School Business Services

School Construction

Qualified Zone Academy Bonds (QZAB)


Congress provided authority to issue Qualified Zone Academy Bonds (QZAB) in Section 226(a) of the Taxpayer Relief Act of 1997 to help strengthen schools serving large concentrations of low-income families. The federal government subsidizes these 15-year (max.) bonds by providing tax credits to bond holders that are approximately equal to the interest that states and communities would ordinarily pay the holders of taxable bonds. The federal government allocates the authority to issue these bonds to states based on their proportion of the US population living below the poverty line. States may directly issue the bonds on behalf of eligible schools or they may sub-allocate authority to issue the bonds within the State. Issuers are required to have authority under state and local law to incur this additional debt.


These bonds may be used on behalf of schools or programs that meet the following eligibility criteria:

These schools:
  1. must have located in an empowerment zone or an enterprise community; or
  2. have at least 35 percent of their students eligible for free or reduced-cost lunches under the National School Lunch Act.

Eligible schools must have an education program designed in cooperation with business and receive a private business contribution that is not less than 10 percent of the proceeds of the bond.

Eligible schools must have an education plan that is approved by its school district and its students must be subject to the same standards and assessments as other students in the district.


Qualified Zone Academy Bond proceeds may be used for:

  1. renovating school buildings;
  2. purchasing equipment;
  3. developing curricula; and
  4. training school personnel.
The proceeds may not be used for new construction.