[Congressional Record Volume 152, Number 24 (Wednesday, March 1, 2006)]
[Senate]
[Page S1581]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CONRAD (for himself and Mr. Rockefeller):
  S. 2347. A bill to amend the Internal Revenue Code of 1986 to extend 
and modify the tax credit for holders of qualified zone academy bonds; 
to the Committee on Finance.
  Mr. CONRAD. Mr. President, today, I am reintroducing, with Senator 
Rockefeller, a bill to make some small but important changes to the 
Qualified Zone Academy Bond, QZAB, program.
  The QZAB program helps qualifying schools renovate and update school 
buildings. Schools issue special bonds to finance the cost of 
renovation. Purchasers of the bonds receive a Federal tax credit in 
lieu of interest on the bond, thus helping to reduce the cost to the 
school. Most States are now using this program to modernize their 
school facilities. The QZAB program expired in 2005, but the Tax 
Reconciliation bill that will soon be considered by a conference 
committee extends the program.
  We are proposing to make modest changes in the QZAB program to make 
it even more useful to schools across the country. Our bill would 
expand the pool of bond purchasers to include all taxpayers, both 
individuals and other entities. Currently, only financial institutions 
can buy QZABs, which precludes pension funds and mutual funds from 
purchasing QZABs.
  Our bill would also allow QZABs to be ``stripped'' so the purchaser 
could then sell separately the principal portion of the bond and the 
tax credit. This will encourage the development of a secondary market 
for the bonds and reduce the discount costs making more of the proceeds 
available for school-related expenses. It will also open the market to 
nonprofit entities such as public employee pension funds.
  The bill revises the allocation formula to the States to better align 
with Title I, the program for disadvantaged students. Current law 
requires that allocations be made on the basis of a State's population 
living below poverty. This change simplifies and updates by tying 
funding to the formula used to distribute Title I funding for 
disadvantaged students.
  Unused bonding authority would be reallocated to other States. A few 
States have not used their allocations, and their bonding authority has 
lapsed. However, the demand in many States now far exceeds their 
allocation. Allowing funds to be reallocated would maximize the 
potential of the QZAB program.
  Finally, our bill would allow QZABs to be used for new construction 
and to purchase land for school buildings. We believe QZABs have been 
proven to be a cost-effective method for financing school renovation. 
With this additional flexibility, States can effectively reduce their 
construction backlogs.
  School districts across the country have praised the QZAB program for 
helping them to address serious problems in their buildings. This is a 
good program. We can make it even better by enacting these small 
reforms. I urge my colleagues to join us in supporting this important 
measure.
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