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TO:                  Superintendents of Schools

FROM:             Susan A. Gendron, Commissioner

DATE:              August 1, 2005

RE:                    Adjustments to Subsidizable Costs for FY 2006 School Bus Purchases  

As you know, the 122 nd Legislature recently adjourned having completed the budget for fiscal years 2006 and 2007. In order to balance the budget, some compromises were made in state support for local schools - General Purpose Aid (GPA).  In particular, state subsidy for new bus purchases and/or lease purchases made by School Administrative Units in FY2006 and subsidizable in FY2007 was reduced by $3,200,000 in FY2007. In order to honor that commitment to the Legislature with the least amount of disruption to your scheduled bus deliveries, the subsidizable costs for those FY2006 purchases will be treated as follows:

Approvals previously granted for FY2006 purchases and/or lease-purchases remain in place but only for bus units where confirmed signed orders exist prior to the date of this letter. The subsidy reimbursement for the approved units with confirmed orders will occur over two fiscal years (FY2007 and FY2008) instead of one fiscal year (FY2007) for purchases only. All bus lease-purchases approved for subsidy purposes for FY2006 with confirmed orders and all prior year approvals are not affected. Scheduled payments on those units are subsidizable without interruption. We will continue to explore other ways to support those approvals where confirmed orders do not already exist. Until a method of support is confirmed for orders placed after the date of this letter, a local decision to proceed will be without FY2007 state subsidy for those units.      

It is my hope that this approach will ensure that your commitments to vendors and your transportation needs can be met without disruption. Although there will be additional subsidy impact in FY2008 by this approach, there should be adequate time to plan, at both the state and local levels, for your FY2007 bus replacement needs.

If you have questions or need further clarification please contact Harvey Boatman at or call 624-6884.