Arne Duncan Announces Issue of School Capital Improvement Bonds

In a letter to chief state school officers (May 29, 2009) Secretary of Education, Arne Duncan, announced the availability of three bond funds available for construction and renovation of local education agency (LEA) facilities and infrastructure, including technology. All three of these types of bonds may be used to modernize buildings and convert obsolete non-school buildings into modern school facilities. These three federal bond issues are:

Qualified School Construction Bonds (QSCBs): Under this new ARRA category of tax-credit bonds, the Treasury Department distributes $11 billion of the bond allocation in both 2009 and 2010 among the States and certain large LEAs. The QSCB bond allocation authority generally goes to States (not necessarily State educational agencies) based on their shares of Title I Basic Grant funds under the Elementary and Secondary Education Act (ESEA).

Build America Bonds (BABs): These bonds can be used to finance a wide range of projects, including construction and modernization of school facilities. The BABs program allows municipal bond issuers in 2009 and 2010 to offer an unlimited amount of taxable debt and to elect either to receive a cash subsidy from the Federal Government or to provide bondholders with a tax credit.

Qualified Zone Academy Bonds (QZABs): First authorized in 1997, the ARRA extends QZABs through 2010. States and LEAs can use QZABs to provide additional resources for improving school facilities and instruction. An increase from $400M to $1.4B has been allocated for 2009 and again for 2010.