QZAB Program Overview
In order for a school to qualify for a QZAB bond, it must be a qualified zone academy. A qualified zone academy means that any public school which is established by and operated under the supervision of an eligible local education agency (a Montana school district) to provide education or training below the postsecondary level if:
(1) such school is designated in cooperation with business to enhance the academic curriculum, increase graduation and employment rates, and better prepare students for the rigors of college and the increasingly complex workforce;
(2) students must be subject to the same academic standards and assessments as other students educated by the eligible school district;
(3) the comprehensive education plan is approved by the eligible school district; and
(4) a school must be located in an empowerment zone or enterprise community or at least 35 percent of the students must be eligible for free or reduced-cost lunches.
The proceeds of QZABs can be used to:
(1) rehabilitate or repair public school buildings;
(2) provide equipment for public school use;
(3) develop course materials; and
(4) train teachers and other school personnel.
Before QZAB may be issued there must be a written agreement between the school and one or more private entities under which the private entity(s) pledge to make qualified contributions having a present value of at least ten percent of the proceeds of the QZAB. Qualified contributions include:
(1) equipment for use in the school;
(2) technical assistance in developing curriculum or in training teachers in order to promote appropriate market driven technology in the classroom;
(3) services of employees as volunteer mentors;
(4) internships, field trips, or other educational opportunities outside the school for students; or
(5) any other property or service specified by the eligible school district.
QZABs are issued by a state or local government entity. Under the Municipal Finance Consolidation Act, the Board of Investments of the Department of Commerce is authorized to issue QZAB bonds. An eligible taxpayer must purchase the QZAB. An eligible taxpayer means:
(1) a bank;
(2) an insurance company; or
(3) a corporation actively engaged in the business of lending money.
There are many aspects to issuing QZABs. A financial advisor is key to the successful issuance of QZABs, including, but not limited to, coordination of the private partnership, financial review, project qualification, and finding an eligible taxpayer to purchase the bonds.