Schools Chief Encourages Schools to Apply for Federal Stimulus Funds for Construction Projects

From YubaNet.com

CA
Schools Chief Encourages Schools to Apply for Federal Stimulus Funds for Construction Projects
Author: California Department of Education
Published on Jul 4, 2009 - 5:29:47 AM

SACRAMENTO, July 3, 2009 - State Superintendent of Public Instruction Jack O'Connell today encouraged school districts and charter schools to apply for more than $773 million in the Qualified School Construction Bond (QSCB) program. The new QSCB tax credit program is part of the American Recovery and Reinvestment Act (ARRA) of 2009.

"QSCB will provide tax credits to school districts and charter schools for bond issuance that has the potential to jump start new construction and modernization projects throughout the state," said O'Connell. "While this program does not provide new money to school districts for construction, it allows them to more efficiently issue local authorized bonds. This will make local bond dollars go further to repair, renovate, and construct much-needed schools, as well as stimulate the economy and generate jobs."

ARRA provides $22 billion nationwide to QSCB for this year and next. California's share is $2.7 billion over the same two year period. Of this sum, $582 million has already been directly allocated to the state's 11 largest school districts; $700 million is available to allocate this year to qualifying school districts; and $73 million is available to allocate this year to qualifying charter schools. The remaining $1.3 billion will be allocated in 2010.

QSCB provides federal income tax credits in lieu of interest to lenders who purchase bonds from eligible school districts and charter schools. The United States Treasury Department establishes state allocation limits and sets a tax-credit rate for QSCB that, on average, equals the amount of interest schools would ordinarily pay on debt. With the federal government covering most or all of the interest on the bonds, school districts and charter schools will receive a substantial benefit, because interest payments typically equal about 50 percent of the economic cost of a bond.

Applications from school districts are due by August 25, 2009 to the California Department of Education. Applications from charter schools will be handled by the California School Finance Authority within the State Treasurer's office. More information on the charter school application and deadline are forthcoming. Applicants should seek guidance from their own bond counsel and financial advisers before applying to the program and issuing debt. School districts may apply for QSCB at http://www.cde.ca.gov/ls/fa/qs/index.asp.