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Treasurer’s office says $50M a year in school bonding is feasible under CDAC guidance; JFO flags contingency and funding uncertainties
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Summary
Treasurer’s office and the Joint Fiscal Office told the Appropriations Committee that a $50 million per‑year bonding assumption aligns with CDAC recommendations, but both emphasized modeling sensitivity to inflation, long‑term liabilities and outstanding policy choices tied to the bill.
The treasurer’s office told the House Appropriations Committee on April 14 that the Capital Debt Affordability Committee (CDAC) recommendation and treasurer’s modeling support roughly $50 million per year in new state bond authorizations for the biennium, but officials cautioned that the number is sensitive to project delivery capacity, inflation and the state’s broader long‑term liabilities.
Scott Baker, director of debt management at the treasurer’s office, presented CDAC scenarios and three debt metrics the committee tracks: debt per capita, debt as a percent of personal income, and debt service as a percent of revenues. CDAC’s biennial recommendation this cycle was $100 million for the biennium (about $50 million per year); the treasurer’s office ran additional scenarios that added $50 million and $100 million to that baseline to show how those choices affect the three metrics. "That $100 million is based on what they could actually get out the door in money," Baker said, noting that authorization levels were chosen in part to reflect project deliverability and not just theoretical debt capacity.
Committee members pressed staff on how inflation and rising construction costs are modeled. Baker said inflation and market conditions are included when pricing and projecting future liabilities, and that refunding older bonds is a tool the state uses when savings are available. The treasurer’s office displayed 10‑year projections showing the state would remain within the debt‑as‑percent‑of‑personal‑income and debt‑service‑as‑percent‑of‑revenue guidelines at $50M/year but would exceed benchmark ranges under markedly larger annual issuance assumptions.
Julia from the Joint Fiscal Office then reviewed the fiscal note and how the Ways and Means amendment steers existing education‑transformation funds. JFO confirmed the amendment repurposes portions of an existing $1.4525 million transformation appropriation (Section C103 of the budget) for transition work: reimbursements for union study committees (about $210,000), facilitator and administrative support for regional learning collaboratives (about $442,000), seed grants to help hire CSA executive directors (roughly $50,000 per region, $300,000 total), and other transition costs; JFO added the bill contains one new FY27 appropriation of $75,000 for a pre‑K cost study contractor.
On legacy debt, JFO staff explained Section 74 would create an annual legacy‑debt aid payment covering qualifying school facility debt service incurred on or before Dec. 31, 2025. JFO estimates a single year’s maximum payout could be about $61,000,000 in the highest year, but staff emphasized the amount would phase in and out over time and the funding source (education fund or another source) was not yet resolved.
Why it matters: the treasurer’s office analysis frames what additional state bonding is fiscally prudent; JFO’s fiscal note and the appropriation reallocations show how near‑term transition costs would be covered within previously identified transformation funding, while legacy‑debt aid carries material potential cost and source‑allocation questions for the legislature.
What’s next: the committee paused for caucus and planned to reconvene and vote later the same day; treasurer’s and JFO staff will remain available for technical follow‑up.
