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1994 SESSION

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SB 376 Literary Fund.

Introduced by: Mark L. Earley | all patrons    ...    notes | add to my profiles

SUMMARY:

Literary Fund. Allows the Board of Education to make Literary Fund loans for the purpose of refinancing or redeeming debt incurred by a locality on behalf of a school division that has an application for a Literary Fund loan for an approved school project pending before the Board of Education. The measure also directs that school divisions having an application for a Literary Fund loan for an approved school project pending before the Board of Education shall not be denied or delayed in obtaining such loan solely for the reason that alternative financing had been obtained to begin or complete construction on such project. Pursuant to § 22.1-147, the Board of Education must equitably distribute Literary Fund moneys among the school divisions and may cap loan amounts at $5 million.

Localities considering alternative financing must balance potentially higher interest rates and other considerations, such as time consumed by any referenda that might be required for the issuance of general obligation bonds, with the need to complete project construction on a potentially accelerated schedule. Because Literary Fund loans may not exceed 100% of the cost of the construction, addition, or site acquisition, localities seeking reimbursement from the Fund would assume any costs that may be associated with obtaining alternative financing, such as bond counsel fees and other issuance costs for general obligation bonds.

Under current law, school construction costs may be financed through the Virginia Public School Authority (VPSA), which can purchase general obligation local school bonds through funds set aside to it from the Literary Fund and other appropriated funds, or through the Literary Fund. Literary Fund loans may finance the construction, alteration, or enlargement of school buildings, the equipping of school buses for alternative fuel conversions, and the construction of school bus alternative fuel facilities.

As of December, 1993, the first priority waiting list for Literary Fund loans included a total of 56 projects totaling $98.7 million; an additional 21 projects, totaling $33.1 million, had also been approved for Literary Fund loans. Pursuant to the Governor's proposed budget (SB 30), a reduced transfer to the teacher retirement fund should provide $75 million for Literary Fund loans and subsidies. Should favorable interest rates continue, it is anticipated that $135 to $140 million will be available for projects on the current waiting list.


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