1. The Board of Education and the Virginia Public School Authority (VPSA) shall provide a program of funding for school construction and renovation through the Literary Fund and through VPSA bond sales. The program shall be used to provide funds, through Literary Fund loans and subsidies, and through VPSA bond sales, to fund a portion of the projects on the Literary Fund waiting list, or other critical projects which may receive priority placement on the waiting list by the Board of Education. Interest rate subsidies will provide school divisions with the present value difference in debt service between a Literary Fund loan and a borrowing through the VPSA. To qualify for an interest rate subsidy, the school division's project must be eligible for a Literary Fund loan and shall be subject to the same restrictions. The VPSA shall work with the Board of Education in selecting those projects to be funded through the interest rate subsidy/bond financing program, so as to ensure the maximum leverage of Literary Fund monies and a minimum impact on the VPSA Bond Pool.

2. The Virginia Public School Authority shall provide an interest rate subsidy program in the Fall of 1996 and the Fall of 1997 for projects that are on the Board of Education's First Priority Waiting List. However, the cost of the subsidy shall not exceed $10.0 million in fiscal year 1997 and $10.0 million in fiscal year 1998 including the subsidy payments and related issuance costs.

3. The Board of Education may offer Literary Fund loans from the uncommitted balances of the Literary Fund after meeting the obligations of the interest rate subsidy sales and the amounts set aside from the Literary Fund for Debt Service Payments for Education Technology in Item 140 and for teachers' retirement in Item 139.