Purpose

This bill creates a Propane School Bus Deployment Program to help Minnesota school districts and transportation providers buy propane-fueled school buses. It sets up how grants are awarded, who can apply, and how funding will be allocated and reported to the Legislature. It also reallocates certain funds that were previously set aside for electric school bus grants.

Key Definitions and Terms

• Propane school bus: a propane-fueled vehicle designed to carry a driver and more than ten passengers used to transport preprimary, primary, and secondary students.
• Propane: the form of fuel defined in Minnesota law (as used in this program).
• Eligible applicant: a school district or transportation service provider applying for a grant on behalf of a school district.
• Prioritized school district: a district meeting one or more criteria (see below) that makes it a higher priority for grant funding.
• Prioritized district criteria (examples): districts with 7.5% or more students living in poverty (based on the latest decennial U.S. Census), ruralRemote or rural distant locale codes, districts funded by the Bureau of Indian Affairs, or districts that receive basic state payments for children who reside on Indian land.
• Transportation service provider: a person with a contract with a school district to transport students.
• Free and reduced-price meals: a metric used to identify areas with high need within a district.

What the bill does (Main Provisions)

• Establishes the Propane School Bus Deployment Program under Minnesota Statutes 216C.3741 and defines related terms (including “propane school bus,” “eligible applicant,” and “prioritized school district”).
• Application process
  • The commissioner must create administrative procedures and issue a request for proposals (RFP) to eligible applicants.
  • Eligible applicants must submit a grant application with required details (minimum information includes the number and description of propane school buses to purchase, total cost and any incremental cost, whether the district is a prioritized district, areas with many students eligible for free and reduced-price meals, need for financial assistance, and readiness to implement and operate the buses for at least five years).
  • The department must run an open application process at least twice per year and provide technical assistance to help districts plan and execute projects.
• Grant awards and funding priorities
  • Priority is given to applications from or on behalf of prioritized school districts.
  • At least 40% of the total grant dollars awarded under this program should go to prioritized districts.
  • Grant amounts are based on the district’s demonstrated need for financial assistance.
  • A grant cannot exceed the total cost of the propane school buses funded by the grant.
• Eligible grant expenditures
  • Grants may fund up to 25% of the cost to purchase one or more propane school buses.
  • For prioritized districts, grants may cover up to 50% of the cost to purchase one or more propane school buses.
  • Grants may also cover up to 50% of the cost to purchase new propane storage and dispensing equipment.
• Reporting requirements
  • Beginning July 1, 2027 and each year through July 1, 2031, the commissioner must report to the chairs and ranking minority members of the legislative energy committees about grants and amounts awarded in the previous year.
• Cancellations (funding shift)
  • The bill cancels unencumbered general fund money previously earmarked for electric school bus grants (as estimated in cited 2023 laws) and unencumbered funds in the Renewable Development Account for electric school bus grants (also estimated for cancellation on June 29, 2026).
• Significance of changes to law
  • Creates a new propane-focused grant program (Propane School Bus Deployment Program) and codifies its definitions, application process, and reporting.
  • Reallocates certain existing funds from electric school bus grant programs to this propane-focused program, effectively shifting a portion of school bus modernization funding away from electric buses toward propane buses.

Significant Changes to Existing Law

• Adds a new program codified in 216C.3741 (Propane School Bus Deployment Program) with defined eligibility, prioritization, and cost-sharing rules.
• Establishes annual reporting to the Legislature on grant activity through 2031.
• Cancels unencumbered funds previously allocated for electric school bus grants (general fund and Renewable Development Account funds) with an estimated cancellation date of June 29, 2026.

Practical Impacts

• School districts and transportation providers have a clear, recurring process to apply for propane bus grants, with a strong emphasis on districts with higher need.
• The program prioritizes funding for districts facing greater financial need and/or located in rural or high-need categories.
• Funding supports not only bus purchases but also propane storage and dispensing equipment, especially for prioritized districts.
• Some funds previously set aside for electric school bus grants are redirected to support propane buses, potentially accelerating propane deployment while reducing electric bus grant availability.

Relevant Terms - Propane School Bus Deployment Program - Propane school bus - Eligible applicant - Prioritized school district - Transportation service provider - Free and reduced-price meals - United States Census Bureau Small Area Income and Poverty Estimates - Rural Remote and Rural Distant (NCES locale codes) - Bureau of Indian Affairs - Indian land - Request for proposals (RFP) - Open application process - Technical assistance - Grant awards - Prioritized district minimum of 40% - Total cost of propane school buses - Incremental cost - Eligible expenditures - Storage and dispensing equipment - Reporting requirements (to energy committees) - General fund appropriation - Electric school bus grants - Renewable Development Account - Cancellation of unencumbered funds - Laws 2023 Chapter 60 provisions referenced for cancellations