Public Finance


By: Lucosky Brookman


Specializing in public finance law over the years, I've had the unique opportunity to work extensively with educational institutions navigating the complexities of public finance. The purpose of this article is to elucidate the key legal considerations that emerge in the arena of public finance for education and propose strategies for addressing them effectively.  

The Crucial Role of Public Finance in Education 

Public finance plays an indispensable role in the educational sector. Whether it's funding K-12 schools, community colleges, or public universities, the instruments of public finance - predominantly bonds, levies, and loans - provide the lifeblood for educational institutions to meet their operational and capital needs. 

Key Legal Considerations in Public Finance for Educational Institutions 

  1. Authority to Issue Debt: Educational institutions need to establish their legal authority to issue debt, which can vary by state law and the type of institution. Ensuring that the issuance is within legal boundaries is critical to avoiding legal complications down the line. 
  2. Use of Proceeds: The use of bond proceeds is typically restricted by both federal and state law. It's essential for educational institutions to understand these restrictions and plan the allocation of funds accordingly. 
  3. Compliance with Tax Laws: If an educational institution opts to issue tax-exempt bonds, it must comply with various requirements to maintain the tax-exempt status of the bonds. This includes restrictions on the use and investment of bond proceeds, and arbitrage rules. 
  4. Disclosure Obligations: Issuers of municipal securities, including educational institutions, must comply with the federal securities laws, including providing comprehensive and accurate disclosures to investors. 
  5. Ongoing Regulatory Compliance: After the issuance, the educational institution must meet ongoing compliance obligations. This may include financial reporting, compliance with covenants, and monitoring the use of bond-financed facilities. 

Strategies for Addressing these Legal Considerations 

  1. Engage Experienced Legal Counsel: An experienced public finance attorney can help navigate the maze of federal, state, and local laws that govern the issuance of debt by educational institutions. Early engagement of counsel is crucial to ensure a smooth and legally compliant process. 
  2. Comprehensive Due Diligence: Conducting thorough due diligence at the outset of a financing project is key to identifying potential legal issues and planning strategies to address them. 
  3. Education and Training: Ensure that the key stakeholders within the educational institution understand their roles and responsibilities in the financing process. This includes board members, administrators, and finance staff. 
  4. Maintain a Compliance Calendar: One of the challenges educational institutions faces is managing ongoing compliance obligations. Maintaining a compliance calendar can help track filing deadlines, continuing disclosure obligations, and other compliance milestones. 
  5. Foster Transparency: Open and transparent communication with stakeholders, including the board, employees, taxpayers, and regulators, can help build trust and avoid misunderstandings or controversies. 


Public finance provides a crucial pathway for educational institutions to secure the necessary funds for their operation and growth. However, the legal considerations that accompany this form of financing are complex and multifaceted. Educational institutions must approach these issues with a clear understanding, proper planning, and a commitment to transparency and compliance. 

As public finance attorneys, our role extends beyond merely guiding clients through a bond issuance. We stand as partners in the broader endeavour to use public finance tools effectively and responsibly, thereby playing our part in shaping the educational landscape of our nation. 

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Non-profit organizations should consult with qualified legal professionals for specific guidance tailored to their individual circumstances.