HF4706

Purpose

• Create a Propane School Bus Deployment Program to help fund the purchase of propane-powered school buses for transporting students.

Key Definitions

• Eligible applicant: a school district or transportation service provider applying for a grant on behalf of a school district.
• Prioritized school district: districts that meet certain poverty, rural, or Indian-lands criteria (e.g., 7.5% or more students in poverty; rural codes 43 Rural Remote or 42 Rural Distant; districts funded by the Bureau of Indian Affairs; or districts receiving basic state payments for children on Indian land).
• Propane: as defined in state law.
• Propane school bus: propane-fueled vehicle designed to carry a driver plus more than ten passengers, used mainly to transport preprimary, primary, and secondary students.
• School district / School / School bus / Transportation service provider: standard education-related definitions used in Minnesota law.

Application Process

• The commissioner (state energy/education authority) must develop rules for applying and awarding grants.
• An eligible applicant must submit a grant application with at least:
  • Number and description of propane school buses planned for purchase.
  • Total purchase cost and any incremental cost of propane buses versus other buses.
  • Whether the district is a prioritized district.
  • Areas with many students eligible for free and reduced-price meals.
  • The district’s plan to deploy propane buses in areas with many students on free/reduced-price meals.
  • Evidence of financial need to justify aid.
  • Evidence of readiness to implement and operate propane buses for at least five years.
  • Any other relevant information.
• The application process must be open and conducted at least twice each year.

Technical Assistance

• The department must provide technical help to districts to plan, implement, and manage projects funded by these grants.

Grant Awards

• Priority must be given to prioritized districts, with a goal to allocate at least 40% of total grants to them.
• The grant amount must be based on the district’s demonstrated need for financial assistance.
• A grant may not exceed the total cost of the propane buses funded by the grant.

Eligible Grant Expenditures

• Grants may cover:
  • Up to 25% of the cost to purchase propane buses for non-prioritized districts.
  • Up to 50% of the cost to purchase propane buses for prioritized districts.
  • Up to 50% of the cost to purchase new propane storage and dispensing equipment.

Reporting

• Starting July 1, 2027, and each year through July 1, 2031, the commissioner must report to the relevant legislative chairs and ranking minority members about the grants and amounts awarded in the previous year.

Funding Cancellations (Funder Changes)

• Two existing funds for electric school bus grants will see unencumbered money canceled if not used by June 29, 2026:
  • General fund appropriation from Laws 2023 ch. 460, art. 10, sec. 2, subd. 2, para. q.
  • Renewable Development Account appropriation from Laws 2023 ch. 60, art. 11, sec. 2, subd. 6.

Summary of Significant Changes to Law

• Establishes a new statutory program (Propane School Bus Deployment Program) under Minnesota Statutes to provide grants for propane bus purchases and related equipment.
• Sets prioritization rules to favor districts in poverty, rural areas, or Indian-lands, with a target minimum share of funding for prioritized districts.
• Creates a structured application and reporting framework, including the requirement for readiness and five-year operation commitments.
• Creates specific funding limits and partial cost-sharing for buses and storage/dispensing equipment.
• Introduces annual reporting to lawmakers about program grants.
• Reallocates or cancels certain existing electric bus grant funds if unencumbered by a specified date.

Relevant Terms - propane school bus - propane buses - eligible applicant - prioritized school district - free and reduced-price meals - open application process - grant awards - total cost / incremental cost - storage and dispensing equipment - technical assistance - reporting to chairs and ranking minority members of energy committees - unencumbered funds - cancellation of funds (electric school bus grants)