[FISCAL NOTES] Capital Appreciation Bonds: Another Finance Option for Schools

Most Texas public school districts issue municipal bonds to support construction. These require school districts to make regular payments on principal and interest until the term of the bond issue ends. State debt limitations, however, make it difficult for many fast-growing districts to meet their need for new facilities. CABs allow such districts to tap additional revenue without going over the debt limit, but at the cost of considerably higher interest payments at the end of the bonds’ term. 

We also examine industry “clusters” in Texas — regional groups of interrelated firms, such as Houston’s energy giants or Austin’s digital companies. Industry clusters can strengthen regional economies, but too little diversity can spell trouble in economic downturns.  

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