News
A Matter of Principle: School Bonds Without the Interest

Never heard of a Qualified Zone Academy Bond? The 'QZAB' is a smarter way to pay for school renovation--and a model for the future.

If you think a QZAB is some kind of cotton swab, that ignorance could cost your district some sorely needed dollars for school renovation. The federal Qualified Zone Academy Bond program, created by Congress in 1997, makes $400 million in zero-interest bonds available to districts each year for the creation of "academies" housed in school building additions or rehabbed facilities--along with needed equipment, curriculum, and staff training.

Academies, in this sense, are schools or programs within a school that enter into partnerships with local businesses to enhance the curriculum, increase graduation and employment rates, and better prepare students for college or the workforce.

The QZAB program, recently extended by Congress through 2001, is based on a time-honored concept: investment through tax breaks.

The program is also based on simplicity. Holders of 15-year QZABs get annual federal income tax credits equal to a percentage of the face value of the bonds, sparing school districts from paying interest. And the program is flexible enough to include other types of financing, like zero-interest bank loans.

QZAB guidelines currently restrict this program to federally defined empowerment zones, enterprise communities, or school sites where at least 35 percent of students are eligible for free or reduced-price lunch. Eligible districts must now also line up private partners for QZAB academies.

But, with a few less restrictions and a lot more federal money, QZAB-type bonds could make a critical difference to school districts at all "income levels."

Jeffrey Baratta, a San Francisco investment banker who structures QZAB programs, stresses that QZABs "require little government intervention at the least amount of cost to taxpayers."

All a district needs, Baratta explains, is a bonding allocation from the state, a spending plan, and a "commitment letter" from private partners chosen by the district, who must pledge a donation equaling 10 percent of bond proceeds.

That gift can be in the form of anything from cash and equipment to volunteer mentors and student internships.

"This helps build community support for schools," says NEA lobbyist Joel Packer, "and the zero-interest concept makes it easier to pass a bond issue."

If all this QZAB business is news to you, you probably live in one of the many states that haven't taken advantage of this highly creative program.

"Check to see if your state education authorities have made QZAB allocations to local schools," advises Packer. "If not, lobby them to get on the ball, and get your school district to apply for a QZAB before it loses the opportunity."

QZAB funds allocated in 2000, Packer points out, must be loaned by the end of 2002, and those allocated in 2001 must be loaned by the end of 2003.

And while you're in the lobbying mode, help NEA push to make QZAB-type bonds more widely available--with fewer strings--for school renovation, technology upgrades, and new construction.

NEA strongly supports school modernization bills introduced in the House by Charles Rangel (D-N.Y.) and Nancy Johnson (R-Conn.), and in the Senate by Chuck Robb (D-Va.). These bills--H.R. 1660, H.R. 1760, and S. 1454--would leverage a $3.1 billion federal investment over five years into $25 billion in zero-interest school modernization bonds, distributed to states for use by local school districts.

"This tax credit mechanism would come with little cost to the federal government and relieve districts of 50 percent of the cost of building and modernizing schools," stresses Robert Canavan, chair of the broad-based Rebuild America's Schools coalition.

So important is this legislation that Rebuild America's Schools--uniting education unions, school administrator groups, school boards, rural education coalitions, and even the American Institute of Architects--is pulling out the stops to get it passed by Congress.

In the front ranks of this lobbying offensive is one very influential "Rebuild" affiliate: NEA.

"Nobody can document the profound needs of schools better than NEA," stresses Canavan. "We desperately need the help of NEA members."

What You Can Do:
You can help NEA's lobbying team push for federal school modernization legislation by telling your story. Describe the current condition of your school or classroom and what it would take to make it a 21^st-century learning center.

E-mail your thoughts and photos to myschool@list.nea.org or send them to My School, NEA Government Relations, Room 510, Washington, DC 20036-3290. Fax: 202/822-7741. They'll be posted at www.nea.org/lac/modern.

For more details about Qualified Zone Academy Bond rules and allocations to states, go to www.ed.gov/inits/construction/qzab.html.

Your Dues Did It

• Preparing for the Unthinkable. . . The new NEA Crisis Communications Guide and Toolkit is designed to help NEA affiliates prepare for and respond to tragic events, both natural and human-made. Drawing on the experience and lessons of affiliates that have experienced crises, these materials include advice on drafting crisis prevention plans, creating efficient internal communications, working with the media, dealing with post-traumatic stress, and even managing memorial services. NEA is now producing an accompanying CD-ROM and Web site to make the guide and toolkit more readily available. For more information, contact Rebecca Fleischauer at 202/822-7268.

• Good News About Public Schools. . . is now on the NEA Web site, complete with the latest encouraging information from your state and links to other sites, from the Harris Poll to the National Center for Education Statistics. Point your browser to www.nea.org/publiced/goodnews/.

15-Minute Activist

• The Goal: Build support in Congress for House and Senate bills to make interest-free school modernization bonds available to states and districts--and for an additional Administration proposal to make $1.3 billion in grants and loans available to high-needs districts for urgent and emergency school repairs.

• Your Assignments:
  

  • Urge your House members and senators to co-sponsor both the interest-free bond legislation (Bills H.R. 1660, H.R. 1760, and S. 1454) and the grant/loan proposal for high-needs districts (Bills H.R. 3705 and S. 2124).
  • Help build a school modernization coalition in your community and urge local and state officials to tell Congress of the need for federal support for school modernization.

• Here's how to get started: Ready to become a cyber-lobbyist for school modernization? You can find all you need to make your voice heard online at www.nea.org.lac/modern.