SAB approves $415 million priority funding program

The State Allocation Board signaled Wednesday tentative approval for releasing $415 million from the School Facility Program and give priority to districts that are ready to begin construction.

Although the board refrained from bringing the item to a vote, they directed SAB staffers to work out the details on the plan that would release money to any district on the state's unfunded list that can certify that it will submit a project fund release form to the Office of Public School Construction within 90 days after receiving an apportionment.

The notion of reshuffling the unfunded list to rapidly move money out to shovel-ready school districts was praised by nearly every board member.

We're benefitting the private sector, we're creating jobs, we're building schools where they need to be built, and I think that should be our first goal," said SAB member Scott Harvey, who is also chief deputy director for the Department of General Services.

Details of the plan still need to be fleshed out, such as how the state would deal with a sudden run on the funds by qualified districts that might otherwise be cause for litigation. Also at issues is how the plan will accommodate districts that want to apply the program to hardship projects, or projects that receive 100 percent of their construction funding from the state.

The board moved to work out those details at a subcommittee hearing in mid-May, and plans to revisit the item for a vote at the next SAB meeting, which is scheduled for May 26.

Some school facilities representatives have already taken issue with the program, arguing that it benefits wealthier districts and ones that enjoy better access to state and local construction officials.

"What I'm seeing happening here is blood in the water," said Bob Nicholson, school facility consultant for Eric Hall and Associates LLC, at an OPSC briefing that took place earlier Wednesday. "There's going to be a fight for the food, and it's a very limited amount of food. So it puts pressure on districts to be very influential."

Hall added that the district wealth aspect raises some important equity issues.

At the OPSC briefing, state officials argued that districts that are unable to access available state cash should no longer stand in the way of districts that are ready to move forward on school construction projects.

The new program would also give districts some added incentive to send in fund release forms and stimulate the state economy, said OPSC representatives.

If the plan is deemed unworkable, the board may consider an alternative proposal that would involve the SAB granting "conditional" apportionments to every project on the states's unfunded list, and allowing districts that are ready to submit fund release requests to the OPSC to compete for the available cash.

The 18-month time window that districts have to access available funds after sending in a fund release form would be opened to every project on the list and would not close until all the bonds had been depleted. Once the funds were dry, the 18-month clock would stop.

Two March 2010 bond sales brought in over $1.3 billion to the School Facility Program. At last night's SAB meeting, $961 million worth of projects were apportioned under the current first in, first out funding system.

The remainder from the March sale, $415 million, would be set aside for the new priority program.

Bond sales in 2009 provided $2.6 billion to the School Facility Program. The lion's share of those bonds, plus the proceeds from 2010 bond sales, have sat idly while school facility operators attempt to lock contracts in place and secure matching state funds.

Fund release requests dropped from an average of about $265 million per month from April through July 2009 to$39 million per month from last August through the present, reported SAB staff.

Districts have given several reasons for why they have not yet accessed the available funds, among them the difficulty in selling local bonds amidst a weak housing market, restrictive local political environments, and declining enrollment.

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