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QZABs offer cost-effective financing of renovation and other projects

Qualified public school districts can take advantage of a unique financing instrument that allows them to carry out much-needed school renovations and repairs. The instrument is Qualified Zone Academy Bonds, or QZABs. South Dakota currently has about $4.35 million in QZAB authority.

QZABs are bonds the federal government subsidizes by providing tax credits in lieu of cash interest payments to bondholders. As a result, school districts are generally responsible for repayment of just principal. These bonds may be used at an eligible school for several purposes: rehabilitating or repairing school facilities; purchasing equipment; developing curricula; and training school personnel. They may not be used for new construction.

The primary eligibility requirement is that a public school has a reasonable expectation that at least 35 percent of the students attending the school will be eligible for free and reduced price lunches under the national school lunch program. The school also must comply with other criteria detailed in the QZAB application.

Schools may apply for a minimum of $250,000 in QZAB authority and a maximum of $500,000 during this allocation cycle.

An application is available at http://doe.sd.gov/ofm/qzab.asp. Click on “Application” in the right-hand column.

Questions regarding QZABs can be directed to Cody Stoeser at the Department of Education, (605) 773-3248.