WASHINGTON — The Treasury and Education departments yesterday allocated $11 billion of authority for states and large local educational agencies to issue $11 billion of qualified school construction bonds this year.
These taxable tax-credit bonds, which were created by the American Recovery and Reinvestment Act last year, are used to finance either the construction, rehabilitation, or repair of a public school facility or the acquisition of land where a school will be built.
However, under the Hiring Incentives to Restore Employment Act, which the Senate approved yesterday and sent to President Obama, QSCB issuers would have the option of receiving Build America Bond-style direct payments from the Treasury instead of the department providing tax credits to investors.
The direct-pay BAB-style subsidy rate would be designed to approximate roughly 100% of interest costs. Issuers would get payments equal to the lesser of the actual interest rate of the bonds or the tax credit rate for muni tax-credit bonds, which the Treasury sets daily.
The Treasury and Education departments allocated $6.6 billion of the $11 billion of authority to states and $4.4 billion of authority to large local educational agencies.
Among the states, California received the largest allocation at $720.1 million, followed by Texas at $547.674 million, Michigan at $297.611 million, Ohio at $293.763 million, and Pennsylvania at $286.677 million.
The District of Columbia, Hawaii, and Puerto Rico received no allocations.
New York City received the largest allocation among large local agencies, $664 million. The next largest are the Puerto Rico Department of Education at $380.4 million, the Los Angeles Unified School District at $290.2 million, and the Chicago School District 299 at $257.1 million.
The Philadelphia City School District received the next largest allocation at $145.4 million, followed by the Detroit City School District at $127.6 million, and the Dade County, Fla., School District at $95.4 million.
The Marion County, Fla., School District received the smallest local allocation, at $11.3 million. The allocations are the second batch. The two departments already allocated $11 billion of the total $22 billion for QSCBs last year.
QSCBs “provide low-cost borrowing to build and upgrade schools, which is a win-win for communities across the country,” deputy Treasury secretary Neal Wolin said yesterday. “The projects funded with these bonds create jobs today building modern schools to prepare our kids for the global economy of tomorrow.”
Deputy education secretary Tony Miller also noted the importance of the allocations. “The recovery act is keeping teachers in the classroom and, through the construction bond program, making lasting investments in the quality of our schools. Our kids deserve no less,” he said.