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School Funding: New ESPLOST Policy Considerations

Brand-new schools, technology upgrades, and classroom additions are among the many sought-after items that school leaders consistently look to fund. But, finding effective solutions to meet pressing needs is not easy.

Traditionally, districts have used debt financed with property taxes to fund school construction and upgrades. But, ESPLOST, or special purpose local option sales tax for education, provides a unique way for districts to substitute current revenues (via a penny sales tax) for debt financing.

In a new report on ESPLOST, authors Ross Rubenstein and Nick Warner examine the use of this funding tool in school districts throughout Georgia, paying special attention to trends and policy implications. Currently, there are 143 counties with an ESPLOST in place.

Although popular, ESPLOST does have challenges. To address the inequities in the ability of districts to fund capital expenses, the authors recommend that the state consider several options:

  1. Explore sales tax base sharing, given that many school districts in Georgia (particularly in rural areas) have limited capacity to raise revenue through sales taxes.
  2. Develop incentives and technical support for borrowing in low ESPLOST districts, such as matching grants to districts with low debt that issue bonds or guaranteeing debt service payments to creditors to lower interest cost to districts.
  3. Create a state bond bank, which could provide low cost, easy-to-access financing for school districts at little or no cost to the state.

— Joy L. Woodson

Read the report to learn more about CSLF’s policy considerations. →