A recent study by the U.S. General Accounting Office (GAO) found that years of underfunding through 1994 had left investment in U.S. public schools short by $126 billion. To better understand the GAO finding, the authors estimated capital stocks in U.S. public schools; they then projected future capital stocks and infrastructure deficiencies. They use this framework to interpret two federal public school construction financing options: tax credit bonds, promoted by the Clinton administration, and expanding “arbitrage” earnings possibilities for those state and local governments that issue school bonds, promoted by many Republicans in Congress.
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