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Qualified School Construction Bonds


Office of Economic Stimulus


Qualified School Construction Bonds (QSCB) are authorized under Section 1521(a) of Title I of Division B of the American Recovery and Reinvestment Act of 2009. This tax credit bond program allows state and local governments to finance public school construction projects and other eligible costs for public schools with interest-free borrowings. These tax credit bond programs provide this federal subsidy by giving those who buy these bonds a federal tax credit that essentially allows state and local governments to issue these bonds with little or no interest cost.

QSCBs are bonds, not grants. Bonds must be authorized by the legislative body of the school district in accordance with all applicable requirements of RSA 33. Applications may be submitted prior to district meetings, but will not be considered for approval until the bond has been approved by the legislative body of the school district. The basics of the program are as follows

  • QSCB authority is allocated from the Federal Government to each State
  • The State accepts applications for the desired amount of QSCB authority from school districts
  • The school district receives authority to issue the QSCB from the State
  • A bank lends the funds to the school district
  • The school district pays back only the principal
  • The bank receives an annual Federal Tax Credit in lieu of the school district paying interest

The proceeds of QSCBs may be used for construction or renovation of school buildings or for the purchase of land upon which a school is to be built.

100 percent of bond proceeds, including investment earnings, must be spent on qualified purposes within three years of issuing bonds.

Up to two percent of bond proceeds can be used to pay costs of issuance. Bond proceeds may not be used for a reserve fund or to pay to retire a Bond Anticipation Note.

The maximum maturity of the QSCB, which is set by the U.S. Treasury, is 13 to 17 years.

Davis-Bacon Act prevailing wage rates and administrative requirements apply to all projects funded by QSCBs. SAUs and construction contractors need to be familiar with Davis-Bacon requirements from the U.S. Department of Labor. Training id available.

Qualified Zone Academy Bond (QZAB)

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New Hampshire Department of Education
101 Pleasant Street | Concord, NH | 03301-3494
Telephone: (603) 271-3494 | TDD Access: Relay NH 711