Senate Finance hears bond bank on school construction financing; recommends intercept language for S.39

Michael Gaughn, executive director of the Vermont Bond Bank, told the Senate Finance Committee that the bank is “essentially Vermont’s infrastructure bank for units of government” and outlined how the bank pools local school and municipal borrowing to obtain lower rates in the public bond market.

Gaughn and committee members focused on a proposed state plan (referred to in testimony as S.39), the bank’s current portfolio, and two technical changes the bond bank says would materially improve credit for school borrowing: (1) statutory language enabling the bank to intercept state-distributed education dollars that are currently transferred laterally from municipal tax collectors to school districts, and (2) explicit statutory authority and prequalification for alternative delivery mechanisms such as consolidated design-build or public‑private partnership (P3) procurement.

The bond bank director said the bank has increased capacity and changed its security structure to prepare for a large wave of borrowing. He told senators the bank’s portfolio is roughly $650,000,000 and that school borrowers account for just under $200,000,000 of that total; he repeated a commonly cited statewide estimate that school capital needs total about $3,000,000,000 over the next 10 years. Gaughn said Colchester will be included in an upcoming bond issue and is expected to be the bank’s first borrowing in that deal, about $30,000,000.

Nut graf: The committee’s discussion came as lawmakers and education leaders…