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Questions and Answers with guidance from the U.S. Treasury re: QSCB

Note: Sections 54A and 54F of the Internal Revenue Code (IRC) as well as the U.S. Treasury notice 2009-35 should answer all QSCB-related questions.

Below, please find the specific questions many of the State QZAB/Facilities Directors sent us and answers. Hope this is helpful.

1. Do you have any information about the need to comply with the Davis-Bacon Act when using these new bonds?  Where specifically does it state that the Davis Bacon Act applies? Davis Bacon Act applies to both QSCB and QZAB?

Yes. See Section 1601 Division B of the American Recovery and Reinvestment Act of 2009.

2. What is the State Department of Education’s role in the allocation that is specifically for the large 100 LEAs receiving direct allocation? Does the Department have to keep track of how much of the allocations that these four districts utilize?

None at present. The LEAS receiving direct allocation may turn over the unused portion of the allocation to the State within one year. State can carry it forward and distribute to other LEAs.

3. Am I correct that the QSCB’s must be issued (sold) on or before December 31, 2009?

Yes, but the state can carry forward unused portion of the allocation.

4. If the state law states that no allocations for QSCBs can be authorized until after July 1, 2009 due to the state requirement that program authority be in statute first.  Is this an issue?

No, it is upto each state.

5. Are charter schools eligible to apply directly for the QSCB program, or must they go through the district / LEA?

It is a state decision, depending on how the state defines an “eligible issuer.”

6. The top 100 allocations were made at the district level.  Is the intent that states also make their allocations at the district level?

Again, it is a state decision, depending on how the state defines an “eligible issuer.”

7. For the purposes of issuance / eligibility would the “local government” be defined as the school board? 

Again, it is a state decision, depending on how the state defines an “eligible issuer.”

8. Are there QSCB reporting requirements for the states?

No. The issuer has to file Form 8038

9. What role do the states play in the 100 LEAs receiving direct allocation?

None, except to re-allocate the unused portion of the allocations turned over to the state by the LEA.

10. A definition of allowable equipment purchases is needed.  What is allowable here?  Not allowable?

See notice 2009-35 definition

11. The legislation does not state that these are interest fee bonds.  Are they?

They are tax credit bonds, the same as the QZAB.

12. Can districts purchase land for future needs? 

Has to buy land and build with the same bond proceeds within 3 years.

13. Are states required to allocate to all districts, or can allocation be on an as requested basis?

It is upto the states.

14. What happens to unused allocations to the top 100?  Does it revert to the state or the feds for reallocation?

State gets it and state can reallocate.

15. What are the state’s roles regarding the Indian Tribal Government Volume Cap?


16. Page 9, top of page.  Is this language intended to give the top 100 the authority to receive an additional allocation from the state?

It is up to the state.

17. Page 14.  Will there be carryforward with the state allocations, or will this program work like QZAB and the authority revert 1/1/2010?

State allocations can be carried forward indefinitely.

18. If carryforward to later years is allowable, what will be required of the states to do so?

Keep records.

19. Are issuance costs allowable, as 100% of the proceeds are to be spent on projects?

Just like the QZAB, up to 2% can be spent on issue costs.