sustainability of charter and private K-12 schools.