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TO:                  Superintendents of Schools

FROM:            Susan A. Gendron, Commissioner of Education

DATE:             January 17, 2006

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

Administrative Letter No. 4, dated August 1, 2005, detailed the Department’s plan to respond to the Legislature’s decision at the end of the last session to reduce State support for school bus allocations in FY2007 by $3.2 million. The proposal was framed by three fundamental goals:

  1. Achieve the reductions required by the Legislature
  2. Minimize any disruptions to the approval, ordering, and procurement process for school bus purchases to occur in FY2006
  3. Respect commitments already made in good faith by SAUs and bus vendors prior to August 1, 2005

The decision to support only those orders placed with vendors prior to August 1, 2005 was an important requirement that helped accomplish the above goals. The estimated $3.2 million in savings was based upon our best estimate, at the time, of the number of bus orders not yet placed with vendors. Our latest information on the number of buses not ordered by August 1st, generating the required savings, is considerably less than the number used in July for the August 1st decision. As many as 30 units that we thought had not been ordered by the August 1st date have now been reported as placed prior to that date. With the latest estimate of FY2006 approved purchases not ordered much less than expected, the proposal outlined in Administrative Letter No. 4 will not achieve the required savings.

Consequently, the adjustment will be expanded and applied to all new FY2006 Cash and Term Purchases.  This will mean that all approved expenditures for purchases or lease purchases of new buses in FY2006 will have the subsidizable allocation for those purchases split between FY2007 and FY2008; 50% in FY2007 and 50% in FY2008. Approvals for term purchases prior to FY2006 will not be affected and will be included in the FY2007 allocation for the full amount of the approved scheduled payment.

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