Debt Margin

If you only read one thing Debt margin is the difference between the statutory debt limit and debt currently outstanding, how much borrowing capacity actually remains.

Builds on FM7.2 The debt limit is the legal ceiling. Debt margin is what’s left underneath it.

Why This Matters

This is the number that actually answers “can we afford to issue more debt,” not the debt limit alone. A district can be well under its debt limit and still have very little real margin if it’s already carrying substantial debt.

What’s Actually Going On

Debt margin equals the statutory debt limit minus debt currently outstanding that counts against that limit. If a district’s debt limit is $20,000,000 and it currently carries $14,000,000 in applicable debt, its debt margin is $6,000,000, the room left to borrow before hitting the legal ceiling.

The green portion is what’s actually still available to borrow.

How This Applies

Before a board discussion about issuing new debt, calculate current margin first, not just the headline debt limit. A shrinking margin is often a clearer early warning sign than the raw debt limit number ever will be.