Using QZABs to Improve Education.

• Author: Amezcua, Jesus J.
• Position: Qualified Zone Academy Bond - Statistical Data Included

Like many school districts, the Laredo Independent School District (LISD) in Laredo, Texas, has limited resources. Located along the United States/Mexico border, 90 percent of the district's students are economically disadvantaged and 54 percent have Limited English Proficiency.

The oldest organized school system in Texas, Laredo ISD is the 55th lowest in the state (among more than 1,000 districts) in wealth per student. This means that the taxable value of $54,988 wealth-per-student does not allow the district to provide for adequate resources, making the district dependent on state funding for about 86 percent of all its resources.

QZAB Program

Because of its severely limited resources, Laredo ISD must look for new ways to fund school facility construction. Thanks to federal support, the Qualified Zone Academy Bond (QZAB) program has been able to fill that role.

Created by Congress in 1997, the QZAB program is a federal tax credit program for education construction administered by the U.S. Treasury Department. QZABs are designed to provide tax credits to bondholders that are generally in lieu of the interest payments that normally would be paid. QZABs, under federal law, can be used to help schools raise funds to renovate and repair buildings, invest in equipment and modernize technology, develop challenging curricula, and train teachers.

To be eligible for the program, a school must be located in designated Empowerment Zones, enterprise communities, or have 35 percent of its students enrolled in the federal free- and reduced-lunch program, which is for children of families living below the federal poverty line.

In addition, the district must provide written participation from private entities for contributions totaling a present value equal to not less than 10 percent of the proceeds of the bond issue. The 10 percent contribution from private partners may include cash, property, or equipment for use at the QZAB academy campus.

Developing a QZAB

Developing a QZAB is a complex undertaking. It requires multiple variables that must be coordinated with school officials, the business community, and the investment community. Those variables are explained in Exhibit 1.

Planning Process

The requirements for the QZAB program fit perfectly within the LISD planning process and mission statement. The planning process at LISD has the following characteristics:

* learning centered--it is designed for the improvement of student learning;

* data...