DALLAS — The Texas Education Agency will distribute more than $1 billion of federally subsidized qualified school construction bonds to local districts under an allocation procedure issued Monday.

The state's capacity includes $547.7 million of bonds that are available for local districts and a direct allocation of $467 million of QSCBs reserved for 18 large districts across the state by the U.S. Department of Education. The Texas allocation is part of an $11 billion nationwide economic stimulus effort.

Applications will be accepted through June 30. If the allocations for charter schools and the 18 large districts are not fully subscribed by then, the remaining capacity will be returned to the general allocation fund.

The general allocation includes $100 million of bonds reserved specifically for charter schools.

Districts issuing QSCBs receive a direct, 100% subsidy of interest costs from the federal government.

Gary Marek of the TEA's state funding division said local districts issued about 25% of total 2009 QCSB allocations, but he expects more interest in the program this time.

Last year, he said, the program ­provided tax credits to bond buyers. The new ­direct-subsidy provision seems to be more attractive to school districts, Marek said.

"We received a whole stack of applications on Tuesday, the first day we accepted requests," he said. "It seems that people really like the changes."

In 2009, Marek said, the 18 school districts with direct allocations returned $320 million of an authorization of more than $400 million.

"The financial people tell me there is a good market for this type of debt, better than last year," he said. "Districts were reluctant to issue any kind of debt in 2009, but the new direct-subsidy makes the program more attractive."

The large districts that were unable to use their 2009 allocations will be eligible for a portion of the general allocation this year, in addition to their current direct allocation, Marek said.

A specific allocation is provided for every school district in Texas, but the districts must apply for their allocation. The formula is based on fall 2009 enrollment.

Large districts with direct allocations can receive some capacity from the general allocation, according to Marek.

"If the direct allocation is less than the district would have received based on the formula, we can make up the difference from the general allocation," he said.

Proceeds from QSCBs must be used to build or repair school facilities, or to purchase land for future construction.

Issuers must sign contracts for 10% of the proceeds within three months of the bond sale and spend all of the proceeds within three years.

Districts can receive up to 5% more than the amount of bonds for which they are qualified if facilities are built to strict environmental standards.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.