What is QZAB?

Qualified Zone Academy Bonds (QZABs) are a relatively new financing instrument that can be used to carry out much-needed school renovations and repairs as well as other improvements (any use except new construction). The federal government covers, on average, all of the interest on these bonds, thus enabling schools to save up to 50 percent of the costs of these construction/other projects. The interest payment is actually a tax credit, in lieu of cash, provided to financial institutions that hold the bonds. In effect, when a school district issues a QZAB, it is like getting 50% of the funds as a grant.

Through the establishment of Qualified Zone Academy Bonds (QZABs), school districts with low-income populations can save on interest costs associated with financing school renovations and repairs as well as other improvements. In addition, these benefits can be used for other types of activities, such as paying the interest on loans. QZABs cannot be used for new construction but can be used for all activities including the following:

• Renovating and repairing buildings
• Investing in equipment and up-to-date technology
• Developing challenging curricula
• Training quality teachers
  

QZABs also encourage schools and businesses to cooperate in innovative ways that expand students' learning opportunities and help schools prepare students with the kinds of skills employers, and our nation, need to compete in the global economy.

What People Are Saying About QZABS

• Dr. Terry Bradley, Deputy Superintendent of the Clovis Unified School District in California, called QZABs, "one of the most 'user friendly' Federal or State programs in existence" because decisions are made at the local level and there are few bureaucratic hurdles.
• Arthur E. Anderson II, a Richmond, Virginia bond lawyer, wrote that his clients, lower income school districts in two cities and a rural area, were "pleasantly surprised by the flexibility and cost savings afforded by QZABs." The program offers targeted aid to poor school districts with a minimum of federal interference.

QZAB legislation:

Section 226(a) of the Taxpayer Relief Act of 1997