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Funding building projects in a tough economy: hidden money will help you construct and maintain your buildings.

The federal government last formally assessed the state of the nation's schools in the 1999 report "Condition of America's Public Schools, which estimated that it would take $127 billion to bring our nation's schools to "good condition." The American Society of Civil Engineers (ASCE) issued its own report card the same year. In "The Report Card for America's Infrastructure," the ASCE gave schools a D grade and estimated an even greater dollar amount ($322 billion) was needed over five years to bring schools into good condition.

Funding these needs remains a huge challenge, and a policy statement ASCE adopted in 1999 has evolved and is a focus in the organization's 2011-2012 priorities. The statement includes a concern that the nation would continue to struggle in the 21st century to make students competitive: "The neglect of public school buildings and their inability to support 21st century education erodes our society's ability to compete globally. Quality education is essential for the continued competitiveness and viability of our nation. Modern school facilities that meet modern safety standards and the evolving needs of a burgeoning school population are essential.... Designing, constructing and retrofitting school buildings and their infrastructure to meet or exceed the latest building codes and standards and to specifically address local hazards is the best way to assure that continuity of operation."

ASCE also encourages creative financing options such as lease financing, where the facility is privately owned, and public-private partnerships, which can provide a combination of financing, ownership and use arrangements to facilitate construction. ASCE also supports federal programs to reduce school bond interest rates.

Data compiled by the 21st Century School Fund and its Building Education Success Together (BEST) partners in 2011 suggests that districts have an estimated $271 billion (averaging $4,883 per student) of deferred building and grounds maintenance in their schools. In 2010, in fact, 10 states reported a need for an average of $4,400 per student for deferred maintenance.

According to a 2011 report from the 21st Century School Fund and its BEST partners, districts spent $49 billion (or 10 percent of their operating budgets) on maintenance and operations and $9.4 billion on utilities in 2008. Districts also reported spending $59 billion for capital outlay on construction and land/building acquisition in 2008, with a reported $369 billion in long-term capital debt.

Primary Funding

While the primary funding source for school facilities has been local and state tax revenues, with some limited support from state and small federal initiatives, the methods for determining state support vary by state and are often political. The average state share of funds for capital projects between 2005 and 2008 was 30 percent, but 11 states contributed no funds for school facility projects, and three states and the District of Columbia funded 100 percent of these costs.

Thanks to the American Recovery and Reinvestment Act (ARRA) of 2009, districts received additional federal funding for instructional facilities improvement. According to the 2011 expenditure estimate, $89.6 billion of ARRA dollars made their way into education. Funds for capital improvements were disbursed primarily through the State Fiscal Stabilization Fund (SFSF). Nearly $54 billion in SFSF funds were used to support modernizing, renovating and repairing school and college facilities, and to retain teachers and impact student achievement in part by improving teacher effectiveness and establishing college and career data systems that track progress. Governors applied for these funds at the state level and, of the $48.6 billion that went to state governors, 18 percent of the state award went to support education (including school modernization renovation and repair), public safety and other government services. Out of each state's allocation, 82 percent of the funds was reserved for the education block grant which had to be spent in certain ways and of which a portion stayed at the local level focused on education. Governors had discretion about how these funds were allocated. Of the $48.6 billion that went to state governors, only about $26 million went to public school facilities improvements.

Hidden Public Funds

There is some uncertainty about finding funding today. However, some less well-known sources exist, such as Local School Construction Bonds and Qualified Zone Academy Bonds.

Local School Construction Bonds are typically used to finance a building or capital project. Public school districts use them to construct new facilities or renovate existing buildings, for example. The laws governing construction bonds vary by state and locality, as do the amounts of the bonds. The National Clearinghouse for Educational Facilities offers listings of bond issues.

Qualified Zone Academy Bonds (QZABs) can also be used for renovating school buildings. Established in 1997, QZABs are administered by the Internal Revenue Service as a provision of the tax code. These bonds provide interest savings (0 percent for 15 years) for financing school renovations and repairs but cannot be used for new construction. The annual appropriation for the QZAB program is $400 million. A state's allocation is based on its population under the poverty line.

The money can only be used for qualifying schools, which are those where 35 percent or more students are eligible for free or reduced-price meals or those that are located in an Enterprise Community or Empowerment Zone based on poverty. A list of Empowerment Zones and Enterprise Communities is available on the QZAB site at www.qzab.org. Local education agencies (LEAs) are required to secure a 10 percent private-entity partner contribution in cash or in-kind services and to have a district-approved plan to ensure equity in what standards are used and how students are assessed. Districts apply to their state for the funds.

Federal Funds

Although the U.S. Department of Education plays a small and somewhat informal role in addressing the needs of school facilities, there are some dedicated funding programs that may help meet facility improvement needs. Funds for modernization, emergency repairs, new construction and maintenance are available through the Impact Aid Discretionary Construction Grant Program and the Impact Aid Facilities Maintenance Program. Impact Aid services students who reside on Indian lands or federal property. Many local districts include within their boundaries parcels of land that are owned by the federal government or that have been removed from the local tax roll by the federal government, including Indian lands. The Impact Aid Discretionary Construction Grant Program provided an estimated $17.5 million in 2011. And 40 percent of these funds are set aside for districts receiving Basic Impact Aid Support payments every year. The other 60 percent are awarded competitively to cover emergency repairs or modernization costs to districts. A grant cannot exceed half the cost of the project for which it was awarded.

Impact Aid Facilities Maintenance grants help maintain school facilities operated by LEAs that serve military installations. There is no application form, as project needs are determined through LEAs. In 2009, the latest year for which figures are available, $1.2 million was awarded.

Several programs are available to plan, design and implement charter schools, such as the Credit Enhancement for Charter School Facilities Program ($10 million in FY 2011) and the State Charter School Incentive Grants Program ($15 million in FY 2009, $15 million in 2010 and $13 million in 2011). Information about the next competition will be posted on the DOE's Web site when available.

Funding may come through yet other federal agencies, as well. For example, a dedicated fund for kitchen improvement, the Equipment Assistance Grants for School Food Authorities, can be found through the Department of Agriculture. This funding provided $100 million to public school facilities in 2009.

The Department of the Interior, which is responsible for protecting America's natural resources and heritage, has the Bureau of Indian Affairs--Elementary and Secondary School Construction fund, which is responsible for constructing, improving and repairing education buildings on Indian lands. In FY 2009, this fund provided $129 million in regular funds to schools. The Department of Defense offers the Military Construction Program, which provides construction resources for DOD-operated schools on military bases around the world. A future funding plan was announced in 2010 to address $3.7 billion in construction needs for schools on military bases.

Other federal programs may allow funding for school facilities, even though their programs are not specifically dedicated to school facility improvement. The Department of Health and Human Services' Head Start program includes grants that can be used for purchasing, renovating and constructing facilities. In FY 2009, the program put $7 billion of potential resources into public schools. The Energy Department's State Energy Program grants provided $39 million in funds in 2011 through formula grants. Formula and competitive grants focus on energy efficiency. Districts apply to the state for competitive grant funding.

Creative Funding

Administrators can be creative. For example, the State Energy Program Grants can be used for purchasing and installing equipment and materials for energy-efficiency measures and renewable energy measures, including design costs. The Federal Emergency Management Agency's (FEMA) Public Assistance Program Grants for districts help to reconstruct and repair school facilities damaged or obliterated by a disaster. In FY 2009, $263 million flowed into public education facilities through FEMA's grants. School districts can apply through FEMA directly.

FEMA provided $3 billion to public school facilities between 1998 and 2010, which included $2 billion to schools in Louisiana following Hurricane Katrina. FEMA is now assisting schools on the East Coast devastated by Hurricane Irene, as well as others across the nation affected by floods and natural disasters.

The Department of Agriculture has a small Rural Community Facilities Program to help rural communities improve their facilities. It is not specifically designated for schools, but is an allowable program for districts. The program's grants, along with its direct and guaranteed loans, are available in areas up to 20,000 in population. The amount of assistance available depends upon the median household income and community population. Applications are filed with the USDA Rural Development field offices in each state.

Together, these federal grant programs, including FEMA, the departments of Interior and Agriculture, Head Start, and Impact Aid programs, provided a combined $7 billion to public school facilities in 2009-2010.

Competitive Grants

Finally, competitive grant funds are an ongoing and exciting potential source of revenue. These funds can come from federal or state agencies or from private grants awarded by community and corporate foundations. (Foundation funding is often localized, with a foundation awarding funds to schools within its community or served by its company.) Monitoring grant opportunities to identify those that will allow capital projects can lead to other sources of funding for renovations, repairs and modernization improvements. Federal grant opportunities are posted on the grants.gov Web site, and information about funding releases and priorities are made available from the Department of Education at www.ed.gov. Enlisting the services of school funding experts, such as RedRock Reports, the Foundation Center and Education TURNKEY Systems, can ensure that relevant funding opportunities are not missed.

In the Green

On top of typical renovations and building programs, there are funding possibilities for energy efficiency and renewable energy projects.

Secretary of Education Arne Duncan spoke in February at the Green Schools National Network Conference in Colorado to discuss the growing importance of recognizing green schools, environmental literacy and educating students about environmental stewardship and sustainabiliy. Research shows that schools that implement energy-saving strategies--from following green building design to using energy-efficient building components to encouraging behavioral change--can reduce energy use by as much as one-third, resulting in major environmental benefits and cost savings. This will reduce subsequent operating costs and thereby offset the investment in the capital project. Additionally, as districts turn to local bonds as a potential funding source, environmentally friendly repairs and renovations may be ones that voters will support.

In addition to the aforementioned State Energy Program Grants, the Department of Energy has several programs to support energy-efficient school facilities. The Energy Efficiency and Conservation Block Program provides formula-based block grants based on population to states, U.S. territories, large cities, counties and Indian tribes within the United States. These funds are dedicated to energy-efficiency and conservation projects and programs.

The Tribal Energy Program supports projects dedicated to energy efficiency and conservation for federally recognized Native American tribal governments. From 2002 to 2008, more than $16.5 million was provided by the Department of Energy for 93 tribal energy projects.

The Environmental Protection Agency addresses environmental concerns in buildings through the Brownfields Program, which is focused on preventing, assessing, safely cleaning and sustainably reusing brownfields. A brownfield is a former industrial or commercial site that has suffered potential environmental contamination. School districts are eligible to apply for funding from the EPA through three programs: the Area-Wide Planning Pilot Program, the Assessment Grants Program, and the Clean Up Grants Program. With some ingenuity, each of these funds may be used creatively by combining it with other funds and developing multifaceted projects of which capital improvements are a part. Information is at epa.gov.

In addition to government sources, many private foundations and corporations support the green movement and may be willing to support facility needs. The EPA's Web site includes information on such funding (www.epa.gov/greenbuilding/tools/funding.htm).

Persistence Will Pay Off

As you work to find resources to strengthen the buildings that support your students, remember that the money is out there. Just start hammering away until you find the sources that will work for you.

Collaborative Partnerships Work

Partnering with parent groups, business and non-profits equal power.

For the last few years, a trend has been emerging in K12 education funding with a clear message: Partnerships equal power. Partnerships should include the school district, of course, and community groups, parent organizations, nonprofit supporters and for-profit businesses.

For school district leaders, it is obvious how a higher education partner can be a benefit. But how can a for-profit company also be a benefit? For-profit partners have much experience in the marketplace. They can provide insight about business acumen and market trends that can only come from outside of the education arena. They can also provide valuable expertise in grant applications, board presentations, and justification or validation for your decisions related to the investments made with district resources.

For example, if your goal is to renovate a building to make it more energy efficient, think about the information that a HVAC company can provide about how to capitalize on this efficiency. Including this information in your grant application or board presentation makes a more comprehensive case about your need, and the partnership will serve you well when it is time to make the changes to your building.

Also, many competitive grants require matching funds or in-kind contributions. Your for-profit partners can be key contributors to in-kind services or products that can maximize the resources you receive. In addition, there has been more emphasis on encouraging creative public-private partnerships, which can provide a combination of financing, ownership and use arrangements to facilitate construction. Lastly, it can only be a win-win proposition to have partners to call on as you search for funding to meet the needs of your most precious resources--your students.

RELATED ARTICLE: Retrofitting buildings with special funds.

These three school districts have used grants or special taxes to retrofit buildings, saving money and increasing security.

Greenville Schools Create Renewable Energy

In late 2010, Greenville Public Schools, a rural district in Michigan, ranked in the 95th percentile nationally for sustainable schools. The district has since applied for LEED certification, the U.S. Green Building Council's rating system, following completion of a green energy project with Johnson Controls.

The district added two 100kW solar photovoltaic panels-one at the high school and one at an elementary campus--with a $180,000 state grant and revenue funds from Consumers Energy's Experimental Advanced Renewable Program (EARP). EARP requires energy companies to produce a certain amount of clean, renewable energy or to buy that energy from someone else who produces it, such as GPS' solar panels.

The district is now making $70,000 per year selling its green energy to EARP. This money is being used to pay off a $5 million bond, fixed at 0.5 percent interest, that funded several energy-saving initiatives, such as occupancy sensors to control lighting and HVAC, new boilers and windows, and low-flow water faucets and toilets in the restrooms, along with the solar panels.

Along with sustainability efforts, the district also added the Johnson Controls Solar Academy curriculum, which includes green energy classroom lessons. The curriculum has been incorporated into the science program at the elementary and middle schools and as an elective at the high school. Energy output from the solar panels is displayed at the schools every day to educate students about the intensity of solar power and to promote a green culture.

Taylor Schools Upgrades Facilities and Infrastructure

In the fall of 2011, the Taylor School District in the suburbs of Detroit partnered with Honeywell to modernize old facilities and update an outdated infrastructure, changes that drove energy and operating costs down by more than $550,000 annually.

The district didn't have to look far for the $14 million. The federal American Recovery and Reinvestment Act, which President Obama unveiled in 2009, funded the project. All school districts in Michigan were eligible to receive the low-interest ARRA-supported Qualified School Construction Bonds, which are being paid back with guaranteed energy and operational savings.

Honeywell plans to install conservation measures in all 15 schools this summer, such as new plumbing features to decrease water use in bathrooms. Taylor schools will replace inefficient boilers, lighting, doors and windows in all buildings and integrate an energy management system to help maintenance staff track energy consumption and identify ways to increase savings.

"Most of our facilities had not gone through a major renovation in more than two decades," says Beth Iverson, Taylor's superintendent. "And, like many districts in Michigan, we didn't have the resources to properly maintain existing systems, let alone install new equipment."

To cultivate a green culture, Honeywell provides Web-based dashboards that allow teachers to see the results and use the school buildings as a teaching tool and show students how to be environmentally responsible. The dashboards can also be used to educate the community and show taxpayers how their money was spent.

Securing Entries in Cobb County

Cobb County School District, located in the suburbs of Atlanta, is making sure staff and students are safe with an upgraded card access control system at its 68 elementary schools. This system was funded by a 1 percent special purpose local option sales tax that was passed by voters in the county in Sept. 2008 for this project along with other safety measures, new classrooms and technology upgrades.

Last year, CCSD worked with Ingersoll Rand--a company that provides security, industrial and climate solutions--to inspect every door of all school buildings to determine whether the door frames and hardware were in the necessary condition to start the project. "We visited other school systems and universities and realized that the doors, frames, closers and hardware all have to be in perfect condition for an access control system to work," says James Carlson, executive director of maintenance services for CCSD. "Then we made a determination of what was needed to bring every door up to standards and be sure it would close securely. In some cases we replaced wood doors with metal doors."

Proximity card readers, which manage access to buildings, and electric latch exit devices, which secure doors, were installed at all major entrances to the elementary schools. The system unlocks and relocks controlled doors according to the school schedule. If the doors are not properly closed after school hours, an alert is sent to the school office, and public safety is notified if there is no response after 15 minutes. Cards can be programmed to control access for a restricted time.--Courtney Williams

Paula Love is vice president for research and funding at RedRock Reports. Kathy Krapf, director of custom consulting at RedRock Reports, contributed to this article.

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Author:Love, Paula
Publication:District Administration
Geographic Code:1USA
Date:Apr 1, 2012
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