diff --git a/src/DurableTask.SqlServer.AzureFunctions/SqlDurabilityOptions.cs b/src/DurableTask.SqlServer.AzureFunctions/SqlDurabilityOptions.cs
index 3b7fc99..be54aa4 100644
--- a/src/DurableTask.SqlServer.AzureFunctions/SqlDurabilityOptions.cs
+++ b/src/DurableTask.SqlServer.AzureFunctions/SqlDurabilityOptions.cs
@@ -42,6 +42,16 @@ internal SqlOrchestrationServiceSettings GetOrchestrationServiceSettings(
                 throw new ArgumentNullException(nameof(connectionStringResolver));
             }
 
+            // If SchemaName is wrapped in `%`, then it is an environment variable to be resolved
+            if (this.SchemaName != null && this.SchemaName.StartsWith("%") && this.SchemaName.EndsWith("%"))
+            {
+                // remove surrounding `%` characters
+                this.SchemaName = this.SchemaName.Substring(1, this.SchemaName.Length - 2);
+
+                // resolve the environment variable
+                this.SchemaName = connectionStringResolver.Resolve(this.SchemaName)?.Value;
+            }
+
             IConfigurationSection connectionStringSection = connectionStringResolver.Resolve(this.ConnectionStringName);
             if (connectionStringSection == null || string.IsNullOrEmpty(connectionStringSection.Value))
             {
diff --git a/src/common.props b/src/common.props
index ace5c3e..01f2aaf 100644
--- a/src/common.props
+++ b/src/common.props
@@ -17,7 +17,7 @@
   <PropertyGroup>
     <MajorVersion>1</MajorVersion>
     <MinorVersion>3</MinorVersion>
-    <PatchVersion>0</PatchVersion>
+    <PatchVersion>1</PatchVersion>
     <VersionPrefix>$(MajorVersion).$(MinorVersion).$(PatchVersion)</VersionPrefix>
     <VersionSuffix></VersionSuffix>
     <AssemblyVersion>$(MajorVersion).$(MinorVersion).0.0</AssemblyVersion>
diff --git a/test/DurableTask.SqlServer.Tests/Integration/DatabaseManagement.cs b/test/DurableTask.SqlServer.Tests/Integration/DatabaseManagement.cs
index 3f4f024..f71d497 100644
--- a/test/DurableTask.SqlServer.Tests/Integration/DatabaseManagement.cs
+++ b/test/DurableTask.SqlServer.Tests/Integration/DatabaseManagement.cs
@@ -504,7 +504,7 @@ async Task ValidateDatabaseSchemaAsync(TestDatabase database, string schemaName
                 schemaName);
             Assert.Equal(1, currentSchemaVersion.Major);
             Assert.Equal(3, currentSchemaVersion.Minor);
-            Assert.Equal(0, currentSchemaVersion.Patch);
+            Assert.Equal(1, currentSchemaVersion.Patch);
         }
 
         sealed class TestDatabase : IDisposable