Department of Education

 

GDForum ID: 145

Description of Proposed Guidance Document Changes

At its July 25, 2019 meeting, the Board of Education approved program guidelines based on the initial interpretation of the underlying legislation in SB 1093. Following the July Board meeting, Department of Education staff consulted with legislative and Virginia Public School Authority staff on a revised interpretation of SB 1093 which better conformed to the specific language in the bill and that would provide a more favorable subsidy grant payment to school divisions. With concurrence on the revised interpretation, the program guidelines were revised accordingly. Background information: Senate Bill 1093, enacted at the 2019 General Assembly session and codified as Section 22.1-146.1, Code of Virginia, requires the Board of Education to establish a new interest rate subsidy program to subsidize interest payments on certain loans made by the Virginia Public School Authority (VPSA) under its Pooled Bond Program to local governing bodies and school boards for the design and construction of new school buildings and facilities or the modernization and maintenance of existing school buildings and facilities. Further, Item 136, Paragraph C.11.b. of the 2019 Appropriation Act (Chapter 854), requires the Virginia Public School Authority to provide an interest rate subsidy program in fiscal year 2020 for projects that are on the Board of Education's First Priority Waiting List, and which shall only use the subsidy funding and associated VPSA borrowing by localities as original financing for the projects and not to refinance any prior debt on the projects. Up to $5.0 million from the Literary Fund is authorized to pay the cost of the interest rate subsidy program in fiscal year 2020 for subsidy grant payments and related issuance costs, with the program subject to the provisions of Section 22.1-146.1. Under this program, eligible Literary Fund projects are financed with a loan through the VPSA Pooled Bond Program at a market rate of interest but also receive an interest rate subsidy grant from the Literary Fund (at a 50 or 100 percent rate) applied to a portion of the market interest rate and the project cost, reducing the principal amount borrowed. Depending on the market interest rate, the combination of the VPSA loan and subsidy grant may result in a debt service cost lower than that paid on a direct Literary Fund loan. The program is targeted to school divisions with lower composite indices that may have less ability to pay for school construction and renovation. This financing approach is in lieu of the project receiving a direct construction loan from the Literary Fund.

 

Guidance Document(s) for this Comment Forum

Document ID	Document Title	Document in Effect	Proposed Document
6730	Guidelines for Providing Loan Interest Rate Subsidy Grant Payments for the Virginia Public School Authority Pooled Bond Program (Revised - September 2019)	n/a	Proposed Document

 

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