Department of Education

 

GDForum ID: 1954

Description of Proposed Guidance Document Changes

The Literary Fund is authorized under Article VIII, Section 8 of the Constitution of Virginia as a permanent and perpetual school fund to be used for public school purposes. Certain revenue sources are dedicated to the Literary Fund, primarily escheated property, property forfeited to the Commonwealth, fines for offenses committed against the Commonwealth, and annual interest on the Literary Fund. A minimum asset balance of $80.0 million must be maintained in the Fund. Title 22.1, Chapter 10, Code of Virginia, Chapter 100 of the Virginia Administrative Code, and provisions in the state appropriation act further govern the Literary Fund and its uses. The Board of Education (“Board”) is responsible for administering the Literary Fund; the Department of the Treasury serves as accountant for the Fund. The Code of Virginia and regulations of the Board in the Virginia Administrative Code establish public school construction and renovation through revolving loans as a primary purpose of the Literary Fund. The state appropriation act further authorizes the Board to issue loans from the Literary Fund to the school boards of local school divisions that apply for loans, authorized by the locality and the school board, for the purposes of a) erecting, altering, or enlarging school buildings in local school divisions, or b) refinancing prior indebtedness or obligations incurred by a locality on behalf of a school division which has an application for a Literary Fund loan for an approved school project pending before the Board. Several new budget language provisions impacting Literary Fund school construction loans were enacted in Item 137, Paragraph C.11 of the 2022 Appropriation Act (i.e., Chapter 2) for the 2022-2024 biennium, as follows: ? Language authorizing the Board to offer up to $200,000,000 in fiscal year (FY) 2023 and up to $200,000,000 in FY 2024 from the Literary Fund for school construction loans, subject to the availability of funds. Amounts designated for school construction loans that are not obligated in FY 2023 may be obligated in FY 2024; ? Establish an annual open enrollment process by which localities and school boards apply to the Literary Fund for school construction loans, replacing the First Priority and Second Priority waiting lists for awarding loans. Priority for loan funding is based on the local composite index of ability-to-pay (but the Board may consider other critical projects for priority); ? Establish a maximum Literary Fund loan amount per project of $25.0 million (from $7.5 million currently authorized in the Code of Virginia); ? In consultation with the Department of the Treasury, establish loan interest rates that are benchmarked to a market index interest rate on an annual basis, not to exceed 2.0 percent for the tier of localities with a school division local composite index of ability-to-pay between 0.0000 and 0.2999; and ? Language authorizing the Board to offer a loan add-on not to exceed $5.0 million per loan for projects that will result in school consolidation and the net reduction of at least one existing school.

 

Guidance Document(s) for this Comment Forum

Document ID	Document Title	Document in Effect	Proposed Document
7257	Guidelines for Implementing New Appropriation Act Provisions for Literary Fund School Construction Loans in the 2022-2024 Biennium	n/a	Proposed Document

 

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