SCHOOL BUILDING AID PROGRAM CHANGES 2014 AND BEYOND

The new system for School Building Aid will become effective in Fiscal Year 2014 which begins on July 1, The moratorium for votes by the legislative body continues through June 30, Districts that vote to approve a project prior to July 1, 2013 will not be eligible to receive School Building Aid for that project.

The following slides describe the major changes to the School Building Aid program. More details will be published as the new procedures are developed and approved.

CHANGES TO THE BASIC PROCESS Available funds will be used first to pay eligible grants under the old system New School Building Aid grants will be competitive School Building Aid payments will be paid in two grants: 80% upon project approval and the balance upon completion of construction Applications must be more detailed, must be complete, and must be submitted by the deadline Thorough planning and design process must take place prior to application

CHANGES IN ELIGIBILITY SAU offices are no longer eligible Temporary facilities (portable classrooms) are no longer eligible 25% of CTE projects not covered by CTE money is no longer eligible Leases are no longer eligible – any leases to be funded through separate line in state budget Charter school construction is now eligible

CHANGES IN RATE CALCULATION 30%-60% based on rankings for median family income and equalized valuation per pupil No incentive for multi-town arrangements No incentive for high performance schools Changes in the law and the 2010 census result in significant changes in the rates for many districts.

WHAT HAS NOT CHANGED Definition of “construction” Definition of “substantial renovation” Fire Marshal review Historical review Planning board notification requirement Permits Max allowable size Max allowable cost Minimum rate = 30% Maximum rate = 60% Site requirements Requirements for approval of bond sales

APPLICATION REQUIREMENTS Must identify: Problem to be solved Existing conditions – With appropriate supporting documentation from professionals Feasible alternatives considered to solve the problem - Must have at least two - Must complete Life Cycle Cost Analysis Complete and reliable cost estimates

ALTERNATIVES A feasible alternative must solve the problem, meet all applicable federal & state requirements, and meet the educational needs Possible feasible alternatives for consideration by the district: - Renovate an existing building - Expand an existing building - Construct a new building - Change the grades housed in the building - Redistrict - Close the school and send students elsewhere - Combination of above - Other options Doing nothing is not a feasible alternative that may be considered for the application

LIFE CYCLE COST ANALYSIS DOE will provide format and factors to be used such as discount rate, inflation rates etc. Must compare at least two feasible alternatives on 20 year life cycle Calculate the Net Present Value (NPV) for each alternative Must justify if not implementing the alternative with the lowest NPV

LOCAL VOTING Districts will know the project’s priority on the state list prior to district meetings Districts may want to make approval of local funding contingent on receiving state funding Projects initially not approved for funding may become eligible if funds become available – don’t give up too soon The timeline may allow opportunities for subsequent votes if the first fails

APPROVAL FOR FUNDING BY DOE Must have: All application documents submitted and accepted Successful vote by local legislative body Funding available based on prioritized list Design and cost approved by DOE Signed construction contract 80% of approved amount sent to district upon approval for funding by DOE

STATE BUDGET ISSUES Funds first go toward the “tail” Remaining funds in any fiscal year are available for new projects DOE will program, request, and budget funds based on estimated start dates and estimated completion dates on application forms It will be key to have start and completion dates that are realistic Changes in completion dates that cross a biennium may be difficult The earliest payment following a March vote will be in July of that calendar year (next fiscal year) Projects that fall on the cut line may be offered partial payment with no guarantee that the difference will be received Budget over-runs are not likely to be covered by building aid

MORE TO FOLLOW More information will be provided as the details for the new system are developed.