Funding Options in a Recovering Economy

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Magdalen Richardson
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2 Funding Options in a Recovering Economy Friday, December 3, :00 pm 5:15 pm Tom Duffy, C.A.S.H. Lisa Kaplan, State Allocation Board Jeffrey Baratta, Piper Jaffray & Co. Cathy Allen, Western Placer USD

3 CSBA Annual Conference Where s s the Money for School Construction? Lisa Kaplan, Esq. Assistant Executive Officer State Allocation Board Trustee, Natomas Unified School District

4 School Construction: State (School Facility Program) SFP: Established in 1998 Three State Bonds 2002 (Prop 47 $11.2 Billion) $24 million remaining bond authority* 2004 (Prop 55 - $10 Billion) $550 million remaining bond authority* 2006 (Prop 1D - $7.3 Billion) $1.70 billion remaining bond authority* *All Numbers are Estimates and Change Monthly the amounts will be updated for the December 15 th State Allocation Board meeting & available at

5 School Construction: Where s s the $? New Construction (50/50 match) Prop 1D - $13.8* Prop 55 - $286.3* Prop 47 - $7.7* Modernization (60/40 match) Prop 1D - $1.027 billion* Prop 55 - $2.2* Prop 47 - $.3* *All Numbers are Estimates and Change Monthly the amounts will be updated for the December 15 th State Allocation Board meeting & available at

6 Prop 1D other programs Seismic Repair Bond Allocation $200m Authority $190m High Performance Schools Bond Allocation $100m Authority $65m Overcrowding Relief Grant Bond Allocation $1 billion Authority $450m

7 Prop 1D other programs continued Career Technical Education Bond Allocation $500m Authority Exhausted Charter School Bond Allocation $500m Authority Exhausted Joint Use Bond Allocation $57.5m Authority Exhausted

8 Energy Efficiency Prop 55 other programs Part of New Construction - $.2m available Critically Overcrowded Schools Bond Allocation $2.44 billion - $179.7 reserved authority exhausted Charter School Bond Allocation $300m Authority $70m Relocation / Hazardous Material-Waste Removal / Conversion Increase Fund Joint Use Bond Allocation $66.7m Authority Exhausted

9 Bond Sales Where s s the Money Fall 2010 (Nov 29 th th ) GO Bond sale of $1,483,335,000 To be Apportioned at Dec. 15th Board meeting Spring 2011 Unfunded list (fiscal crisis) $2.5 billion (less the $1.4 billion just sold in GO bonds) True unfunded list When all bond authority is exhausted New Construction bond exhaustion imminent

10 I Have No Local Bond $ Financial Hardship (100% funding) Must have made all reasonable efforts to raise local funding and must also demonstrate that it is unable to contribute all or a portion of the matching share requirement. This means: Levy maximum developer fee allowed Demonstrate local effort to raise revenues Financial inability to contribute the match Must have an approved financial hardship status prior to submitting ing an Application for Funding (Form SAB 50-04). 04). In order to obtain this approval the district must provide verification ication that a reasonable effort was made to meet the district s s matching share requirement, and must have confirmation from the Office of Public School Construction (OPSC) that the district is unable to contribute the entire matching share requirement.

11 Emergency Repair (Health & Safety Issues) Facility Hardship Grant The purpose of the grant is to assist districts with funding where it has been determined that the district has a critical need for pupil housing because the condition of the facilities, or the lack of facilities, presents an imminent threat to the health and safety of the pupils. To be eligible for a facility hardship grant the district must demonstrate d that one of two conditions exists: facilities must be replaced due to an imminent health and safety threat, or existing facilities have been lost to fire, flood, earthquake or other disaster. The district wide enrollment must justify a continuing need for these facilities Each request is reviewed and analyzed on a case-by case basis Top of Unfunded List

12 Priorities in Funding Changing the Way Districts Access Funding Timeline: 18 months to 90 days Letter Certifying District wishes to participate Submittal of (Fund Release) 50% is under contract

13 Future of School Construction 2012 Bond Legislative Approval Voter Approval Alternative Avenues of Financing DGS Expert Working Group OPSC DSA - CDE

14 Accessing Information Building Blocks OPSC Newsletter State Allocation Board Meets - 4 th Wednesday of the Month Implementation Committee Meets 2 nd Thursday of the Month

15 Questions?? Contact: Lisa Kaplan 916/ (office)

16 Federal and Local Funding Sources Jeffrey Baratta Piper Jaffray & Co.

17 Federal Programs Build America Bonds (BAB) Qualified School Construction Bonds (QSCB) Qualified Zone Academy Bonds (QZAB) New Clean Renewable Energy Bonds (CREB)

18 Long-term Bonds (options) General Obligation Tax-exempt Current Interest/Capital Appreciation Bonds (CIB/CAB) Bond Anticipation Notes (BANs) Certificates of Participation (COP) Variable Rate Demand Obligations (VRDO)

19 Investor Types Institutional Retail

20 Term and Size Supply & Demand

21 BAB/QSCB Reauthorization High Supply in December

22 Questions? Jeffrey Baratta Piper Jaffray & Co. (415)

23 Survival Mode: Options for School Districts December 3, 2010 Cathy Allen, Assistant Superintendent, Facilities & Maintenance Services Western Placer Unified School District

24 Overview State is sporadically apportioning money for school construction & modernization projects. Chances are you didn t make the cut when apportionments have been made in the past. What does that mean for your construction projects? The Priorities in funding policy of the SAB may be your opportunity if you have an unfunded approval. Deferred Maintenance Funding has probably been swept. Future of Maintenance & Operational funding & staffing. Practical applications implemented by Western Placer Unified. What does the future hold?

25 School Construction & Modernization Projects What are your options if you are not able to access state dollars? Other Federal and State funding sources Local funding sources Local General Obligation Bond Funds Does the district have the assessed valuation to issue bonds? Is this a good time to issue bonds? How do you decide what projects move forward and what gets put on the back burner? What chance do you have for reimbursement from the state for new construction versus modernization projects? Are you willing to front the money and hope that the State Allocation Board reimburses you sometime in the future? How long can you front the money?

26 Local Funding Sources Certificates of Participation Used as a substitute for GO or MR bonds. COP s do not have their own independent revenue source. They are a lease and require a land asset to secure the COP; usually existing schools. Ultimately the general fund is liable. Sale of Surplus Property Can be used for capital outlay or non-recurring maintenance costs; however, District must certify that there will be no need for new construction or school sites for the next 10 years. May be appropriate for declining districts with excess property but risky for others. (May also be used for limited general fund expenditures under specific circumstances.)

27 School Facility Mitigation Fees Developer Fees One-time fee paid prior to issuance of building permit Flat fee per square foot of new construction May only be used for projects that increase capacity to house students from new development or the need to reconstruct/modernize an existing facility needed to address growth.

28 Developer Fees Statutory School Fees (Level 1) Currently $2.97/square foot for residential and $0.47/square foot for commercial/industrial Alternative Fees Level II Authorized by Prop 1A and SB 50 in November of 1998 District must adopt a School Facilities Needs Analysis Formula driven Fees will vary from district to district Expires after one year Level III Only allowed when State is out of funding for the New Construction Program

29 Refunds, Restructuring & Bankruptcies Requests for restructuring CFDs and Modifying Existing Mitigation Agreements. Requests for refunds of Developer Fees. Who paid them in the first place? Banks sending notices demanding money be returned.

30 Deferred Maintenance Deferred Maintenance was included in the Tier II and III categories of dollars that were allowed to be swept and used for virtually any other purpose. Tier II and III sweeps will end in 2013/2014 unless extended by the legislature.

31 Practical Applications WPUSD has chosen not to sweep DM money However, the district did choose to not make its match thus contributing something to the general fund deficit. Allowing the district to use the funding for what it was intended for; maintaining the schools. Reinforced the meaning of standardized cleaning from site to site.

32 Practical Applications (cont) Summer Time Activities Limited availability of school sites to park and recreation departments. Tried to limit all activities scheduled on one or two sites. Literally shut down air conditioners at sites not being cleaned or not used for summer school and park & rec activities. Implemented team cleaning for our middle and elementary school sites. Greatly reduced the number of substitutes needed as most custodians tend to take portions of the summer off.

33 Practical Applications (cont) Updated the district s Facility Use form and associated costs. Very detailed analysis of cost per square foot for utilities and staff. Discovered some interesting anomalies i.e. custodial staff working on weekends and ending up with time-and-a-half and double-time due to number of hours worked and the district not billing the renting entity enough to cover costs.

34 What Does the Future Hold? In our district, the kids keep coming. Tried a bond in November and failed. We will try again in Next school will most likely be Financial Hardship. For future years: Bigger classes Different grade configurations Boundary changes Portables

35 Financial Hardship Funding State funds up to 100% of District Share. But the end product is typically not what your community will want to see Must have approved financial hardship status prior to submitting application for funding. Restrictions on how you spend new monies.

36 Questions? Cathy Allen Western Placer USD (916)

37 Questions & Answers

Duwayne Brooks Murdoch, Walrath & Holmes

overview of career technical education Duwayne Brooks Murdoch, Walrath & Holmes proposition 1D funding PROGRAM New Construction* Modernization* Charter Schools Joint-Use Program Career Technical Education