Panel separates school debt‑service from EPS subsidy calculation; change approved unanimously

The Appropriations Committee unanimously approved language (part MM) that takes principal and interest for approved major school capital projects out of the Essential Programs and Services (EPS) subsidy calculation and places those debt‑service costs on a separate targeted education funds line.

Proponents said the change clarifies accounting and prevents debt service for major construction from being commingled with operating subsidy calculations. Representative Michael Brennan described the change as separating debt service from the EPS subsidy and said it would not penalize districts that bond for school construction. "It makes it clear that they're not commingling what they get for debt service with the EPS amount," Brennan said.

Nicole Dennis, the Department of Education’s director of finance, told the committee the language moves debt-service amounts to a separate line in the same general-purpose aid account and does not alter the department’s reimbursement process for approved construction projects. She said the change is primarily where the line-item lives on the purple sheet but that the state still pays debt service on approved projects.

Committee members asked whether the change would change total state spending for education; Representative Brennan noted a modest reduction of about $2 million in the total cost of education because debt service is attributed only to SAUs with approved school construction. After extended questions and clarifications, the committee moved part MM as presented, and the motion passed unanimously.

Next steps: The language was adopted into the governor’s supplemental package; the committee noted the EPS committee will continue separate work on EPS formula changes.