The Virginia Board of Education (VBOE) recently took action last week to advance two important sources of state support for local school capital needs, approving the release of additional Literary Fund loan dollars and a new round of grants through the School Construction Assistance Program (SCAP).
At its August 27 business meeting, VBOE unanimously approved Item I, recommendations regarding Literary Fund loan applications and the release of loan funds, and Item J, recommended grant awards for school projects submitted through the FY2026 School Construction Assistance Program. Both actions provide important state resources to assist localities and school divisions confronting significant school construction, renovation, and modernization needs across the Commonwealth.
Literary Fund Loans
Under Item I, VBOE approved recommendations for the release of Literary Fund loan funds. Virginia’s Literary Fund has long provided a financing mechanism for public school construction projects, allowing eligible localities to borrow for school capital improvements. Under current regulations, Literary Fund financing may support the construction, alteration, or expansion of public school facilities.
Literary Fund loans are particularly valuable because they can provide localities with access to below-market financing for qualifying projects. Literary Fund loans provide localities with access to financing for qualifying school construction projects, with loan approvals prioritized by VBOE based on a school division’s Local Composite Index of ability-to-pay
VBOE unanimously approved the recommendations for release of funds at its August meeting.
Board Approves FY26 School Construction Assistance Program Awards
Of particular significance to counties, Under Item J, VBOE also unanimously approved the latest round of School Construction Assistance Program grants.
The General Assembly appropriated $110 million from the School Construction Fund for SCAP in FY2026. Combined with previously unspent SCAP funds carried forward for the FY26 grant cycle, VDOE reported that $209,251,437 was available for awards.
SCAP, established by the General Assembly in 2022, provides competitive grants to local school boards and regional Career and Technical Education programs for the construction, expansion, modernization, and renovation of public school facilities. Prior to the FY26 grant round, VDOE reported that SCAP had awarded $618.5 million in grants to qualifying school projects since the program’s creation in 2022.
For FY26, school divisions were permitted to submit as many as three projects. Projects receiving at least 65 points under VBOE’s competitive scoring criteria were eligible for funding. Grant amounts are generally calculated at 10, 20, or 30 percent of eligible project costs, depending upon the locality’s Local Composite Index and fiscal stress designation. Eligible project costs are capped at $100 million for purposes of calculating an award.
VBOE had amended the SCAP guidelines earlier this year to provide additional flexibility and added a new criterion recognizing increased student enrollment. The program continues to consider factors such as building conditions, local commitment, fiscal capacity, and the need for state assistance.
School Construction Remains a Major Local Challenge
The August actions represent another important state investment in Virginia’s public school infrastructure, but the scale of school capital needs continues to require a sustained state-local partnership. Virginia’s counties are responsible for providing and maintaining school facilities, and the cost of replacing aging buildings, modernizing instructional spaces, addressing safety and accessibility needs, and accommodating changing enrollment can place significant pressure on local capital budgets. SCAP and the Literary Fund provide important tools to help leverage local investments and reduce borrowing costs, but neither replaces the substantial local resources counties continue to devote to school construction.
VACo has consistently advocated for additional state resources and financing tools to help counties address these needs. Recent progress, including continued SCAP appropriations, Literary Fund financing, and the expansion of authority for localities to seek voter approval of an additional local sales and use tax dedicated to school capital, provides counties with a broader set of tools to tackle long-term infrastructure challenges.
VACo appreciates the continued investment by the Governor, General Assembly, Board of Education, and Virginia Department of Education in school construction and will continue to advocate for a strong and sustainable state-local partnership to address the Commonwealth’s significant public school capital needs.
VACo Contact: Jeremy R. Bennett