March 9, 2017

The Truth About State Bond Funds and How to Obtain Proposition 51 Approvals

by Eric Hall, President EH&A

 

Background
The State funded facility projects with a series of four voter approved general obligation bonds between 1998 and 2006 that together provided $35.4 billion. By 2012 the state exhausted funding from these bonds. The voters in the State of California approved the first state school bond in 10 years, Proposition 51 with 52{310f4324ad65b0a2030a48dd153b38f905c81f5512720fdadc65be8f0797b958} voter approval; over 7.5 million voters approved the measure. Proposition 51 provided $7 billion in facility funding for K-12 school facilities.

Getting your Basic Approvals
Many districts have promised their local communities that have approved local bond measures, the matching State funding to complete their projects. Qualifying for State funds require two major steps in the process. Your District must first establish eligibility for State funding utilizing current and projected enrollment, classroom inventories and capacity calculations and in the case of Modernization also documenting the age of buildings and the work that has previously been competed with State funds. Relying on the eligibility being established as a prerequisite, the second major step requires the District to contract with an Architect to have projects approved by the Division of the State Architect (DSA) with and also signed off as educationally sound by the California State Department of Education (CDE).

Projects Approved? – How Much is in the Pipeline?
The list of projects includes Districts that have jumped over the hurdles identified above and approved by the State Allocation Board (SAB) on the “approved and unfunded list” amount to approximately to $400 million. Since 2012, OPSC has accumulated approximately $2 billion in projects on an “unfunded list”. These are projects that have been acknowledged but not processed for funding.

Getting Your Money – OPSC Staffing
Several additional steps will need to be taken before the pipeline of projects begins to flow. OPSC needs the resources to tee up, review and approve appellations. Staffing at OPSC is at a historic low of about 50 positions and should be increased to at least the average of about 130 positions in order to have the resources necessary to review and approve applications. The Governor has not proposed an increase in the OPSC staffing levels.

Getting Your Money – Bond Sales
Consistent with the Governor resisting the issuance of debt that the State will pay back via debt services from its general fund, the Governor has proposed an insufficient amount to address the backlog. The State is planning to only $655 Million in School Bonds in 2017-18 fiscal year. The administration proposes to further slow the issuance of funding for school facilities as these bonds will be sold in two tranches, one in the fall of 2017 and one in the spring of 2018.

Getting Your Money – Regulatory Changes
The Governor is proposing to amend the state law and to add state facility bond expenditures to local audit requirements. Under this plan the OPSC would no longer perform audits of projects. OPSC should instead assist districts in filling out a newly required upfront grant agreement; this change is proposed to be enacted as a regulatory change and it’s been stated that a regulation can be implemented as early April of this year!

Final Thoughts – Plan for Success
Planning is critical! Having worked in facilities since the mid 1980’s and participated in the current School Facility Program and the previous Lease Purchase Program, we have learned some lessons and established best practices along the way. It is incumbent upon Districts interested in matching and maximizing their funding to identify projects and prioritize their needs and be familiar with their long range enrollment projections. These components are central in a Districts long range facility master plan. Districts pursuing State funds must have the local resources to plan as well as to obtain construction ready architectural drawings approved by DSA.

We hope you find this update on the Status of Prop 51 funding helpful as you perform the magic needed to plan, design, and obtain approvals and construct schools facilities for the students of the 21st century. For more information about the State program or the practice and components of master planning, please contact Eric Hall or Bob Nicholson via the links on our Contact page.

NOTE: The Legislative Analyst Office (LAO) analysis of the Governor’s budget proposal for 2017-18 includes a through summary and analysis of Proposition 51 and the School Facility Program issues.