| This dissertation focuses on the capital expenditure side of school district finance, to ultimately determine which factors impact the price of capital. Due to the immediate need for capital expenditures in the American schools' infrastructure, the funding sources play an important role. The two main sources of capital funds to school districts are state capital aid programs and local school district bond issues. This research ties together these two sources of funding to analyze the impact of state capital aid and specific bond characteristics, on the bond issuance cost (price of capital).;The other state institutional characteristics of interest included in this model are referendum requirements, debt limits and operational state aid funding programs. The results of this model conclude that standard bond finance variables (term, discount costs, market rates, bond ratings) are the most significant determinants of the price of capital. The existence of referendum and debt requirements also proved to be significant, although the state aid programs did not directly impact the bond costs. Since one of the explanatory variables in this model, the bond rating, is an endogenous variable, there is a separate multistage bond rating model that precedes this price of capital model.;The bond rating model has three separate stages that relate to the different choices facing a school district official. The choices are whether to have a bond rated (first stage) and whether to insure the bond (second stage). The final stage estimates the rating category. The results confirm many significant factors utilized in evaluations by the rating agencies, and are significant at all of the different stages. Further research into each of these stages will yield even more insightful results. |
