A sinking fund schedule is a schedule of payments that is required by a general obligation bond to be placed each year into a special fund called a sinking fund. This fund can be used for retiring a specified portion of term bond issues prior to their maturity.
For example, a municipality may issue a 10-year general obligation bond that calls for $1 million per year to be placed into a sinking fund via a sinking fund schedule. After the first five years, the municipality may opt to use the $5 million to redeem some of the bonds early.
