California School Finance Authority

TEFRA

The Tax Equity and Fiscal Responsibility Act (TEFRA) hearing is a public inquiry required by the Internal Revenue Service of non-profit borrowers that intend to issue tax-exempt debt. The hearing provides the public an opportunity to comment on the use of tax-exempt bond proceeds by the specific borrowing institution to finance their capital needs. Following the public hearing, the Treasurer executes an approval certificate for the financing under the TEFRA rules.

TEFRA list for the last 12 months
TEFRA date School Name Resolution # TEFRA notification
3/17/2020 REAL Journey Academies 20-09 TEFRA Notice - REAL Journey March 2020
5/21/2020 High Tech High Learning 20-13 TEFRA Notice - HTH Learning
6/18/2020 Aspire OG 20-15 TEFRA Notice - Aspire OG
6/18/2020 College Preparatory Middle School 20-16 TEFRA Notice - College Prep 2020
7/23/2020 The Classical Academies 20-20 TEFRA Notice -Classical Academies
7/23/2020 Contra Costa School of the Performing Arts 20-21 TEFRA Notice - Contra Costa School of the Performing Arts
7/23/2020 REAL Journey Academies 20-22 TEFRA Notice - REAL Journey July 2020
9/17/2020 Santa Rosa Junior College 20-28 TEFRA Notice – Santa Rosa Junior College
9/17/2020 Value Schools Everest 20-29 TEFRA Notice – Value Schools Everest

Why you need a TEFRA:
A TEFRA hearing is an IRS requirement for any non-profit looking to use tax-exempt funds through CSFA.

When TEFRA hearings are held:
The hearing must be held prior to the Board meeting in case any issues arise at the hearing. The TEFRA Hearing is typically held the day of the CSFA Board meeting when the financing in question will be considered. In the COVID era the IRS has approved hearings be held virtually with a telephone conference or video conference connection provided for public participation.

How much does a TEFRA Hearing cost:
The TEFRA Hearing typically involves costs of legal counsel as well as approving local government jurisdiction staff or other costs. The TEFRA Hearing process through CSFA is free, however.

The TEFRA Notice:
The TEFRA Notice must be published 7 calendar days prior to the public hearing. The Notice alerts the public of the time/location/call-in number for the hearing. The Notice must be published in a public location. The IRS recently approved websites for TEFRA Notice publications and CSFA publishes the notice on its website as part of the process.

Sample docs and Instructions on applying:
The TEFRA notice and approval is part of the general CSFA bond application process. The link for the bond application is below. (Please link the previous sentence to the attached file, Form of TEFRA Notice). Please don’t hesitate to reach out to CSFA staff or your bond counsel with any additional questions.