Distributed via Email: October 5, 2012
SEQUESTRATION AND SCHOOL BONDS
The National School Boards Association (NSBA) has learned that the federal sequester, which is slated to become effective January 2, 2013, could impact certain school bond programs. Unless Congress intervenes to rescind sequestration, these across-the-board budget cuts could affect school operating budgets with cuts of 8.2 percent or more to federal grant programs, as well as cuts to capital improvement budgets because of a reduction in federal subsidy payments that school districts (bond issuers) receive under certain direct-pay, tax credit bond programs - namely Qualified School Construction Bonds (QSCBs), Build America Bonds (BABs) and Qualified Zone Academy Bonds (QZABs).
Under the economic stimulus, these bond programs were designed to help provide a significant cost savings to school districts for capital improvement. School districts had the option of issuing QSCBs as Build America Bonds, and receiving a direct federal payment from the U.S. Treasury Department that would be equal to a portion of the interest costs or the federal tax credit that would otherwise be provided for these bonds. For example, BABs are taxable bonds for which the federal government makes payments to issuers equal to 35 percent of their interest costs.
Nationwide, about $255 million in subsidy payments would be cut for BABs, along with $62 million in payment cuts for QSCBs and $3 million in payment cuts for QZABs, according to the White House Office of Management and Budget. These cuts would equate to an estimated 7.6 percent reduction in payments to bond issuers in 2013.
NSBA has contacted the U.S. Department of Education and the U.S. Treasury Department to address this concern. If your school district issued direct-pay bonds under any of these programs, you should consult your bond counsel regarding the effect of sequestration on the subsidy payments.
NATIONAL SCHOOL BOARDS ACTION CENTER
NSBA has recently launched the National School Boards Action Center (NSBAC), a 501(c )(4) organization. NSBAC will enable NSBA to expand its advocacy efforts and to increase their lobbying profile to include public advocacy activities not previously available. You can access NSBAC at www.nsbac.org.
To this end, they sent a survey to 1,100 Congressional and Senatorial candidates requesting their views on education. The responses are available on their website by entering the password: network2012.
Additionally, posted on the site is a side-by-side comparison of President Barack Obama’s and Governor Mitt Romney’s positions on public education and how they compare to the school board position. Their viewpoints are covered on such issues as standards, testing, accountability, vouchers, choice, early education, teacher and principal issues, local governance and education funding.
NSBA’S CHARTER SCHOOL RESOURCE CENTER
NSBA has a new online resource regarding charter schools ( www.nsba.org). The website has two primary goals: 1) to provide useful information for state associations and school board members to address charter school legislation and policy in their states; and 2) to showcase school board leadership in public accountability and stewardship over taxpayers’ funds in charter school oversight.
The website contains a “Charter School Guide for School Board Members,” NSBA advocacy information, research, media postings of charter school happenings across the country, and information on charter school policies across the states.
NSBA GRASSROOTS LOBBYING GUIDE
NSBA has put out a lobbying guide that contains updates on key federal issues. It can be accessed at: www.nsba.org/lobbyingguide2012.
RACE TO THE TOP – EARLY LEARNING CHALLENGE PHASE 2
In late September, the U.S. Department of Education invited the five states (CO, IL, NM, OR, WI) with the highest Race to the Top-Early Learning Challenge (RTT-ELC) scores that were not funded in FY 2011 to apply for the $133 million being made available for RTT-ELC from FY 2012 funds. Illinois is eligible for a maximum award of $35 million.
The final requirements have very few changes from the original 2011 RTT - ELC competition. Changes to RTT - ELC Phase 2 stem from limited funding, so states will have to adjust the scope of their original proposal. Phase 2 RTT - ELC applications must focus on Core Area B (High-Quality, Accountable Programs), especially Quality Rating and Improvement Systems as well as two or more of the following: promoting early education & development outcomes, great early education workforce, and measuring outcomes & progress.
The Illinois State Board of Education has until Friday, October 26, to apply.
This Federal Legislative Report is used to forward information on federal issues from NSBA and other federal sources. Those interested in additional information or signing up for these free reports should contact Susan Hilton .