|
Introduction
Congress provided authority to issue Qualified Zone Academy
Bonds (QZAB) in Section 226(a) of the Taxpayer Relief
Act of 1997 to help strengthen schools serving large concentrations
of low-income families. The federal government subsidizes these
15-year (max.) bonds by providing tax credits to bond holders
that are approximately equal to the interest that states and
communities would ordinarily pay the holders of taxable bonds.
The federal government allocates the authority to issue these
bonds to states based on their proportion of the US population
living below the poverty line. States may directly issue the
bonds on behalf of eligible schools or they may suballocate
authority to issue the bonds within the State. Issuers are required
to have authority under state and local law to incur this additional
debt.
Eligibility
These bonds may be used on behalf of schools or programs
that meet the following eligibility criteria:
These schools: (1) must have located in an empowerment
zone or an enterprise community or (2) have at least 35
percent of their students eligible for free or reduced-cost
lunches under the National School Lunch Act.
Eligible schools must have an education program
designed in cooperation with business and receive a private
business contribution that is not less than 10 percent of the
proceeds of the bond.
Eligible schools must have an education plan that is approved
by its school district and its students must be subject to
the same standards and assessments as other students in the
district.
Purpose
Qualified Zone Academy Bond proceeds may be used for:
- renovating school buildings;
- purchasing equipment;
- developing curricula; and
- training school personnel.
The proceeds may not be used for new construction.
Additional information about Qualified Zone Academy Bonds is
located on the Internet at http://www.ed.gov/offices/OVAE/qzabfin.html.
- Nationally authorizes dollars of locally issued bonds
to be designated as "Zone Academy Bond"
- Such bonds provide federal tax credits to holders
instead of paying interest
- Eligible holders are limited to:
- Banks
- Insurance companies
- Other companies that normally make loans
- State Education Agency is assigned responsibility of allocating
authorized amounts among eligible schools
- Public Schools designated as "Zone Academies"
are eligible.
- Must be located in an "Enpowerment Zone"
or an "Enterprise Community" or have at least
35% of students eligible for Free or Reduced Lunch.
- Curriculum must be a product of "public private
partnership"
- School must be provided "substantial business
support" (i.e. in-kind contributions of at least
equal to 10% of amount borrowed).
- Issuing authorities must:
- Approve Zone Academy Plan
- Issue bonds on behalf of Academy
- Issue information tax returns to purchasers
|
