Advisory group presents options to address $6 billion in school deferred maintenance

Members of the School Construction Advisory Group told the Vermont House Education Committee on Jan. 7, 2026, that they have outlined several approaches to handling legacy school construction debt and need clear state policy to shape a new school construction-aid program.

"The 6,000,000,000 number that's been thrown around for deferred maintenance... every year that goes by, that's $240,000,000," said architect Dave Epstein, summarizing the committee's estimate of statewide facility needs and the cost of delaying repairs. Michael Gaughan, executive director of the Vermont Bond Bank, said rapid construction-cost inflation since 2020 has amplified those needs and affects the economics of any remedy.

The advisory group's report lays out three principal options. One is the status quo, in which a newly consolidated district would assume the debt of its predecessor districts—"we're simply changing the name of the obligor on that debt and sending the bill somewhere else," Gaughan said. A second option — and one the presenters described as practical to implement — is a debt-service reimbursement model in which districts pay debt service and are reimbursed by the state through a defined subsidy mechanism (a model used in Rhode Island). A third option is targeted forgiveness: the report discussed a $5,000,000-per-district forgiveness cap that the presenters said would require roughly $54,000,000 in total appropriations and would eliminate outstanding debt for all but about 13 districts.

Gaughan cautioned that direct state issuance to extinguish debt carries tax and escrow complications and can be treated by rating agencies as state-supported debt. "A much cleaner way to do it is to have money that is not raised from issuance of bonds, but just an appropriation," he said, while noting limits and trade-offs for state credit metrics.

Presenters also stressed that debt is not always a liability: newer bonds often indicate recent investment and lower deferred maintenance. Gaughan noted the bond bank's portfolio median debt-service share is below 2% of district budgets, compared with national medians above 5%, suggesting debt service is a relatively small slice of education spending in many Vermont districts. The advisory group flagged the vintage of debt and facility-condition scores (FCI) as important factors when deciding whether to renovate or replace buildings.

Committee members raised practical and equity questions. Representative Quimby asked whether the $5 million idea would "wipe out" most districts' debt; Gaughan clarified the report meant $5 million per district and that the total appropriation would be on the order of $54 million. Presenters also flagged the question of retroactive subsidies — whether districts that already invested in construction before a program starts (for example, Burlington, Winooski or Colchester) should receive reimbursements — and noted the program design will need measurable priorities so incentives align with state policy goals such as consolidation or building size.

The advisory group recommended further work to flesh out the Act 73 framework for school construction-aid but said it needs policy direction from the Legislature or Agency of Education to set priorities and measurable incentives. Gaughan suggested the bond bank could serve as a fiscal agent to track debt-service payments and administer reimbursements.

The committee did not take formal action at the hearing; presenters and members agreed to continue work on program design and to return with more detailed frameworks once policy choices are defined.