Alternative financing methods (other than state financing) for developing cost-effective energy efficiency projects are discussed. It is suggested that by properly financing energy efficiency investments, state campuses can generate immediate positive cash savings. The following eight initiatives for maximizing energy savings potential are addressed: assess the energy savings potential in all public buildings; commit to funding all projects that are cost effective; propose energy efficiency projects separately for capital budgeting; lift the capital ceiling on energy projects by demonstrating access to external capital; confirm or authorize the contractual ability of state institutions to use alternative financing; develop procurement procedures for using alternative financing; designate a budget line for alternative finance payments; and create a new energy budgeting system to stimulate efficiency. Components of an energy budgeting system are as follows: budgeting in energy units, budgeting over a 5-year period; calculating energy savings and converting into cost savings, and developing a schedule for distribution of savings. Finally, the following financial options are discussed: tax-exempt bonds, municipal leasing, shared savings contracting, and third-party financing. (SW)