The National Education Technology Funding Corporation, "Eddie Tech™"

Qualified School Construction Bonds (QSCBs) and Qualified Zone Academy Bonds (QZABs) are taxable rate securities issued by school districts and other local educational agencies.  Legislation passed by Congress in March, 2010 allows issuers to elect to sell these bonds as interest-bearing obligations, with the issuer receiving a direct subsidy from the Treasury.  The subsidized rate is set by Treasury each day at the "qualified tax-credit bond rate."  Although QSCBs and QZABs are offered at taxable, not tax-exempt yields, the federal subsidy covers most or all of the interest expense of borrowing.  As illustrated in the chart below, school districts are able to use these bonds to realize a significant debt-service savings compared to conventional tax-exempt bonds.

The federal legislation relating to QSCBs and QZABs directs that the Secretary of the Treasury establish a tax-credit rate such that issuers need not pay interest cost or sell the bonds at a price less than the face value.  In recent months, however, investors generally have required supplemental interest payments of 0.5 to 2.0%, due to concerns about size, credit, and liquidity.

The Treasury on a monthly basis also establishes the maximum permitted maturity for the QSCBs and QZABs (recently in the 15- to 17-year range) and the "permitted sinking-fund yield" (the maximum rate at which borrowers can reinvest annual deposits to provide for principal repayment). 

Click here for the current tax-credit rate, maximum maturity, and sinking-fund yield from TreasuryDirect 

Issuing government entities repay the bond principal, using local revenue sources such as property taxes. 

The value to school districts of QSCBs and QZABs is maximized if the bonds are structured as "balloon maturities," with all the principal remaining outstanding until the year of final maturity.  Many states have legal requirements that school districts make annual level debt service payments to provide for the orderly retirement of debt.  Eddie Tech™ envisions that most participants will make equal annual contributions to a central escrow account (the Sinking Fund).  Districts would be credited with net earnings on sinking fund balances to reduce their contribution the following year.

Eddie Tech plans to market pooled QSCBs and QZABs through its School Investment Pooled-Securities (SIPS™) Program on a quarterly basis, as demand warrants.

Click Here To View A Presentation About the SIPS Program

Eddie Tech's SIPS Program is designed to minimize the net-interest cost, transaction expenses, and effort associated with marketing QSCBs and QZABs.

The volume of QSCBs and QZABs is constrained by federal enabling legislation.  School districts should consult with their respective state Departments of Education to determine if they are eligible to receive an allocation of QSCBs and QZABs volume cap.

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No securities are being offered hereby. If the securities described herein or other securities are ultimately offered, any such offer would be made only pursuant to an offering document and only after a prospective investor had completed its own independent investigation of the securities, instruments or transactions and received all information it required to make its own investment decision.  The projections or other estimates in this website (if any), including estimates or assumptions regarding interest rates, pricing levels and cost savings, are forward-looking statements based upon certain assumptions and are preliminary in nature. Accordingly, there can be no assurance that estimated or assumed interest rates, pricing levels or cost savings described herein will be realized or that actual interest rates, pricing levels or cost savings will not be materially different than those estimated or assumed herein.