Federal Money for Infrastructure Is Available

Congress through the American Recovery and Reinvestment Act (ARRA) provided new funding mechanisms for capital improvement programs in school districts across the country. Nearly $25 billion has been allocated through bonds that schools can use to acquire land, build new schools, repair and renovate existing schools, and even pay for software and staff training.

But it’s not easy money, as some school districts have discovered, which is why an afternoon breakout session at the FRN Conference was devoted to helping educators understand, and more importantly, get their hands on these federal monies.

Approximately $22 million has been siphoned into the Qualified School Construction Bonds (QSCB) for 2009 and 2010, with 40 percent of the bond authority designated to the 100 largest districts in the country and the 25 districts deemed by the U.S. Department of Education to be the neediest. The remaining 60 percent of bonds are authorized to states, which each have their own method of divvying up the bonds.

Tennessee, for example, uses a lottery system, while each district in Ohio receives a specific allocation, said Deborah Rigsby, director of NSBA’s federal legislation division. The exciting thing about QSCB is that it is a zero-interest bond program, hence only the principal needs to be paid back in a predetermined amount of time to the bond holder — at least that’s the way it’s supposed to work.

“This is a wonderful subsidy, unfortunately this subsidy hasn’t materialized for every district because this subsidy is a little more difficult to sell to the traditional investor,” said Brett Mandel, CEO of EddieTech, the National Educational Technology Funding Corporation, a new startup designed to be a clearinghouse and resource for districts wanting to tap into the federal infrastructure bonds.

Mandel said the IRS has yet to come up with regulations around these bonds, which has led some lending institutions to sit on the sidelines or institute fees or supplemental coupons to hedge their bets. Complicating matters are the stipulations built into use of these bonds. For instance, an underwriter, bond counsel, and financial advisor are required.

“That’s where we come in, perhaps we can make this easier,” says Mandel, who has partnered with organizations like NSBA, AASA, and NEA to connect with school districts and help them through the process. “We essentially want to make this a plug-and-play, where you sign here, give us the information, of course you get the local approval, and we get you the money as soon as possible.”

EddieTech’s website http://eddietech.org was expected to go live soon.

Naomi Dillon, Senior Editor

Naomi Dillon|February 1st, 2010|Categories: Educational Finance, Educational Legislation, Educational Technology, FRN Conference 2010, Governance, School Board News, School Boards|Tags: |

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