1 How to Apply for School Facilities Funding Financial Hardship

2 “What to Expect in a Financial Hardship Review” Presented by Jason Hernandez & Steve Inman

3 Topics What is Financial Hardship? Submitting your Financial Hardship Request Qualifying Criteria – Phase I Submittal & Documents Needed Review of Available Funds – Phase II Submittal & Documents Needed FH Findings Letter & FH Approval Letter

4 What is Financial Hardship? The Regular School Facility Program (SFP) 50/50 for New Construction & 60/40 for Modernization Program for school districts unable to provide all the matching funds for an eligible SFP project – can provide up to 100% State funding Only review function that is done on the front end Need the Financial Hardship approval prior to submittal of any funding application Two Tier review process Phase I FH Checklist Phase II FH Checklist

5 Submitting Your Financial Hardship Request The Financial Hardship (FH) team is available for any preliminary questions. The FH team is available to perform a site visit to assist Districts. Both School Districts & County Offices of Education get started by submitting the “Financial Hardship Checklist – Phase I.” County Offices of Education have the option of submit Phase I & Phase II documentation together.

6 District Contact During the review, the district will need to provide reliable day to day contacts who can provide additional information in order to resolve issues. The contacts should include district accounting staff familiar with facility accounting, the general ledger, and the Financial Hardship package. To ensure that your package is processed as soon as possible, OPSC audit staff will need timely information.

7 Financial Hardship Phase I Submittal A Phase I Financial Hardship (FH) submittal will include the following: A cover letter requesting FH assistance A completed & signed FH Checklist – Phase I n_Hrdshp_Chklst.pdf n_Hrdshp_Chklst.pdf The appropriate backup documents (discussed in the presentation) Once the FH Phase I request is received by the OPSC, it is reviewed for completeness.

8 Steps to Locate Financial Hardship Forms (1) Open to the OPSC home page at (2) Click on “Programs & Services” tab (left side of screen). (3) Click on Financial Hardship (FH) Program tab (middle of page). (4) Click on: “read more.” (5) Click on: “Financial Hardship Program forms.” (6) From there you will click on the “+” sign on the blue box marked “Financial Hardship Program Eligibility Forms.” This will drop down a list of forms needed for Financial Hardship. The Financial Hardship Checklist – Phase 1 is the first form listed.

9 Incomplete Phase I Submittals Incomplete Phase I – Financial Hardship (FH) Checklist 10 day letter issued – requesting missing documents 4 day letter issued – When package still incomplete Any Financial Hardship Phase I packages incomplete after the 4 day time period passes will be returned to the District Only accepting complete FH packages to the workload list helps shorten the review time of all FH packages

10 Qualifying Criteria - Phase I Submittal Submittal of Phase I – Financial Hardship Checklist School Districts and COEs Identifying the qualifying criteria district. Qualifying Criteria Per SFP regulation section (c) to qualify district must be charging the maximum developer fee and meet one of the following: Bonded Indebtedness 60% or greater Successful Proposition 39 Bond Total Bonding Capacity less then 5 million County Superintendent of Education Other evidence as approved by the State Allocation Board

11 Documents Needed for Phase I Submittal County Office of Education Completed Financial Hardship (FH) Phase I Checklist Cover letter requesting Financial Hardship consideration and listing of school projects. School Districts Developer Fee Documents (Initial FH Request) School Board resolution (Within One Year) Justification Study (Within Two Years) Sharing Agreement Documents supporting why fees not levied Note: The 2010 developer fees did not increase from the 2008 level.

12 Documents Needed for Phase I Submittal (Continued) School Districts Developer Fee Documents (Renewal FH Request) Need Analysis (Within One Year) for Level II Fees – Renewal & New Construction Projects Must meet at least two of criteria listed in CA Education Code Section :  At least 30% of District’s pupils enrolled on a multi-rack year round schedule  The district has placed on the ballot within the last four years a local general obligation bond that received at least 50 percent yes votes  The district has issued debt for capital outlay obligations at a level of at least 30 percent of its total bonding capacity  At least 20 percent of the district’s teaching stations are relocatable classrooms

13 Qualifying Criteria Documents Bonded indebtedness greater than 60% Letter from County Audit-Controller General Obligation Bond Booklet(s) Certificate of participation Booklet(s) Successful Proposition 39 Bond Copy of ballot issue Certification from Registrar of Voters Letter from County Audit-Controller Total Bonding Capacity less than $5 million Letter from County Audit-Controller Documents Needed for Phase I Submittal (Continued)

14 Phase I Review Complete & Request for Phase II Documents Auditor determines the school district meets the qualifying criteria for Financial Hardship status Letter sent asking for Phase II documents The Letter gives a district 30 days to submit the documentation listed in the Financial Hardship Checklist – Phase II 10 days before the documents are due, a reminder letter is sent 4 day letter - will be sent after the 30 days if the documents are not received or received incomplete If issues have not been resolved after the 4 day time period, the Financial Hardship package will be returned to the district Example of a complete Financial Hardship – Phase 1 package will be posted to the website

15 Review of Available Funds - Phase II Submittal Financial Hardship Checklist - Phase II sts/Fin_Hrdshp_Chklst_SD_II.pdf sts/Fin_Hrdshp_Chklst_SD_II.pdf Auditor reviews District’s financial information to make a determination of available funds. The review will not commence until documentation is complete. Review possible funding sources Certificates of Participation (COP) General Obligation Bonds Redevelopment Funds Sale of Surplus Property, etc.

16 Documents Needed for Phase II Submittal Review Funds which contain the District’s Capital Facility related funding: Fund 21 (Building Fund) Fund 25 (Capital Facilities Fund) Fund 35 (County School Facility Fund) Fund 40 (Special reserve for Capital Outlay) Fund 10 (Redevelopment Funds), etc. Make determination of eligible expenditures, eligible encumbrances, & available fund balances A complete Phase II FH package should include the following documentation: Summary of why district is requesting FH status Financial Hardship Project Worksheet for each project – phase specific

17 Documents Needed for Phase II Submittal (Continued) District’s Capital Outlay Plan – for the next five years Financial Hardship Fund Worksheets General Ledger (GL) Detail Reports Copy of latest two Independent Audit Reports Separate expenditure report (SAB 50-06) – for each project the district is submitting for FH Documentation supporting reported encumbrances

18 Financial Hardship Project Worksheet A Financial Hardship Project Worksheet is submitted for every project and every phase for which a District is requesting Financial Hardship. When completing a project worksheet, the District can use the same information used to complete a form SAB Facility Hardship projects requesting Financial Hardship have to complete the Financial Hardship Project Worksheet.

19 Financial Hardship Project Worksheet

20 Financial Hardship Fund Worksheet One Fund worksheet is submitted for every fund that contains capital facility funding. The worksheet is used to determine how much contribution is available within the Fund. Documents Needed: Most recent audited financial statements A General Ledger Detail Report for each fiscal year covered in the review Summary Report and/or Trial Balance for each fiscal year Contracts for any encumbrances claimed

21 Financial Hardship Fund Worksheet

22 Additional Fund Detail Worksheet

23 Redevelopment Area Funding A review of RDA funding received by the District to determine if any is available contribution Object Code 8625 – CA Accounting manual Documents Needed: RDA Agreements Table which breaks out all the RDA areas in District and balance of each RDA Summary of RDA Revenue & Expenditures Map of applicable RDA Areas Listing on maps where school projects are located

24 Schedule G – Redevelopment Agency (RDA) Table

25 Summary of RDA Revenue and Expenditures

26 FH Findings Letter Determination of available Funds The OPSC makes a determination of available funds using the information provided by the district. The “Findings” Letter will be issued with attached fund worksheets. This is not an FH approval letter. District has 15 days to respond to letter. If District doesn’t agree with findings – may submit additional documents during this time period. The District concurs with the findings by signing & returning the fund worksheets.

27 FH Approval Letter FH approval letter is issued This allows districts to submit applications for funding Six month approval period Additional projects during six month period (not listed in the original approval letter) District submits request in writing Submits Project worksheet & expenditure report (SAB 50-06) Full FH review not required Additional Application Letter is generated  This letter does not extend the 6 month approval period

28 FH Audit Staff Members Steve Inman, Audit Supervisor (916) Maria Gamino, Auditor OPSC (916) John Leininger, Auditor OPSC (916) Jacqueline Shepherd, Auditor OPSC (916) Audrey Sims Davis, SCO Auditor (916) Jason Hernandez, Audit Supervisor (916)

29 How to Apply for School Facilities Funding Webinar Archives Available: Part I: Elements of a Complete Application – April 11, 2011Elements of a Complete Application Part II: Site Development Funding – April 18, 2011 Part III: New Construction Eligibility & Funding – April 25, 2011 Part IV: Modernization Eligibility & Funding – May 2, 2011 Part V: Site Acquisition Funding – May 9, 2011Site Acquisition Funding Part VI: Financial Hardship – May 16, 2011Financial Hardship

30 Feedback Questions Comments Suggestions for Improving the Process Submit Instant Message Now - or –

31 Thank You for Participating This was the final presentation of the six-part webinar series. If you have any suggestions for future webinars, please submit them to:

32 Resources OPSC Project Manager: p p Estimate the State Grants for My New Construction Project: ome.asp ome.asp Financial Hardship: ome.asp ome.asp SFP Handbook: /SFP_Hdbk.pdf /SFP_Hdbk.pdf Commonly Used Acronyms and Abbreviations: ms.pdf ms.pdf

33 Resources Architect Submittal Guidelines: /Arch_Sub.pdf /Arch_Sub.pdf PVT Presentation on Site Development: PSC-PVT.ppt PSC-PVT.ppt Substantial Progress & Expenditure Audit Guide: /SFP_Audt.pdf /SFP_Audt.pdf Public School Construction Cost Reduction Guidelines: _Rdt.pdf _Rdt.pdf Annual Adjustment to School Facility Program Grants: dj.pdf dj.pdf