Budget & Finance

Why Some Districts Rejected Cash to Buy Electric Buses—And Others Want More

By Mark Lieberman — July 08, 2024 5 min read
Yellow electric school bus plugged in at a charging station.
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Electric school buses are becoming more common across America, thanks in large part to the federal government.

Congress allocated $5 billion for energy-efficient alternatives to traditional diesel buses as part of the 2022 Bipartisan Infrastructure Law, a massive spending package aiming to curb the environmental effects of climate change. The Environmental Protection Agency is offering those funds to districts in several rounds of rebates, awarded at random using a lottery system, and grants, awarded to applicants that demonstrate the highest need.

The program hasn’t been without hiccups. Some school districts have rejected the money the federal government has awarded them to help pay for electric school buses.

But thousands of districts have moved forward with using their federal funds to help them with electric bus purchases. And dozens are going back for seconds.

Roughly two-thirds, or 8,000, of the 12,000 electric school buses that districts nationwide are either currently operating or have concrete plans to operate were funded through the EPA’s Clean School Bus Program, according to a report published July 8 by the nonprofit World Resources Institute’s Electric School Bus Program. There are about 450,000 school buses total on the road in the United States.

Eighty-nine districts in more than 30 states, as well as the District of Columbia, Puerto Rico, and American Samoa, received EPA funds for electric school buses during at least two of the three award cycles that have played out so far, according to data collected by the WRI’s Electric School Bus Initiative.

“We have seen a fair number of those repeat customers,” said Sue Gander, the director of that initiative. “Those folks are having a good experience.”

Why some districts didn’t want the federal money they got

Districts applied for $4 billion worth of rebates during the initial 2022 offering of $500 million. The agency ended up granting nearly twice that amount—$965 million—to meet the high demand.

But out of more than 400 districts that were awarded rebates, 54 opted to reject them, according to the EPA. In total, those districts rejected $74 million worth of funding that would have gone toward 190 electric buses and 32 propane buses.

Why would a district turn down free money from the federal government? For some, like the East Side Union High School district in San Jose. Calif., the issue was simple math, according to local news coverage. In order to receive the money, the district would have had to pay the difference between the rebate amount and the much-larger total cost of the bus, according to the program guidelines.

Electric buses on average cost roughly $350,000, several times more than the cost of a traditional diesel bus. Long-term costs for electric buses are typically lower, because they don’t depend on costly diesel fuel. But some districts don’t have the cash to shell out upfront.

The Batesville district in Arkansas turned down its $365,000 award for one electric bus because community members wanted the school system to prioritize finishing construction on a cafeteria project that has gone over budget before making new investments, the Arkansas Democrat-Gazette reported. Federal funds wouldn’t have covered charging infrastructure, which can cost tens of thousands of additional dollars.

Other districts were daunted by the process of installing charging infrastructure and dealing with the potential limitations of an electric bus on a single charge. Most electric buses can travel at least 100 miles on a single charge, though the exact range differs depending on terrain and weather.

“We don’t want to do something now that we’re going to have to undo in two years because it was done too quickly without enough due diligence and enough planning,” said Victoria Walker, the superintendent of the Onteora Central schools in upstate New York, during a school board meeting last fall, according to the Hudson Valley One. The district rejected $8 million from the EPA.

The phenomenon of districts rejecting clean school bus rebates hasn’t fazed advocates like Gander. She still sees significant progress and plentiful opportunities for more.

The federal program “got a slow start because the rules were still being developed,” Gander said. “Now, it’s fully operational.”

Demand for electric buses is likely to persist

Indeed, the EPA reports no districts have rejected funds they’ve been awarded in the second and third rounds of clean school bus funding—$400 million in grants in April 2023 and $900 million in rebates in May 2024. They still have until later this year to send their money back.

The EPA reported in a February dispatch to Congress that it’s taking steps to address concerns that arose during the first rebate cycle. The agency has launched initiatives to help school board members understand how electric buses work and to facilitate connections between school districts and local utility providers for help installing charging infrastructure.

The Internal Revenue Service has in the meantime launched a separate process by which districts can get money back from the federal government for investments in electric school buses. Through the “direct pay” program, the average district can apply for 30 percent of the total cost of an electric bus investment, and some districts in higher-need areas can get a discount worth up to 70 percent.

See Also

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That money comes in the form of “tax credits.” Since districts don’t pay taxes, it amounts to a check, no strings attached. The program is offering unlimited tax credits to school districts and other applicants through 2030.

Districts are likely to continue seeking funding for energy-efficient school buses. States including California, Maryland, and New York are requiring districts to shift away from diesel buses in the coming years. Several more states, like Michigan and New Jersey, have launched grant programs of their own.

One district—the Clayton County schools in Georgia—secured EPA funds during all three cycles, for a total of 100 buses. All told, funding for more than 450 buses is going to districts that already secured EPA rebates during the first round.


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