School districts will be able to apply for low- to no-interest bonds for construction and building needs
SPRINGFIELD, IL – School districts will soon be able to apply for low- to no-interest rate bonds to pay for construction projects, repairs, renovations, and other building needs through the Qualified School Construction Bond program (QSCB).
The Illinois State Board of Education (ISBE) approved the guidelines and application process for the QSCB during its regular business meeting Nov. 20. ISBE expects to be able to distribute more than $495 million in bonding authority to school districts.
“These low- to zero-interest bonds will enable school districts to use more of their existing funds for educational uses and educator professional development rather than paying off interest,” said State Superintendent of Education Tony Smith, Ph.D. “I encourage eligible districts to take advantage of this great program.”
The QSCB program was created under Section 1521(a) of the American Recovery and Reinvestment Act of 2009 (ARRA). The program is a source of limited financial bonding for school districts to fund the rehabilitation or repair of an existing public school facility, construction of a new public school facility, equipment associated with repair or construction, or for land acquisition related to the construction of a new facility. Since the bond proceeds can be used for building rehabilitation and repair, districts will be able to issue low- to no-interest bonds in lieu of Fire Prevention (health, life, and safety) bonds that would be at a higher interest rate.
In 2012, ISBE entered an intergovernmental agreement with the Governor’s Office of Management and Budget (GOMB) to grant GOMB the authority to allocate or issue these bonds. The GOMB recently notified ISBE that it has relinquished its authority back to ISBE.
ISBE will require that all districts that apply for the QSCB program must have their 2014 Annual Financial Report on file and complete an ISBE-approved application. School districts will be limited to a maximum request of $50 million. If a winning district does not issue the bonds within 18 months, the authority will revert back to ISBE. If authorization remains after all eligible applicants have received their requested amount or authority is relinquished, ISBE will open another application cycle.
When the authority is not enough to completely fund the full request of the next district on the list, that district will be contacted and given the option to accept or decline a reduced allocation.
Staff will open an application cycle from Dec. 1, 2015, to Jan. 15, 2016. The applications will be reviewed and scored. The districts eligible for an allocation based upon the scoring matrix will be recommended to the Board for its approval.