Senate briefing reviews options to restart Vermont school construction aid amid moratorium

John Green, officer of the Legislative Council, and Chris Roop, associate fiscal officer at the Joint Fiscal Office, briefed the Senate Education Committee on the state's paused school construction aid program and legislative options to restart it.

"School construction right now is not exactly proceeding under a particular program, but it's not to say that the language doesn't exist," said John Green, describing Title 16, Chapter 123 as the existing statutory framework now under moratorium.

The moratorium and why it matters

Green told the committee the current statutory program was created in 1996 to authorize the treasurer to issue bonds to assist school districts and that the program has been under suspension since 2007. Under the law, awards historically were a percentage of eligible project costs, and the program created a two-step application process: preliminary review by the Secretary of Education followed by final review and prioritization by the State Board of Education. Emergency aid authority for urgent repairs has continued during the suspension.

The pause has shifted most construction financing to local districts, with costs falling by default to local property tax levies and affecting the statewide education fund. Green said the statutory program also disqualifies projects where the Secretary finds the need is the result of "significant deferred maintenance," a provision he warned could make many existing needs ineligible under the current statute and rule set.

Past design and policy levers

Green reviewed the program features that serve as policy levers: (1) eligibility conditions that determine which projects may apply; (2) a prioritization system (points that give first priority to emergency projects above $100,000); and (3) the award formula that pays a share of approved eligible costs. Under the historical framework he described, most projects received roughly 30% of approved costs in state aid; renewable energy projects could receive up to 75%, consolidation projects 50% and career-technical-education facilities 50%.

Working-group and bill proposals

Roop summarized fiscal tradeoffs and the working group's recommendations. He said the group and the Agency of Education's facilities assessment estimated that a like-for-like replacement of the state's portfolio would require substantial sustained investment; he described an illustrative estimate of about $300 million per year for 20 years to replace the current facilities footprint if done "like with like," and noted the working group judged that figure likely understated.

Roop and Green described S.39 (Senate) and H.129 (House), bills filed by legislative members of the working group. Both bills would: - Establish a new state aid program administered within the Agency of Education (AOE) rather than split between the Secretary and the State Board of Education; - Create a special fund to hold appropriation or transferred resources for construction aid, planning grants, administrative costs and emergency aid; and - Award aid as a debt-service subsidy payable over the life of local financing, with a base subsidy around 20% of eligible cost and up to another 20% available as bonus incentives set in rule.

Under the bills, municipalities or school districts would procure bonds (potentially through the Vermont Bond Bank) and the state would provide a recurring grant to pay a share of the annual principal-and-interest payments. The bills also would set a requirement that the Agency submit a funding request as part of the governor's recommended budget each year.

Fiscal constraints and alternatives discussed

Roop emphasized the capital budget context: the Capital Debt Affordability Committee (CDAC) recently reduced its annual general obligation borrowing recommendation (from roughly $54 million to about $50 million for the current biennium), and the general obligation program is constrained. He said the state currently carries several hundred million dollars in GO debt and annual GO debt-service is in the tens of millions (figures described to give committee context rather than to set a precise program cost in this briefing).

Committee members and staff discussed alternatives the working group reviewed, including revolving loan funds, public'private partnership (P3) models (noting Prince George's County, Maryland and other national examples), and the Rhode Island debt-service subsidy approach. Roop described pros and cons of funding upfront (park the full long-term subsidy in a special fund) versus funding on a cash-flow basis (budgeting annual subsidies each year). He cautioned that dedicated revenue sources have trade-offs: they can provide stability but also reduce the legislature's annual appropriations flexibility and can underperform if the revenue grows more slowly than program demand.

Key rules and constraints highlighted

Both presenters flagged features that would shape any restart of state aid: - The existing statute delegates rulemaking to the State Board of Education (series 6000 rules govern construction eligibility and eligible costs). - The current statute disallows aid where the Secretary finds needs are the result of "significant deferred maintenance." Green said many current needs may meet that description and thus be ineligible under the old text. - Emergency aid authority persisted during the moratorium; the transcript records an emergency-aid cap figure described as $100,000 under current practice.

Discussion and next steps

Committee members raised consolidation, equity across districts, and whether separating facilities funding from per-pupil operating funding would help create regional planning and stronger facilities governance. Green and Roop noted the AOE facilities assessment, the School Construction Aid Task Force, and the working group reports as the primary background materials; the bills reference those proposals but do not include a dedicated revenue source in their drafts.

No formal committee action or vote on S.39 or H.129 was recorded during the briefing. Green and Roop said further technical, fiscal and statutory drafting work remains; the bills would require AOE rulemaking and annual funding requests to be considered through the governor's budget process.

Ending

The briefing concluded with committee members calling for follow-up: more detailed fiscal schedules for debt-service subsidy scenarios, tighter estimates of eligible project counts, and discussion of whether legislative committees beyond Education (including institutions and appropriations) should be involved as policy and funding decisions are developed.