Dive Brief:
- New York Gov. Andrew Cuomo has approved $45 million in funding toward 52 Smart Schools investment plans under the state's $2 billion Smart Schools Bond Act.
- According to the announcement from New York State, $the funding is broken down into $26 million for tech purchases, $15 million for school connectivity, $4 million for high-tech security and $23,000 for community connectivity.
- The plan is based on a report from the Smart Schools Commission created by Cuomo to gather information on strategies for how schools can most effectively invest bond funds, and its recommendations included focusing on expanding broadband and wireless connectivity and the use of "transformative" tech.
Dive Insight:
Nationwide, school districts have used bonds in different ways to support schools. In Florida's Pinellas school district, a borrowing plan has helped offset the cost of $94.5 million for building renovations. That allowed construction to be completed faster, since the district was required to spend bond profits within three years. In that case,borrowing money was meant as a workaround for the district, in place of having to allocate money from annual budgets.
For charter schools, borrowing and using bonds can present challenges. Marketwatch reported underwriters and investors aren’t sure how to assess the schools’ credit worthiness or risk profile, therefore charging a premium for schools that try to tap the bond markets.
One clause within the Every Student Succeeds Act, “Pay for Success” initiative, allows for private investors to profit from returns on the upfront financing of educational programs, such as with social impact bonds. That means that private firms can step up to pay for public services. They’re then repaid with interest, subsequently turning a profit, if the services funded result in cost savings for the state.