FINANCING CAPITAL
IMPROVEMENTS
Options, costs, governance, and strategic considerations
Preparing for E-SPLOST VII and the November 3, 2026 Referendum
Board of Education Briefing
Finance Division
Why this discussion matters now
The referendum establishes both a revenue source and authority to advance-fund projects.
$850M $500M 1¢ 60 11/3/26
Projected five-year collections Maximum GO bond authority Education sales tax Collection months Referendum date
PROGRAM TIMELINE
NOV 2026 MAR 2027 JUL 2027 JUN 2032 2032–33
Final scheduled
Voter decision Potential advance funding Collections begin Collections end
repayment
Bond authority advances access to future revenue. It does not create additional E-SPLOST
revenue.
2
DeKalb County School District | Capital Financing Options
The fundamental capital financing decision
Every option should be evaluated against timing, repayment, approval, and risk.
WHEN SOURCE APPROVAL RISK
1 2 3 4
When is the money Who must authorize What capacity is
What will repay it?
needed? it? placed at risk?
Project readiness and cash draw Sales tax, debt millage, General Capital purchasing power, district
Voters, Board, or both
timing Fund, or savings liquidity
The goal is not the lowest annual payment. The goal is the best overall value with
manageable risk.
• Pay-as-you-go has no interest cost, but projects begin more slowly.
• Borrowing accelerates delivery, but interest and issuance costs reduce purchasing power.
• Internal financing may lower external cost, but it uses District liquidity.
3
DeKalb County School District | Capital Financing Options
Financing options at a glance
The options are not interchangeable. They differ by approval, repayment source, cost, and risk.
OPTION APPROVAL REPAYMENT TERM ADVANTAGE PRIMARY CONCERN
E-SPLOST GO bonds Voters + Board Future E-SPLOST Short / matched Accelerates projects & takes Interest reduces capital capacity
to ESPLOST cycle advantage of today’s
construction costs
Debt-millage GO bonds Voters + Board Separate property-tax levy Flexible Provides additional funds to Additional property-tax obligation on top of an already
address district wide backlog of high millage rate for M&O
capital improvement needs.
Certificates of Participation Board Annual general fund revenues Flexible No referendum required Stresses an already tight general fund budget.
from existing state and local
sources.
Pay-as-you-go Board Accumulated ESPLOST VII None No interest expense Delay and construction inflation exposure
cash collections
Interfund advance Board Future ESPLOST VII cash Short / matched Interest free Uses General Fund liquidity limiting the capacity to
collections to ESPLOST cycle react to significant unexpected expenditures or
sudden drops in revenue. Reduces interest earnings
in General Fund.
Match the financing term to the revenue source, project cash flow, and useful life of the asset.
4
DeKalb County School District | Capital Financing Options
E-SPLOST-backed General Obligation
bonds
Construction cost versus cost of capital
The relevant comparison is borrowing cost and execution risk versus inflation and delay.
$120–$260 3%–6% 3.25%–5.00%
Illustrative Southeast commercial cost per Planning range for annual construction
Illustrative municipal borrowing sensitivity
square foot escalation
$100 MILLION PROJECT AFTER A TWO-YEAR DELAY
Borrowing earlier may preserve purchasing
power when:
• Projects are ready to proceed.
• Avoided escalation exceeds interest and issuance
costs.
• The District does not borrow far ahead of expenditure.
6
DeKalb County School District | Capital Financing Options
E-SPLOST-backed General Obligation bonds
Convert future collections into earlier project capacity.
District issues Projects receive Sales tax repays
1 Voters authorize 2 bonds 3 funding 4 debt
Referendum includes bond Amount and timing set by Board, Proceeds support eligible capital Future E-SPLOST funds principal
authority can be before 7/1/2027 work and interest
ADVANTAGES RISKS TO MANAGE
• Accelerates high-priority, ready to go ESPLOST VII identified
projects. • Interest consumes program revenue. Bond yields are at a 20
• Can lock in construction schedules earlier. year high.
• Participating in the Georgia State Aid Intercept Program • Collections or project schedules may differ from forecasts.
(pledging future QBE funds) generally enhances our rating and • Borrowing too early creates carrying cost and compliance risk.
supports competitive borrowing rates.
Treat authorization as a ceiling, not an automatic issuance amount.
7
DeKalb County School District | Capital Financing Options
What the $500 million model demonstrates
A 4.00% illustrative structure converts future collections into up-front capital.
$500.0M 4.00% $52.8M $552.8M $297.2M
Principal borrowed Modeled interest rate Total interest Total debt service Remaining for pay-go
ILLUSTRATIVE ALLOCATION OF PROJECTED COLLECTIONS
$500.0M
500
Model cautions
400
$297.2M • High-level estimates used (interest rate
300 will likely be less, amounts borrowed or
repayment schedules could be different).
200 • Actual schedules will be rebuilt by the
district’s financial advisor using actual
100 $52.8M issuance need, more accurate interest
rates and defined collection dates.
0
Principal repayment Interest Remaining pay-go
8
DeKalb County School District | Capital Financing Options
Illustrative cost of a $500 million five-year borrowing
Level semiannual debt service shows the sensitivity to interest rates.
RATE SEMIANNUAL TOTAL DEBT TOTAL INTEREST 75
$71.3M
PAYMENT SERVICE
70
3.25% $54.6M $545.8M $45.8M
$63.9M
65
4.00% $55.7M $556.6M $56.6M
60
$56.6M
4.50% $56.4M $563.9M $63.9M 55
50
5.00% $57.1M $571.3M $71.3M $45.8M
45
40
3.25% 4.00% 4.50% 5.00%
A 1.75-point increase in the illustrative rate raises total interest by approximately $25.5 million.
9
DeKalb County School District | Capital Financing Options
Term changes affordability and total cost
Longer repayment lowers annual payments but substantially increases total interest.
400
$363.0M
BOARD TAKEAWAY
350
300
A longer term can spread
250 $231.1M repayment across multiple
ESPLOST cycles and makes
200
the annual payment easier.
It does not make the
150
financing cheaper and
$111.3M $111.6M encumbers future, not yet
100 approved ESPLOST funding.
$56.6M $61.2M
50 $36.6M $28.8M
0
5 years 10 years 20 years 30 years
Annual debt service Total interest
10
DeKalb County School District | Capital Financing Options
Debt-service-millage General Obligation
bonds
Debt-service-millage General Obligation bonds
A separate voter-approved property-tax levy can support longer-lived capital investments.
BEST SUITED FOR ADVANTAGES
• Major school replacements
• Long-life facilities • Preserves E-SPLOST capacity
• Projects that exceed E-SPLOST capacity • Flexible repayment options
• A separately and narrowly defined voter-supported • Can expand overall capital capacity
capital program
Voter approval is required. Taxpayers assume an additional property-tax obligation.
State law has a very high debt limit, capped at 10% of the assessed value of taxable property which would equate to
$4.5B in borrowing capacity.
12
DeKalb County School District | Capital Financing Options
Certificates of Participation
Certificates of Participation
Flexible Board-authorized financing, but with direct operating-budget consequences.
ADVANTAGES
HOW THE STRUCTURE WORKS
Investors purchase proportional • No voter referendum ordinarily required
• Flexible repayment term
interests in lease.
• Can address targeted timing needs
RISKS
Annual Board repays over time
• Payments compete with other general fund operating
priorities
• May carry a higher yield or added structural cost
No referendum does not mean no taxpayer cost. Repayment can reduce annual General Fund capacity.
14
DeKalb County School District | Capital Financing Options
GO bonds versus Certificates of Participation
Approval flexibility must be weighed against repayment source and operating risk.
CONSIDERATION VOTER-APPROVED GO CERTIFICATES OF PARTICIPATION
Voter approval Required Generally not required
Primary repayment Sales tax or debt-service millage General Fund
Security Voter-authorized tax pledge Lease
Expected pricing Generally stronger for comparable credit May require additional yield or structural cost
Operating impact Limited if paid from dedicated source Direct General Fund pressure
Best use Broad voter-supported capital program Targeted need when referendum debt is impractical
Decision lens: Which source should bear the cost and risk?
15
DeKalb County School District | Capital Financing Options
Pay-as-you-go and interfund financing
Pay-as-you-go and interfund financing
Internal funding can reduce external cost but does not eliminate economic cost or risk.
PAY-AS-YOU-GO INTERFUND ADVANCE
• No interest or issuance cost
• May reduce external borrowing cost
• Best when projects can wait for collections
• Bridge before E-SPLOST collections
• Maximizes capital dollars for use on projects
• Must preserve operating liquidity
and not on interest costs
• Requires defined repayment and reporting
• Risk: delay and construction escalation
Internal financing gives up liquidity and investment earnings otherwise earned by the General Fund.
17
DeKalb County School District | Capital Financing Options
Municipal Financial Advisor
Why the Municipal Financial Advisor matters
Independent fiduciary advice before the District selects a transaction or counterparty.
CORE ASSIGNMENTS
FIDUCIARY CASH FLOW Validate collections, project draws, and liquidity
An obligation to put the
STRATEGY
District’s financial interests Compare GO, COP, pay-go, interfund, and hybrid options
ahead of the advisor’s own
interests when providing
municipal advisory advice. MARKET Assess timing, method of sale, and pricing
Independent advice can include a TRANSACTION Coordinate with bond counsel and support underwriter selection
recommendation to borrow less, phase
the borrowing, use cash, delay, or not
borrow.
OVERSIGHT Review pricing, issuance costs, and post-issuance reporting
The advisor advises the District. The underwriter purchases and resells the securities.
19
DeKalb County School District | Capital Financing Options
Financial Advisor RFP: current progress
Procurement is positioned to support an intended October 2026 Board recommendation.
AUG 11 AUG 21 AUG 27 AUG 27 SEPT OCT NOV 3
Public
Evaluation / interviews / Intended Board
Pre-proposal conference Official answers posted Proposals due, 2:00 PM acknowledgement, 3:00 E-SPLOST referendum
negotiations recommendation
PM
COMPLETED UPCOMING UPCOMING UPCOMING PLANNED TARGET ELECTION
Timing October remains the intended target. Final placement depends on responsive proposals, evaluation, any interviews or
caveat negotiations, procurement review, and Board agenda deadlines.
Following voter approval and advisor recommendation: initiate underwriter procurement if bonds are recommended.
20
DeKalb County School District | Capital Financing Options
Four strategic paths for Board consideration
The advisor should test each path rather than assume one structure in advance.
A FULL $500M ISSUANCE B PHASED GO BONDS
VALUE Maximum immediate capacity VALUE Issues aligned to project readiness
RISK Maximum interest, carrying cost, and execution pressure RISK Future rates and multiple issuance costs
C HYBRID APPROACH D COP / MILLAGE DEBT
VALUE Limited GO + pay-go + capped interfund loans VALUE Targeted projects outside E-SPLOST cash flow
RISK More complex administration and reporting RISK General Fund pressure or added property-tax burden
Preliminary direction: evaluate phased and hybrid strategies first.
21
DeKalb County School District | Capital Financing Options
Recommended Board direction and governance
Independent advice, disciplined issuance, and transparent reporting before any debt is sold.
PROJECT READY INDEPENDENT STRESS TESTED
1 No issuance without project-level cash
2 Financial Advisor recommendation and
3 Collections, escalation, rates, and
flow bond counsel review liquidity scenarios
COMPETITIVE TRANSPARENT BOARD CONTROL
4 Documented method of sale and
5 Quarterly debt, investment, and project
6
Final financing plan returns for approval
underwriter selection reporting
Continue the Financial Advisor procurement and return with a financing plan that specifies
RECOMMENDED DIRECTION amount, timing, repayment source, expected cost, cash-flow impact, risks, and safeguards
before any debt is issued.
The question is not whether debt is available. The question is whether borrowing creates more
value than it costs.
22
DeKalb County School District | Capital Financing Options