Do school bonds purchased as a community development investment need to be for a school district with over 50% on free/reduced lunch in order to qualify? Does the school need to be located in a low to mod census tract?

Look towards the free and reduced lunch statistics.

The three factors that qualify a school are:

• benefits a low- to moderate-income, designated disaster area, or underserved or distressed nonmetropolitan middle-income census tract
• 50% or more of the students on the free and reduced lunch program
• is the school designated as a Title 1 School Wide

If verifying by the district, and the majority of the schools aren't in CRA geographies aggregate the total students in the district, and the total students who are on FRL to find the districts FRL rate.

Also, if the districts FRL rate is below 50% you can take the pro rata share of the investment if it has a primary purpose of course.

Mrogersfib: What size bank and who examines you for CRA?

I was under the impression (which may be misguided) that pro rata share can only be applied when looking at affordable housing based on the percentage of units set-aside for low- or moderate-income individuals.

Also, do not put much reliance on "Title One" school designations. Title One schools include many that are less than 50% free and reduced lunch. Many examiners will not accept title one as being a proxy for CD services or investments.

@Tennismom

I am examined under a large-bank criteria, and have worked for one of the top 3 banks CRA departments.

Yes you are right that the only example given in the Q&A is for affordable housing, but the Q&A also states that one example in a scenario also applies to others. For instance, the loan itself is the record, and the dollar amount of the loan is the quantitative aspect of the loan, and the affordable rent calculations are the qualitative aspect that we determine if a loan qualifies. If the qualitative nature of the loan benefits less than a majority--then we take the pro rata share of the loan to reflect the portion that LMI people benefited from.

To follow suit, and not all institutions do this, but if you highlight hours served in your service records you can take the pro rata share of the hours served when less than a majority of the hours served were to LMI. For example, financial education to a school who has 40% FRL then you would state to an examiner, "4 out of 10 financial education hours taught were to LMI students."

Same could be said for the investment bond to the school district, but I only use this method if there are significant other qualitative factors as this method could be interpreted as inflating your numbers if there are no significant benefits to a community. We have to remember that even if an area is middle- or upper-income that there are still LMI people who reside in those areas, and this is where the current philosophical issue of CRA comes into play with the most recent ANPR. In some ways the CRA has caused regulatory red-lining for LMI people not residing in LMI area/tracts. Further, examiners interpretations of the law are so varied that they are discouraging banks, when the first paragraph of the law states that the act is meant to encourage banks. Just treat your examiners like a judge, and you the lawyer--provide as much evidence as to why your record qualifies beyond a reasonable doubt and to a moral certainty.

@Pale Rider

You are right that some examiners are tough on Title-one, and to clarify when we talk about Title-one we are talking about Title-one School Wide (SWP) and not Part A Title-one. SWPs require that great than or equal to 25% of families are "low income." I would recommend finding the SWP document to see why the school was designated as such. But, to lend credence to the SWP for instance a distressed census tract only has to have 20% or more people living below the poverty-line. Moreover, these students are generally at a severe disadvantage and thus efforts to help that school can arguably benefit students who will more than likely be at a disadvantage economically to their peers due to the education system failing them, rather these children are called "at risk youth."