When Governor Kathy Hochul signed Senate Bill 1986 on Monday, the operative change amounted to a single word in the Education Law. The bill strikes "eighteen" from Section 3602, inside the subdivision that governs state building aid. In its place it writes "twenty-five," the new ceiling on how long a contractor may take to guarantee that a district's energy savings will repay its upgrades.

For districts, that means a longer runway for solar arrays, boiler plants and HVAC overhauls financed through an energy performance contract. Those projects can now be paid off from guaranteed utility savings over as many as 25 years instead of 18. The Senate bill record lists the law as Chapter 310 of 2026, delivered to the governor September 22 and signed September 28, with immediate effect.

Senator Pete Harckham, the sponsor, pitched the change in the governor's signing announcement as help for districts ready to commit to "renewable energy projects like solar for their buildings." He also credited student advocates with pushing it forward. Assemblymember Judy Griffin, who carried the Assembly version, A.6318, said she had championed the idea for close to a decade. A longer recovery period, she argued, makes more upgrade projects workable for districts under financial pressure.

Versions of the same one-word change were introduced in the 2019, 2021 and 2023 sessions, according to the sponsor's memo. The 2021 bill cleared the Senate before dying in the Assembly Education Committee, and the 2023 version died in Finance. This session the Senate passed it 60 to 0 on June 1, and the Assembly substituted it for its own bill and passed it the following day. It then waited nearly four months before reaching the governor's desk.

How the Savings Pay for the Work

Under an energy performance contract, a district hires an energy services company to design and install equipment that cuts energy use or produces power on site. The company guarantees that lower utility costs will cover the contract cost within the term. The State Education Department's Office of Facilities Planning requires measured utility data to verify those savings throughout the contract. The Commissioner's regulation also bars the contractor from counting any state building aid the district receives as part of the savings it guarantees.

The payback ceiling therefore limits how much work a district can bundle into one contract. On a simple payback basis, a package of measures saving $250,000 a year could support roughly $4.5 million of work under the 18-year rule. The same savings stream now supports about $6.25 million. Interest on the financing comes out of those same savings, so both figures shrink in practice, and a longer term carries more of it.

In a 2006 memo to superintendents, the department answered districts that wanted to fold long-payback items "such as windows, boilers or renewable energy" into a contract and still meet the 18-year test. Its ruling was that a separate state capital grant could not be used to buy those items down to fit. The sponsor's memo argues that the contracts spare districts large upfront costs and tend to reduce maintenance spending and emergency repairs. It also notes that federal agencies already allow 25-year terms, and it frames the bill as parity for schools.

What Monday's Law Left Alone

Article 9 of the Energy Law already lets school districts and BOCES sign performance contracts running as long as 35 years or the expected life of the equipment, whichever is shorter. That rule appears in NYSED's guidance on energy performance contracts. What held projects to 18 years was the Education Law guarantee that Chapter 310 rewrote.

Section 155.20 of the Commissioner's regulations still requires the contractor to certify recovery of costs within 18 years or the useful life of the installed equipment, whichever is less. The new law says nothing about that second test. A 25-year guarantee on equipment rated to last 15 years would still stop at 15, and until the regulation is amended, districts will be reading a statute and a rule that name different numbers.

Performance contracts entered into for a capital purpose are recorded in the Capital Projects Fund and claim regular building aid under Section 3602(6). Chapter 310 leaves that formula, the aid ratios and the list of ineligible costs untouched, including the exclusion of energy audit fees. Whether the department will pay aid on a 25-year contract over a longer schedule is a question the amendment does not reach. Business officials should put it to Facilities Planning in writing before a board votes on a new contract.

Districts already under contract should not expect to stretch their existing terms. NYSED stopped accepting amendments and change orders on energy performance contract projects once they are approved and permitted. It treats added work as a new project needing its own submission and building permit. A district that trimmed solar from an 18-year package last year would reach it now through a second contract.

Where the Extra Years Meet the Rest of the Capital Plan

The longer window arrives as the same boards price other electrification costs. The Standard has reported that Albany pushed the electric school bus mandate from 2027 to 2032 without changing the size of the fleet, the price of a bus or the $700 million set aside for the transition. Transportation and facilities plans now draw on the same capital reserves and the same voter patience.

Performance contract work also closes out through the same state paperwork as any other capital project. That means the changes to the Final Cost Report process and SAMS Rebuild reporting apply to it as well. Those filings shape how much aid a project ultimately generates, and a 25-year contract gives the state seven more years of measured savings to check against what the contractor promised.

For a school business official, the practical work begins with the last package that did not pencil out. That means pulling the measures cut to meet the 18-year test and checking each one against its rated useful life. The next step is asking the energy services company to rerun the guarantee over 25 years, with building aid kept out of the savings. Aid treatment should be confirmed with the state before the request for proposals goes out.

Board members and residents can press the same questions at a public meeting, starting with which projects were dropped from the last energy contract and whether they now fit. The answer will vary by building, by the age of each boiler and by how much of a district's electricity already comes from panels on its own roofs. A district with a new heating plant and little roof space may find the extra years change nothing at all.

The sponsor's memo lists the fiscal implications of the change as "to be determined." The first figures will come from districts that issue requests for proposals this fall. Later ones will arrive in the measured savings reports those contracts owe the state for as many as 25 years afterward.