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The Future of School Facilities
Funding & Construction in California
CMAA Northern California Chapter
October 3, 2012
William Savidge, Assistant Executive Officer
State Allocation Board
Kathleen Moore, Director School Facilities and Transportation Services Division
California Department of Education
Agenda
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A decade of strong commitment
A new world of State/local bond debt constraints
State school facilities funding in transition
School facilities construction over the next 2 years
Where do we go from here?
 UC Berkeley Center for Cities and Schools Report:
“California’s K-12 Educational Infrastructure Investments:
Leveraging the State’s Role for Quality School Facilities
in Sustainable Communities.”
Over a Decade of Strong
Commitment
School Facilities funding prioritized
 Meeting California’s growth needs
 Modernizing existing schools
Over $35 billion in State Bond Funds
 1998 School Facility Program
 Growth of targeted state funding programs
 Not just New Construction & Modernization
 High Performance
 Charter Schools
 Overcrowding Relief Grants
 Seismic Mitigation
 Joint Use
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Over a Decade of Strong
Commitment
$66 billion local funding for school facilities
 General obligation bonds
 Passage of Proposition 39 was a huge impact
 Growing local responsibility
 State partnership important in selling to voters
Developer Fees in addition to local bonds
 Local residential growth impact funding
 Local development districts
 CFD’s, Mello Roos, others
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The New World: Debt Constraints
Changed economic climate—financial crisis!
 State infrastructure investment impacts
Schools one infrastructure area competing
for voter-authorized funding
 Parks, levees, transportation, high-speed rail…
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The New World: Debt Constraints
Impacts to the State General Fund
 Debt-service payments continue to rise
 Compete with other funding priorities
 In a time of difficult choices, reduced revenue,
limited budgets
Solution—measured pace of bond sales
 In the new era of restricted school facilities funding
 Bi-annual bond sales
 SAB instituted Priority Funding process
 Certify to be under contract in 90 days to receive cash
 The “shovel-ready” project is king!
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California’s Bond Debt Has Increased Significantly Since 2003
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– The rating agencies generally consider the State’s debt burden moderate, but note its rapid growth
and significant use for deficit borrowings
– California currently has the among lowest credit rating of any state in the country
Notes: Includes Non Self-Liquidating General Obligation (GO) bonds, SPWB Lease Revenue Bonds (LRBs), Economic Recovery Bonds (ERBs) and Prop 1A bonds. Does not include Enterprise Fund
Self-Liquidating bonds such as Vets GO Bonds or outstanding GO commercial paper notes. ERBs were authorized in 2004. Prop 1A bonds were authorized in 2009 and issued by the California
Statewide Communities Development Authority.
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As a Result, Debt Service Has Also Increased
Notes: Includes Non Self-Liquidating GO bonds, SPWB LRBs, and Prop 1A bonds. Does not include Enterprise Fund Self-Liquidating bonds such as Vets GO Bonds, ERBs or outstanding GO
commercial paper notes. Does not reflect offsets due to subsidy payments from the Federal Government for Build America Bonds or transfers from special funds.
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State Debt Service Forecast
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We’ve come out of the recession stronger
Balanced state budgets from legislature and
governor
 Reducing long-term structural deficit
Future scenarios regarding infrastructure
investment
 Strategic Growth Plan future investment needs
 With anticipated new debt—including school
bonds
 Will still have a high level of bond debt as percent
of General Fund revenues
State Debt Service Forecast
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Local Debt Constraints
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Local funding for school facilities
 Developer fees have dried up with the housing market…
Local General Obligation Bonds
 Proposition 39 limits
 The 55% majority blessing
 But…individual tax limitation @ $60/$100,000 of assessed
valuation (“AV”) for Unified Districts
 And…overall bonding capacity limitations @ 2.5% of AV
As local Districts continue facilities investments
 Tax rate limitations become critical
 LAUSD has billions in voter-authorized bonds—unable to sell
Local Debt Constraints
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Local debt service and limitations—finding ways to create room under the line!
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State funding end game…
State funding in transitiion…
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Still $2.4 billion in the “pipeline”
 Including Unfunded Approvals waiting for cash
 Funds/programs with remaining authority
Earliest date for new state school facilities bond
 November 2014
OPSC has applications in-house
That exceed remaining bond authority
 Modernization $116 million
 New Construction $58 million
 As of August 31, 2012
State funding in transition
State Allocation Board action
Acceptance of Applications Beyond Bond
Authority
 Creation of new process
 “SAB-Acknowledged Workload List”
 Limited processing of applications
 No “Unfunded List” as in the past
Board concerns regarding
 No guarantee of state funding in future
 Changes to state program
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School Facilities Construction
Navigating the next 2 years
 Local bond funding continues for schools
 Green building standards, renewable energy
systems
 Increasing regulatory complexity for state-funded
projects
 Locally funded projects that may be funded/reimbursed in
the future by state funds
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2012 School Facilities Bonds
District
Local Districts have
placed $11.4 billion in
bonds on the November
ballot.
In addition, $750 million
was passed by locals in
November 2011—an “off”
year.
Most recently $1.6 billion
was passed by locals in
June 2012.
Significant opportunities
for continuing school
facilities construction.
Alum Rock Union ESD
Alvord USD
Anderson Union HSD
Antioch USD
Arcata ESD
Bellflower USD
Burlingame ESD
Butteville Union ESD
Brawley ESD
Cajon Valley Union SD
Calexico USD
Caruthers USD
Castaic Union ESD
Chaffey Joint Union HSD
Chico USD
Chula Vista ESD
Coachella Valley USD
College ESD
Covina-Valley USD
Del Mar Union ESD
Dehesa ESD
Delhi USD
Earlimart ESD
East Side Union HSD
Elk Hills ESD
Escalon USD
Folsom Cordova USD
Fortuna Union HSD
Fountain Valley ESD
Gravenstein Union ESD
Gridley
Hemet USD
Hueneme ESD
Inglewood USD
Jefferson ESD
Jefferson Union HSD
Kings Canyon USD
Knightsen ESD
Lancaster ESD
Lindsay USD
Little Lake City ESD
Lynwood USD
McFarland USD
Mendota USD
Morgan Hill USD
Amount
(in millions)
Santa Clara
$125.00
Riverside
$79.00
Shasta
$12.30
Contra Costa
$56.50
Humboldt
$7.00
Los Angeles
$79.00
San Mateo
$56.00
Siskiyou
$3.50
Imperial
$7.50
San Diego
$88.40
Imperial
$41.00
Fresno
$12.00
Los Angeles
$51.00
San Bernardino
$848.00
Butte
$78.00
San Diego
$90.00
Riverside
$41.00
Santa Barbara
$12.00
Los Angeles
$129.00
San Diego
$76.80
San Diego
$3.00
Merced
$8.00
Tulare
$3.60
Santa Clara
$120.00
Kern
$6.20
San Joaquin
$19.50
Sacramento
$68.00
Humboldt
$10.00
Orange
$23.50
Sonoma
$6.00
Butte
$11.00
Riverside
$49.00
Ventura
$19.60
Los Angeles
$90.00
San Mateo
$67.50
San Mateo
$41.90
Fresno/Tulare
$40.00
Contra Costa
$3.00
Los Angeles
$63.00
Tulare
$16.00
Los Angeles
$18.00
Los Angeles
$93.00
Kern
$25.00
Fresno
$19.00
Santa Clara
$198.30
County
Mount Pleasant ESD
Santa Clara
San Diego
Riverside
J Nuview Union SD
Alemeda
W Oakland USD
Ocean View SD
Orange
C
Ocean View SD
Ventura
B
Oxnard SD
Ventura
F Pacific ESD
Santa Cruz
BB Pajaro Valley USD
Santa
D Palmdale ESD
Los Angeles
R Panama-Buena Vista Union Kern
Riverside
S Perris Union HSD
Tulare
C Porterville USD
San Diego
X Ramona City USD
Los Angeles
C Redondo Beach USD
Ripon USD
San Joaquin
QS
Roseland ESD
Sonoma
P
Rowland USD
Los Angeles
E Sacramento City USD
Sacramento
E Sacramento City USD
Sacramento
X San Bernardino City USD
San Bernardino
K2012 San Carlos ESD
San Mateo
San Diego
CC San Diego USD
San Diego
CC San Dieguito Union HSD
Santa Clara
D San Jose USD
Sacramento
E San Juan USD
San Ramon Valley USD
Contra Costa
H
Sanger USD
Fresno
I
Santa Monica-Malibu USD Los Angeles
Santa Ynez Valley Union
Santa Barbara
B Soledad USD
Monterey
P Somis Union SD
Ventura
D Sonora Union HSD
Tuolumne
San Diego
N South Bay Union ESD
Monterey
M Spreckels Union ESD
Napa
G St. Helena USD
Kern
U Standard ESD
Stockton USD
San Joaquin
T
Summerville Union HSD
Tuolumne
GG
Temecula Valley USD
Riverside
I Temple City USD
Los Angeles
E Templeton USD
San Luis Obispo
K Visalia USD
Tulare
H Washington USD
Fresno
Merced
L Weaver Union SD
Contra Costa
L West Contra Costa USD
Los Angeles
EE Westside Union ESD
Glenn
K Willows USD
Wilmar Union ESD
Sonoma
Wheatland Union HSD
Yuba
M
Whittier City ESD
Los Angeles
G Yucaipa-Calimesa Joint USD San Bernardino
MeasureMountain Empire USD
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$25.00
$30.80
$4.00
$475.00
$198.00
$4.20
$90.00
$0.83
$150.00
$220.00
$147.00
$153.42
$90.00
$66.00
$63.00
$25.24
$7.00
$158.80
$346.00
$68.00
$250.00
$72.00
$2,800.00
$449.00
$290.00
$350.00
$260.00
$50.00
$385.00
$19.84
$40.00
$8.00
$23.00
$26.00
$7.00
$30.00
$11.20
$156.00
$8.00
$165.00
$128.80
$35.00
$60.10
$22.00
$9.00
$360.00
$18.51
$14.70
$4.00
$9.00
$55.00
$98.00
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Energy, Renewables, Green Building
Continued focus on school projects
 Energy efficiency
 Performance Contracting
 Rebates, utility and local agency programs
 Renewable energy systems
 Local bond funding
 State funding when available
 Energy Commission Loans—”Bright Schools” program
Green building standards
 Schools a focus—CHPS, LEED for Schools
 Leading the green construction team
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Construction in our regulated world
School construction ongoing requirements
 State funded projects
 Continue these programs in order maintain the
option of filing to receive state funds
Labor compliance
 DIR Compliance Monitoring Unit
 Required for all public works projects receiving
state bond funds
Mandatory pre-qualification for Contractors
 Including MEP Subcontractors
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Major Benefits from
Past 10+ Years of
Investment
• ~20% enrollment growth
• Overcrowding relieved
• Upgraded thousands
• 70/30 local/state share
Comprehensive
Look at Past
and Future
• Sound planning?
• Wise investment?
• Policies needed?
Today’s Context
• New economic era
• New state policy framework on
infrastructure & land use: climate change &
sustainable communities
– “communities that promote equity, strengthen
the economy, protect the environment, and
promote public health and safety” (Public
Resources Code § 75125, originally SB 732)
State Planning Priorities for
Infrastructure
• Promote infill development and equity
• Protect environmental and agricultural resources
• Encourage efficient development patterns
(Government Code § 65041.1, originally AB 857)
CA cannot afford to not be strategic:
A shift is needed
• To existing facilities focus
• To investing in community sustainability
• To intentional innovation
Why School Facilities Matter
• Affect teaching and learning
Uline, C. (editor). (2009). Special Issue, Journal of Educational Administration 47(3).
Higgins, et al. (2005). The Impact of School Environments. University of Newcastle.
• Affect land use, growth, travel
patterns, VMT, housing choices
U.S EPA. (2003). Travel and Environmental Implications of School Siting
U.S. EPA. (2011). Voluntary School Siting Guidelines.
PACE and CC&S. (2009). Smart Schools, Smart Growth. UC Berkeley
Californian’s Invest in K-12 Infrastructure
K-12 Schools
34%
Source: PPIC 2008
Sound
Planning
Effective
Management
Adequate
Equitable
Funding
Appropriate
Accountability
Infrastructure Best
Practices Framework
Estimating K-12 Capital Needs:
• New Construction
– Enrollment growth/crowding
– Building Replacement
• Modernization
– For health, life-safety, and ADA
– For educational program delivery
• Capital Renewals
– Scheduled replacement or restoration (2-4%)
Estimating Needs:
$117 billion to ensure
safe, modern, equitable,
and sustainable learning
environments for all
students
Recommendations:
Leveraging the State Role
1.
2.
3.
4.
5.
6.
7.
8.
Establish state vision & master plan
Promote local intergovernmental planning
Assemble needed information
Review & update Title 5 (CCR)
Set funding priorities
Establish state funding of capital renewals
Identify multiple revenue sources
Improve public accountability
Harnessing Efficiencies & Benefits
Three levers:
1. Policy reforms
2. Process innovations
3. Technology tools
1. Adopt vision & master plan
a. K-12 on Strategic Growth Council
2. Promote local inter-agency planning
a.
b.
c.
d.
e.
Include K-12 in SB 375, etc.
Require standards-based LEA master plans
Provide guidance for local joint planning
Set minimum green building criteria
Use CEQA strategically
3. Assemble info to be
strategic and prioritize
a. Develop inventory & assessment tool
4. Review & update Title 5, CCR
a. Statewide comparison of schools
b. Supports sustainable communities
5. Set priorities to remedy inadequate
facilities and support new construction
a.
b.
c.
d.
Identify state-level need
Establish criteria for ranking
Bring all schools to minimum level
Develop transparent funding formula
6. Establish capital renewals funding
a. Shift from reactive to proactive approach
7. Identify multiple revenue sources
a. Consider statewide special tax
b. Public/private partnership legislation
c. Periodic bond use
8. Improve accountability
a.
b.
c.
d.
e.
f.
Produce annual report
Inter-agency info system
SFP Citizen’s Oversight Committee
Maintain Implementation Committee
Streamline approval processes
Support technology tools
Stakeholder Input Sessions
• October 1
School Implementation Advisory Committee
Roundtable
• October 16
CASH Fall Conference
• November 13 Video Conference
• December 6
Symposium by Center for Cities and Schools,
California Department of Education, and
Strategic Growth Council
Implementation Recommendations
• Prepare Implementation Recommendations for the
State Superintendent of Public Instruction by
December 31.