Economic Recovery and Reinvestment

QUALIFIED SCHOOL CONSTRUCTION BONDS (QSCB)

June, 2010

On June 17, 2010, Governor Jim Doyle and State Superintendent Tony Evers announced districts that received Qualified School Contruction Bonds (QSCB) authority. A listing of districts and their QSCB authority can be found below.

 

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

The federal QSCB program provides eligible districts with an opportunity to save on interest costs associated with financing school renovations and new construction. The federal government provides eligible school districts with a reimbursement, up to 100 percent, of interest costs paid by the district on qualified school construction bonds. The result may be a savings of up to 40 percent of the cost of construction, 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 was allocated $170,707,000 in 2009. Wisconsin has been allocated $173,392,000 in 2010.

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 $72,933,000.

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.

http://www.irs.gov/pub/irs-drop/n-10-17.pdf

Application process: If your district has an interest in the QSCB program, please provide the department with a letter of interest. 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.

2010 Timeline

2009 Allocation

Guidance

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

Contact: Brian Kahl, School Finance Auditor, (608) 266-3862

Links

For questions about this information, contact dpifin@dpi.wi.gov (608) 267-9114