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ACT NO. 121

(S.146)

Education; Independent School Finance Authority

This act establishes the Vermont Independent School Finance Authority. The new entity is intended to help lower the cost of capital construction for a handful of independent schools which serve as public institutions.

The new school finance authority is a mirror image of the Vermont Municipal Bond Bank, including the same set of individuals serving as directors, with the same purpose of achieving lower cost capital financing.

This lower cost is achieved, first, by relying on the “moral obligation” of the state of Vermont (but not its “full faith and credit”) to assure lenders that debt will be repaid. In addition, both the authority and the bank offer the opportunity for several borrowers to pool their debt, with the resulting larger, single debt issue likely to be purchased more quickly in the bond market, and at a lesser interest rate.

The bond bank serves municipal entities which have the authority to raise tax revenue to repay their debt. In contrast, the finance authority will serve the few schools in Vermont which do function primarily as public schools for local students, but which do not have the authority to raise tax revenues.

The schools the authority is intended to help are: Lyndon Institute, St. Johnsbury Academy, Thetford Academy, and Burr and Burton Seminary. In addition, access to the authority is given the Austine School for the deaf.

Effective Date: July 1, 2000

Became law without Governor’s signature.