Economic Recovery and Reinvestment

QUALIFIED SCHOOL CONSTRUCTION BONDS (QSCB)

August 5, 2009

Doyle, Evers Allocate 125.5 Million in Bond Authority for Wisconsin Schools

District Allocations

Program Description: The Qualified School Construction Bond Program is a new tax credit program created by the American Recovery and Reinvestment Act (ARRA).

The Qualified School Construction Bonds (QSCB) provides tax credits, in lieu of interest to lenders who issue bonds to eligible school districts. Because the federal government provides for the “interest” payment, the district is only responsible for repayment of the bond principal. The federal government covers all of the interest in the form of tax credits on these bonds, resulting in savings up to 50 percent of the cost of these renovation and improvement projects.

All school districts and school buildings are eligible regardless of size or poverty levels. The bond proceeds may be used to finance NEW construction, rehabilitation, repair of public school facilities, the acquisition of land, and the acquisition of equipment to be used in such public school facilities.

A Qualified School Construction Bond is a bond issue and is therefore subject to the Wisconsin Statutes which govern the aggregate amount of outstanding debt a school district may incur without elector approval. Wisconsin Statutes provide school districts with the authority to borrow up to $1,000,000 without elector approval at public hearing or referendum. However, nonreferendum debt falls under the revenue cap. This limit applies to aggregate outstanding debt incurred since 8/9/89. Citation: 67.05(6a)(b) and 67.12(12(e)(2g)), Wis. Stats.

Districts are encouraged to work with their bond counsel to develop a bonding plan which best benefits the school district needs.

Funding: The U.S. Treasury has released the state allocations for the Qualified School Construction Bonds. The American Recovery and Reinvestment Act (ARRA) authorized $11 Billion in 2009 and 2010 in QSCB nationwide. Wisconsin has been allocated $170,707,000 in 2009. The 2010 allocation is pending.

Forty percent of the authority to issue bonds will be allocated by the Secretary of Education to 100 large local education agencies (LEAs) in proportion to the amount of Title I received by the LEAs. Only Milwaukee Public School District (MPS) ranks in the 100 large local education agencies. MPS has been allocated $72,118,000.

The state allocation will be reduced by the aggregate amount of the allocation to Milwaukee Public Schools (MPS). The amount allocated to MPS may be reallocated by the district to the State of Wisconsin. Any amount reallocated to the State of Wisconsin may be allocated other school districts.

Application process: If your district has an interest in the QSCB program, please provide the department with a letter of interest by June 15, 2009. Your letter should identify the projects by building, QSCB funding expectations by project, and confirm the districts commitment to comply with the Davis Bacon prevailing wage requirements.

The department will give priority consideration to eligible school districts that have passed a referendum or have a board approved resolution to issue non referendum debt, and for the following purposes:

• Science, Technology, Engineering, and Math (STEM);
• Early Childhood, 4-year-old kindergarten;
• Green and Healthy Schools; and<
• Safe and Healthful Schools.

In addition, given the amount of current referendum-passed projects statewide, the department will initially limit the allocation of such issuance authorization to 33 percent of the referendum at this time, although this figure could increase depending upon the overall demand for QSCBs.

2008-2009 Letter to School District Administrators

Timeline

• May 8, 2009 - Application Process Opens
• May 8, 2009 - Letter to school district administrators
• June 15, 2009 - Application due at department-
• August 1, 2009 - Department announces allocation of QZAB authorization

District QSCB Applications Recieved

Guidance

Please refer to the U.S. Department of Education’s website at:

• QSCB Allocation
• http://www.ed.gov/policy/gen/leg/recovery/modernization/index.html, and

  The U.S. Department of Education

• National Clearinghouse for Educational Facilities (NCEF) which provides information on planning, designing, funding, building, improving, and maintaining safe, healthy, high performance schools.

Contact: Natalie Rew, School Finance Auditor, (608) 267-9212

Links

• DPI Recovery and Reinvestment Portal
• Wisconsin Office of Recovery and Reinvestment
• Recovery.gov
• ED.gov Recovery
• Davis Bacon Act




Last updated on 8/5/2009 7:39:04 AM