What does "debt service" refer to in relation to school budgets?

Debt service specifically refers to the financial obligations associated with borrowed funds, which includes both the principal and interest payments that a school must make. In the context of school budgets, debt service is an essential consideration as it impacts the overall financial health and operational capabilities of the school. Schools often borrow money to fund various projects, such as building new facilities or upgrading technology. The consistent requirement to pay back these loans can shape budgetary decisions, as funds allocated for debt service cannot be utilized for other purposes, such as educational programs or administrative costs. Understanding debt service is crucial for effectively managing a school’s budget and ensuring long-term financial sustainability.