Qualified Zone Academy Bonds (QZAB)

Section 26 of the Taxpayer’s Relief Act of 1997—codified into Section 1397E of the U.S. Internal Revenue Code—provides a financial tool that can be used by State Education Agencies to encourage formation of partnerships between public schools and local businesses. The Act provided $400 million of bond authority in 1998, 1999, 2000, 2001, 2002, 2003, 2004 and 2005 for issuance of Qualified Zone Academy Bonds (QZAB’s). These partnerships with local businesses are to:

Enhance the academic curriculum;
Increase graduation and employment rates; and
Better prepare students for the rigors of college and the workforce.

QZAB’s are an unusual financial instrument that provide a different form of subsidy
from traditional tax-exempt bonds that school districts might issue. Under this program, the State receives an allocation from the US Department of Education or the Rural Housing Service of the U.S. Department of Agriculture. School districts seek an allocation from the State in the amount of a loan that they pay back over several years. A local financial institution purchases the bond; the interest on the bond is “paid” by the federal government in the form of annual income tax credits to the financial institution that holds the bond. School districts are still responsible to repay the bond principle, but usually not the interest.

Schools with at least 35% Free and Reduced Enrollment as of October, 2007, revised January 11, 2008, are shown on the attached file:

35% Free and Reduced Enrollment - PDF

Historical information can be found on the following documents:

Correspondence

For questions regarding the information on this page please contact:

Cathy Dudley
Property Tax Specialist
801-538-7667
801-538-7729 (fax)