Assessing the Academic and Financial Impacts of the Build America Bond (BAB) Program on Independent School Districts: A Dallas & Fort Worth Case Study

Abstract

This paper investigates the academic and financial effects of Dallas Independent School District’s outsized Build America Bond (BAB) issuance in 2010, using a panel of elementary schools in Dallas and Fort Worth from 2003 to 2017. A Difference-in-Differences design compares changes in reading and math “satisfactory” pass rates in Dallas relative to Fort Worth, which did not participate in the BAB program. Initial models suggest significant improvements in math outcomes (+6pp) post-issuance, while reading scores remain statistically unchanged. When stratifying by economic disadvantage, reading gains become significant (+8.7pp) and math gains increase (+9.5pp), pointing to stronger impacts in more advantaged schools. However, placebo and time trend robustness checks reveal signs of pre-treatment divergence, particularly in math, raising concerns about the validity of the parallel trends assumption and suggesting that improvements may reflect a slowing of Dallas ISD’s prior trajectory rather than a post-treatment surge. On the financial side, results show no yield penalty for Dallas ISD’s subsequent rated tax-exempt issuances relative to Fort Worth ISD, and a $7 higher per-capita issuance size, indicating that the BAB program supported larger borrowings without long-term market consequences.