Lease purchases and Certificates of Participation (COPs) have gained popularity as financing methods for school districts to address capital needs. COPs are a form of lease financing where a district makes payments that ultimately result in district ownership of the asset or improvements. These financing tools can help districts manage cash flow, fund critical improvements, and move quickly without requiring new taxes or ballot issues. They're fast, flexible, and don’t count against debt limitations—making them an appealing option for many.
Using COPs is a bit like using fertilizer in a garden.
When your soil (or budget) is depleted and your plants (or facilities) are struggling, fertilizer can offer a quick and effective boost. You can restore growth, meet expectations, and improve appearances without completely overhauling the ground underneath. Similarly, COPs give school leaders the ability to address urgent capital needs—like restoring air conditioning or repairing parking lots—without dipping into reserves or waiting for a ballot measure.
COPs financing allows districts to stretch costs over multiple years at competitive interest rates. You and your financing team can structure the lease based on future payment goals, ensuring that the burden fits your long-term plans. For urgent issues or community-driven improvements, they’re an incredibly effective tool. In the short term, they help your district “grow” where it’s most needed.
Often times the cost of the interest and issuance is less than the cost of maintenance the district faced without the financing. For example: A district facing a depleted fleet of buses may be putting tens of thousands of dollars into repairing their old buses. Using a COPs issue may upgrade the fleet and eliminate repair costs. The savings in repair costs may more than cover the interest rate cost on the COPs while keeping the overall payment plan well inside the district budget.
However, the benefits of COPs come with important caveats. Continuing with the same example, if the COPs issue extends a payment term to the point that those same new buses need repairs, the benefits of the COPs in the short run become a problem in the long run. The structure and plan are important.
Recently, a colleague of mine—an experienced school finance advisor—shared that she’s grown hesitant to recommend COPs to districts. Why? Because too often, they’re used without a clear long-term plan. Projects are financed over too many years, and the resulting payments stretch long after the improvement has stopped adding recognized value. It's like continuing to fertilize a garden bed that no longer produces crops—your soil (budget) becomes overloaded and less productive.
One of the most common pitfalls is tying up Permanent Improvement (PI) or general funds with ongoing COP payments. At first, it seems manageable—a small annual expense compared to looming project costs—but over time, those COP payments become a burden. They begin to limit your ability to respond to new needs or to invest in future opportunities. You may find yourself trying to cultivate new growth in soil that's already overworked.
Just as a thriving garden needs more than fertilizer—good planning, healthy soil, and balanced resources—a healthy school budget needs more than just quick financing tools. COPs should be part of a larger strategy. That means aligning payment terms not just with the life of the asset, but with your district's future goals and financial flexibility.
If you ask around, you’ll find that for every treasurer who loves COPs, there’s another who feels stuck with the payments. Often, the difference comes down to planning: was the COP part of a larger financial vision, or a short-term fix that became a long-term drag?
Is a COP lease the right tool—or will you regret it down the line?
The answer lies in adopting a long-term perspective. Fertilizer can revive a garden—but only when used carefully and as part of a sustainable cultivation plan. Similarly, COPs can help your district grow and thrive—if you treat them as one tool among many, not a substitute for a strong capital plan.