The bill amends the definition of subsidizable debt service on school construction projects to exclude debt service payments made from unused bond principle amounts and interest earned on investment of these unused funds.

The bill provides that permanent space lease-purchase school projects whose costs are wholly eligible as debt service costs for purposes of calculating state subsidy must be approved by the legislative body of the school administrative unit. If any portion of the costs of the permanent space lease-purchase project is not eligible for inclusion in debt service costs for the purpose of calculating state subsidy, the permanent space lease-purchase project must be approved at a referendum. The bill also permits school construction projects to be considered at referenda conducted under the alternate voting procedures of the Maine Revised Statutes, Title 20-A, section 1305.

The bill also qualifies certain projects for the School Revolving Renovation Fund that were undertaken during the summer of 1998 in anticipation of borrowing from that fund.