Qualified School Construction Bond Program

School districts and charter schools can use qualified school construction bonds (QSCBs) to save money on bonds issued to finance school construction, land acquisition, and renovation projects. The QSCB program is a federal program that provides bond holders with tax credits that are approximately equal to the interest that states and communities would ordinarily pay the holders of taxable bonds.

The program does not grant funding. No monetary payments or awards are issued from the state to the school district or charter school. This program allows the state to grant program authorization to a limited number of qualifying school districts and charter schools. This authorization allows those school districts and charter schools to issue QSCB bonds that benefit qualifying projects.

A QSCB is any bond issued after February 17, 2009, and before January 1, 2018, by a state or local government as a qualified school construction bond and 100% of the available project proceeds are used for the construction, rehabilitation, or repair of a public school facility or for the acquisition of land on which the bond-financed facility is to be constructed.

Applications are not being accepted at this time. Previously for a school district or charter school to gain QSCB program authorization, it would need to submit a program application that satisfied all requirements of the application process. Applications must receive authorization before a school district or charter school could issue its QSCB debt. Additional requirements would then have to be met after receipt of an authorization to comply with federal tax law regarding this authorization. For more information on those possible additional requirements, consult a bond counsel.

Sequestration affected the subsidy received for interest payments from March 1, 2013, through September 30, 2013, for the school districts and charter schools who held Direct Pay Subsidy Bonds. Payments were reduced by 8.7% under Sec. 6431 (which allows the issuer of certain qualified bonds to receive the interest payments directly for Build America Bonds, Qualified School Construction Bonds, Qualified Zone Academy Bonds, New Clean Renewable Energy Bonds, and Qualified Energy Conservation Bonds).

Law

• Qualified Tax Credit Bonds - Internal Revenue Code, Section 54A (PDF, 25 KB)
• Qualified School Construction Bonds - Internal Revenue Code, Section 54F (PDF, 28 KB)  
• QSCB Guidance - IRS Notice 2010-17 (PDF, 35 KB)
• Stripping Transactions for Qualified Tax Credit Bonds - IRS Notice 2010-28 (82 KB)
• Direct Payment Subsidy Option – IRS Notice 2010-35
• Secretary Duncan’s Letter of June 11, 2010 Regarding QSCB/QZAB

 QSCB Program - 2010

• 2010 Texas QSCB Authorizations as of July 9, 2012 (Excel, 54 KB)
• 2010 Texas QSCB Authorizations as of July 9, 2012 (PDF, 275 KB)
• 2010 QSCB Maximum Authorization Amounts That Can be Requested by School Districts/Charter Schools (Excel, 58 KB)
• 2010 QSCB Maximum Authorization Amounts That Can be Requested by School Districts/Charter Schools (PDF, 175 KB)
• QSCB Program Application Process and Requirements (PDF, 43 KB) (Required Reading)
• QSCB Program - 2010 Application (Word, 45 KB)
• QSCB Program - 2010 Application (PDF, 188 KB)

 QSCB Program - 2009 (closed)

• 2009 Texas QSCB Final Authorizations (Excel, 178 KB)
• 2009 Texas QSCB Final Authorizations (PDF, 66 KB)