The state established the school in 1895 for Civil War orphans. It serves 350 economically-disadvantaged children who have a veteran sponsor within their family, Bachman said.
The students, who are in grades three through 12, live at the school during the school year.
The Pennsylvania General Assembly approved the first package last year, and Gov. Tom Ridge released the funds in December.
"We're talking about the infrastructure of the building. In the case of the school building, we want to replace the windows that are heat inefficient and upgrade the plumbing, heating and electrical systems in the school. If there is any money left, we will work on some of the cosmetic improvements," Bachman said.
The cottages, which are all 50 to 70 years old, need new roofs and better ventilation in the bathrooms.
With the exception of a new roof, the school building has had no significant upgrades since it was built in 1949, according to the Pennsylvania Department of Military and Veterans Affairs. It has an outdated steam-heat system and no air conditioning, and only the first floor is handicapped-accessible.
The new capital investment will provide for windows designed to reduce heat loss, installation of a hydraulic elevator, improved access to three floors of the building, water damage repair and plumbing and electrical improvements.
Most of the bathrooms in the cottage buildings have deteriorated from excess moisture and normal wear and tear, officials said. They require installation of exhaust systems and new plumbing fixtures, replacement of ceilings and ceramic floors and tiles, repair of damaged walls and construction of private shower stalls.
The General Assembly is considering the other three packages this year, each encompassing renovations of a building and about a dozen cottages.
"I was glad to include this funding in the Capital Budget Bill and assist in securing its release by the governor, to ensure that these much-needed renovations could begin," Punt said.
Bachman said he hopes an architect will be hired for the project in a few months. The first phase of renovations will take more than a year to complete.