School & District Management

Schools Can Use These Little-Known, Unlimited Funds to Make Their Buildings Greener

By Mark Lieberman — October 10, 2023 5 min read
Photo of excavator by new high school.
  • Save to favorites
  • Print

Hopkins Academy—a public middle and high school serving a few hundred students in Hadley, Mass.—needs a new furnace and a new roof. But the elected school committee has struggled for years to find the right combination of funds and contractors for a project they hope will reduce the 70-year-old building’s environmental footprint.

Enter Sara Ross, co-founder of Undaunted K-12, a nonprofit supporting schools’ efforts to transition to clean energy. At a statewide conference for school committee leaders, Ross led a session about using federal funds to pay for green infrastructure.

“What I learned at that session really blew my mind,” said Humera Fasihuddin, chair of the Hadley school committee.

She’s likely not alone. The federal government is currently offering funds that Ross believes could be a lifeline for hundreds of districts nationwide that desperately need to upgrade their buildings to withstand the oncoming effects of climate change: extreme heat, unpredictable storms, rampant wildfires, and devastating flooding.

But those funds, tucked inside the sweeping climate change legislation Congress approved a year ago known as the Inflation Reduction Act, have flown under the radar. That may be because the mechanism for receiving them isn’t one school districts typically use.

Rather than applying for and securing grants or loans to pay for projects in the works, this new mechanism—known as “direct pay”—supplies school districts with the equivalent of tax credits for work they’ve already completed and paid for.

Every school district in the country is eligible for the federal government to cover 30 percent of the cost to install new building systems driven by renewable energy, including solar or geothermal. There’s no cap on the cost of individual projects and no limit to how much the federal government will dole out in the aggregate over the next decade-plus.

Ross is among the sustainability advocates pushing schools to take advantage of direct pay for any projects that started after Jan. 1 of this year. She believes many district leaders don’t realize the opportunity is there, much less magnitude of it.

“The majority of the questions I’m getting are, ‘Tax credits? I don’t pay taxes, I’m a school, what does that have to do with me?’” Ross said.

How districts can get big payouts for construction projects

School districts across the country have billions of dollars in deferred maintenance that their states and local taxpayers either can’t or don’t want to cover.

Advocates for school facilities have been pushing for years for the federal government to invest $100 billion in modernizing the nation’s aging school buildings. Those efforts haven’t gained traction in Congress, despite evidence that the right kinds of facility improvements can boost students’ academic achievement.

Nor has the Green New Deal for Schools, a legislative proposal from progressive Democrats that would invest $10 trillion in school building construction and renovation over 10 years. That proposal was recently re-introduced in both houses of Congress, though it’s unlikely to pass anytime soon.

See Also

Students walk through school at the end of the day at Swampscott High School, which is collocated and shares space with the senior center in Swampscott, Mass., on March 8, 2023. As America’s population ages and the number of school-aged children decrease, district and community leaders are finding ways to combine services and locations.
Students walk through school at the end of the day at Swampscott High School, which is collocated and shares space with the senior center in Swampscott, Mass., on March 8, 2023. As America’s population ages and the number of school-aged children decrease, district and community leaders are finding ways to combine services and locations.
Sophie Park for Education Week

The Inflation Reduction Act, the spending package signed into law by President Joe Biden in August 2022, included $500 million in grants for schools to improve air quality in their buildings. That program looks typical for school district administrators: apply for the funds and then use them to help pay for a project.

But the legislation also includes the direct pay provision, which operates differently.

Unlike a grant program with a fixed amount of money for districts to spend on particular expenses, schools and other tax-exempt entities like local and tribal governments can get reimbursed for work that’s already been completed simply by correctly filing tax return forms with the Internal Revenue Service.

Many of these systems cost more upfront than their more traditional, fossil fuel-powered counterparts. But they often lead to reduced energy costs in the long term, said Tony Hans, vice president of CMTA, an engineering consulting firm specializing in sustainable building projects whose clients include K-12 school districts.

“I see schools all the time using antiquated systems that are barely meeting code,” Hans said. “It’s sad that we look at spaces where our kids are going to be taught and we did the legally worst we’re allowed to do.”

Districts get an even bigger payout if they meet certain criteria. For example, a project that uses building materials produced in the United States is eligible for an additional 10 percent off.

The same is true for districts located in “energy communities,” defined by law as Census tracts where a coal mine or coal-powered electric plant has shut down in recent decades. The U.S. Department of Energy maintains a website with an interactive map showing all of the nation’s qualifying energy communities.

Some districts may be eligible for yet another 10 to 20 percent off because they’re located in low-income areas.

All told, some school districts could be reimbursed for 70 percent of the cost of a building project that meets the program’s criteria. Similar opportunities are also available for districts to get reimbursed up to $40,000 toward the cost of a new electric school bus and $100,000 toward the cost of new electric vehicle charging infrastructure.

To receive the credit, districts would need to submit two forms to the IRS:

  • a pre-filing form explaining the project and the credits the district intends to claim.
  • a follow-up 990-T form confirming the completion of the project.

One school district could save money by investing in a more modern facility

Hopkins Academy is right near a shuttered coal power plant. That means the federal government will cover 30 percent of the cost of installing a geothermal heating and cooling system, plus another 10 percent of the cost because of the district’s status as an “energy community.”

Before Fasihuddin met Ross, the original plan was to spend $1.8 million to replace the current oil-burning HVAC system with a newer version of the same thing. “We’re just throwing money and heat out” by continuing to use the existing system, the school committee chair said.

Now, the committee is preparing to vote later this year on a proposal to install a more energy-efficient geothermal heat pump system for less than $900,000 after utility rebates and the direct pay incentives—less than half the cost the district originally anticipated.

In the meantime, Fasihuddin said she hopes her district’s project can be a model for what other districts can accomplish with direct pay—if they know about the opportunity.

“It might actually cost us less to go in that direction than it would to just replace the boilers, which was the original strategy being proposed by all those entities we brought in,” Fasihuddin said. “The fact that it might cost less is just amazing.”

Events

This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Curriculum Webinar
Strategies for Incorporating SEL into Curriculum
Empower students to thrive. Learn how to integrate powerful social-emotional learning (SEL) strategies into the classroom.
Content provided by Be GLAD
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
School & District Management Webinar
Leadership in Education: Building Collaborative Teams and Driving Innovation
Learn strategies to build strong teams, foster innovation, & drive student success.
Content provided by Follett Learning
School & District Management K-12 Essentials Forum Principals, Lead Stronger in the New School Year
Join this free virtual event for a deep dive on the skills and motivation you need to put your best foot forward in the new year.

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

School & District Management Grad Rates Soared at a School Few Wanted to Attend. How It Happened
Leaders at this Florida high school have "learned to be flexible" to improve graduation rates.
8 min read
Student hanging on a tearing graduate cap tassel
DigitalVision Vectors/Getty
School & District Management Opinion Don’t Just Listen to the Loudest Voices: Resources for Ed. Leaders
These resources can help school and district leaders communicate with their communities.
Jennifer Perry Cheatham & Jenny Portillo-Nacu
5 min read
A pair of hands type on a blank slate of keys that are either falling apart or coming together on a bed of sharpened pencils.  Leadership resources.
Raul Arias for Education Week
School & District Management The Harm of School Closures Can Last a Lifetime, New Research Shows
The short-term effects on students when their schools close have been well documented. New research examines the long-term impact.
5 min read
Desks and chairs are stacked in an empty classroom after the permanent closure of Queen of the Rosary Catholic Academy in Brooklyn borough of New York on Aug. 6, 2020.
Desks and chairs are stacked in an empty classroom after the permanent closure of Queen of the Rosary Catholic Academy in Brooklyn borough of New York on Aug. 6, 2020. A new study examines the long-term effects on students whose schools close.
Jessie Wardarski/AP
School & District Management Video 'Students Never Forget': Principals Call for Help After School Shootings
School leaders are lobbying Congress for more financial support for schools that experience gun violence.
2 min read
Forest High School students console one another after a school shooting at Forest High School Friday, April 20, 2018 in Ocala, Fla. One student shot another in the ankle at the high school and a suspect is in custody, authorities said Friday. The injured student was taken to a local hospital for treatment.
Forest High School students console one another after a school shooting at Forest High School Friday, April 20, 2018 in Ocala, Fla. One student shot another in the ankle at the high school and a suspect is in custody, authorities said Friday. The injured student was taken to a local hospital for treatment.
Doug Engle/Star-Banner via AP