Revision: March 29, 2012, midnight
HB 533-FN-LOCAL – AS AMENDED BY THE HOUSE
4Jan2012… 2801h
28Mar2012… 1064h
2011 SESSION
04/09
HOUSE BILL 533-FN-LOCAL
AN ACT establishing a cap on the amount of school building aid grants distributed in each fiscal year.
SPONSORS: Rep. Ladd, Graf 5; Rep. Boehm, Hills 27; Rep. Jasper, Hills 27; Rep. Fleck, Carr 5
COMMITTEE: Special Committee on Education Funding Reform
This bill revises the calculation and distribution of school building aid grants
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
4Jan2012… 2801h
28Mar2012… 1064h
11-0680
04/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT establishing a cap on the amount of school building aid grants distributed in each fiscal year.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 School Building Aid. Amend RSA 198:15-a, I to read as follows:
I. To aid local school districts in meeting the costs of the payment of debt for school buildings and educational administration buildings, including office facilities for school administrative units, and to meet the costs of leasing permanent space in a building which is used for the operation of a high school vocational technical education program, the department of education shall, from funds appropriated by the general court to carry out the provisions of this subdivision, pay [annually] to the school districts of the state, sums in accordance with the provisions of this subdivision or the alternative school building aid provisions under RSA 198:15-u through RSA 198:15-w, depending on which option a school district elects. [The annual grant to school districts shall be made in 2 approximately equal payments, one in October and one in April of each fiscal year. No payment shall be made to a school district prior to the district’s first payment on the amount of principal borrowed.]
2 New Paragraph; School Building Aid. Amend RSA 198:15-a by inserting after paragraph II the following new paragraph:
III. Beginning July 1, 2013, and every fiscal year thereafter, school building aid grants for construction or renovation projects approved by the department of education pursuant to this subdivision or RSA 198:15-u through RSA 198:15-w, shall not exceed $50,000,000 per fiscal year less any debt service payments owed in the fiscal year, unless otherwise provided by an act of the general court. School building aid grants approved pursuant to this subdivision or RSA 198:15-u through RSA 198:15-w, shall be funded from appropriations in the state operating budget and no state bonds shall be authorized or issued for the purpose of funding such school building aid grants.
3 School Building Aid; Amount of Grant; Approval of Plans. Amend RSA 198:15-b and RSA 198:15-c to read as follows:
198:15-b Amount of [Annual] Grant.
I.(a) Beginning July 1, 2013, and every fiscal year thereafter, the amount of the [annual] grant to any school district duly organized, any city maintaining a school department within its corporate organization, any cooperative school district as defined in RSA 195:1, any receiving district operating an area school as defined in RSA 195-A:1, or any receiving district providing an education to pupils from one or more sending districts under a contract entered into pursuant to RSA 194:21-a or RSA 194:22, shall be a sum equal to 30 percent of the [amount of the annual payment of principal on all outstanding borrowings of the school district, city, cooperative school district, joint maintenance agreement, or receiving district, heretofore or hereafter incurred, for the] cost of construction [or], purchase, or renovation of school buildings and school administrative unit facilities, or for the cost of acquiring, developing, or renovating any municipally-owned land, buildings, or facilities to be used for school district purposes, to the extent approved by the department of education[, provided that any school district may receive an annual grant in the amount of 40 percent for the construction of an educational administration building for a school administrative unit, and provided that the amount of the annual grant in the case of a cooperative school district, joint maintenance agreement, a receiving district operating an area school, or any receiving district providing an education to pupils from one or more sending districts under a contract entered into pursuant to RSA 194:21-a or RSA 194:22, shall be 40 percent plus 5 percent for each pre-existing district in excess of 2 and each sending district in excess of one, and provided further that no cooperative school district, joint maintenance agreement, or receiving district operating an area school, shall receive an annual grant in excess of 55 percent].
(b) For any municipally-owned land, buildings, or facilities for which school building aid is granted under this subdivision, the following shall apply:
(1) A school district, a city maintaining a school department within its corporate organization, a cooperative school district as defined in RSA 195:1, a receiving district operating an area school as defined in RSA 195-A:1, or a receiving district providing an education to pupils from one or more sending districts under a contract entered into pursuant to RSA 194:21-a or RSA 194:22, shall have first priority in the use of such land, buildings, or facilities for 10 years or the life of any bond or note issued to provide funds for such land, buildings, or facilities, whichever is greater.
(2) [The cost of any proposed renovation project shall be less than the cost of a new acquisition for the same purpose] A school district, a city maintaining a school department within its corporate organization, a cooperative school district as defined in RSA 195:1, a receiving district operating an area school as defined in RSA 195-A:1, or a receiving district providing an education to pupils from one or more sending districts under a contract entered into pursuant to RSA 194:21-a or RSA 194:22, shall submit, when applying for aid under this chapter, the least costly building plan that meets minimum state building standards in this chapter along with any alternative plans that may be proposed.
(3) In the absence of a bond or note or upon the expiration of any bond or note issued to provide funds for land, buildings, or facilities, the principal parties shall enter into an agreement on how such land, buildings, or facilities are to be used.
[I-a.(a) A receiving district situated in this state which is providing education to students from another school district situated in this state under a contract entered into pursuant to RSA 194:21-a or RSA 194:22, shall be eligible to receive the higher annual grant amount provided in RSA 198:15-b, I or RSA 198:15-v under the following conditions:
(1) The contract requires the receiving district to educate at least 70 percent of the public school students at particular grade levels from a sending district as provided in the contract.
(2) The contract contains a provision for the payment of capital costs for specific capital projects.
(3) The contract provides the manner in which school building aid is to be credited to school districts.
(4) The contract or sending district’s obligation to pay capital costs is for a period of 10 years or longer.
(b) The provisions of this paragraph shall only apply for those years in which the contract is in effect. In all other years, the receiving district shall receive aid in the amount for which it would otherwise be eligible under RSA 198:15-b, I or RSA 198:15-v.
(c) N o receiving district shall receive a school building aid grant which is less than what a single school district would receive under RSA 198:15-b, I or RSA 198:15-v.
I-b.(a) A school district, or other entity listed in paragraph I of this section, which is in compliance with the requirements of this section, shall be entitled to receive an additional grant equal to 3 percent of the total construction costs. To be eligible for additional grant moneys, construction projects, as built, shall meet the criteria for designation as a high performance school under the most recent edition of the New England version of standards from the Collaborative for High Performance Schools. Application for the grant of additional moneys shall be submitted on forms developed by the department of education.
(b) Not more than $100,000 in any fiscal year in new additional grant moneys shall be awarded. In the event that the total additional grant entitlement in any fiscal year exceeds $100,000, the full entitlement of grant moneys shall be awarded to the districts having projects which exceed the minimum criteria for designation as a high performance school to the greatest extent.
(c) The department of education shall review other high performance standards as they are developed and shall recommend adoption of new standards when in the judgment of the department, the new standards better reflect the intent of this section.
I-c.(a)] II.(a) [In addition to the requirements of paragraph I,] Each school district, prior to receipt of any grant moneys, shall submit for review and approval a written maintenance plan describing in detail how the school district intends to maintain the new facilities to be constructed with state aid moneys. The required maintenance plan shall include, but not be limited to, the following information:
(b) A description of the procedures to be used, and the method of staffing in which, the following building services are or will be provided. For work performed by in-house staff, an indication of the staffing level shall be provided, expressed as full-time equivalent positions:
(1) Daily facility cleaning.
(2) Grounds maintenance.
(3) Refuse removal.
(4) Snow removal.
(5) Minor maintenance and repair.
(6) Pest management.
(7) Periodic equipment servicing and preventive maintenance.
(8) Plan for 12 month operations, if applicable.
(c) The average amount of space, in square feet, assigned to each custodian for daily cleaning.
(d) The process for reporting, recording, verifying, and prioritizing building problems.
(e) The process for assigning corrective work.
(f) The process for determining that corrective work has solved the problem.
(g) The process for tracking and analyzing recurring problems.
(h) The process for scheduling and completing preventive maintenance services and inspections on installed equipment and major building systems including, but not limited to heating, ventilation, air conditioning, life safety, elevators, plumbing, roofs, windows, doors, and kitchen appliances.
(i) Custodial or maintenance staff increases or reductions that result from the project.
(j) The training program for employees on new equipment to be installed by the project.
(k) A statement of assurance, signed by the chair of the school board, which indicates that the district intends to maintain and service all installed equipment according to the manufacturer’s instructions.
(l) A 20-year maintenance plan that identifies and defines the program and activities necessary to achieve the design life expectancy of the building. Such program shall include activities having to do with scheduled repairs, upkeep, minor alterations and enhancements of the building. The maintenance plan shall also consider preventive maintenance supporting building systems and components.
[II. For the purposes of computing grants hereunder, the amount of the annual payment of principal shall be increased by an amount equal to the amount of capital reserve or the amount raised by taxation which was actually expended for the project at any time, divided by the number of years for which bonds or notes were issued to provide funds for such school building or school administrative unit facilities; provided, however that funds received from trusts, bequests, gifts or insurance policies shall not be eligible for computing grants hereunder. When bonds and notes are issued for a period of less than 5 years, the amount of aid for which the district is eligible shall be paid in no fewer than 5 equal installments.
III. If the project was entirely financed by the use of amounts raised by taxation or by the use of capital reserve other than funds from trusts, bequests, gifts or received from insurance policies the aid provided herein shall be paid in 5 equal installments.
IV.] III. For the purposes of this subdivision, “construction” shall include any one or more of the following for the construction of instructional facilities only:
(a) The acquisition and development of a site.
(b) Planning, construction, or both, of a new building.
(c) Planning, construction, or both, of additions to existing buildings.
(d) Architectural and engineering fees.
(e) Purchase of equipment and any other costs necessary for the completion of a building as approved by the department of education.
(f) Substantial renovations approved by the commissioner of education.
(g) Purchase or lease-purchase of mechanical, structural, or electrical equipment, including the cost of installation of such equipment, which is designed to improve energy efficiency or indoor air quality in school buildings. All grant amounts awarded under this subparagraph shall be returned to the state if such equipment is removed from the school building by the vendor due to the school district’s failure to comply with the terms of the lease-purchase agreement. Lease-purchase agreements shall be subject to the requirements of RSA 33:7-e.
[V] IV. Purchase of school buildings shall include the acquisition and improvement of land in connection therewith and the remodeling, altering, repairing, equipping and furnishing of such buildings as approved by the department of education.
[VI. Repealed.
VII.] V. In this paragraph, “new construction” means additional square footage but shall not mean the renovation of school buildings or school administrative unit facilities. The provisions of this paragraph shall apply to any school building aid grants made pursuant to RSA 198:15-a through RSA 198:15-w.
(a) The department of education shall issue annually maximum eligible cost standards for the construction of new school buildings or school administrative unit facilities, less site acquisition costs, qualifying for school building aid. These standards shall take into account the type, size, and location of the school or school administrative unit facility and shall be based on an appropriate construction cost index developed or adopted by the department which shall reflect cost differences in the several regions of the state. Maximum cost standards shall be computed and published annually and expressed as a maximum cost per square foot.
(b) Maximum size standards for new construction shall be as follows:
(1) Maximum gross square footage per pupil:
Student Population
under 250 250 and over
Elementary school 144 120
Middle or junior high school 168 140
Senior high school
(excluding vocational-technical centers) 192 160
(2) Maximum usable site size for new schools:
Elementary School 20 acres plus 1 acre for each 100 pupils
Middle or junior high school 25 acres plus 1 acre for each 100 pupils
Senior high school 30 acres plus 1 acre for each 100 pupils
(c) For the purpose of calculating the total school building aid grants made under RSA 198:15-a through RSA 198:15-w, the final approved cost for school construction or school project shall not exceed the cost that would result if the project conformed to the maximum cost and size standards. The provisions of this section shall not preclude an eligible applicant from exceeding the maximum standards provided, however, the cost of the portion of the facilities which exceed the maximum standards shall not be eligible for school building aid. The maximum cost and size standards in effect at the time general contract work begins shall be used for the purposes of determining school building aid.
(d) The commissioner of the department of education shall have the authority to waive eligible cost and size standards for new construction for good reason shown.
[VIII.] VII. For the purpose of receiving grants under this section, acquisition of additional land as part of any school renovation project shall not be required unless such additional land is necessary to ensure the safe flow of traffic for school buses or other vehicles entering or exiting school grounds, or the safe boarding or discharge of children using school buses or other vehicles.
198:15-c Approval of Plans, Specifications, and Costs of Construction or Purchase.
I. A school district maintaining approved schools, desiring to avail itself of the grants herein provided shall have the plans, specifications, and cost estimates for school plant construction or proposals for the purchase of school buildings, or both, and the costs for them approved by the [state board] department of education prior to the start of construction. For this purpose the district shall submit its plans, specifications, cost, and purchase estimates in writing to the department of education on such forms as the department prescribes. A school district shall also submit a copy of any application for energy efficiency reimbursement under RSA 374-F. The department of education shall coordinate with the public utilities commission to ensure that eligible school districts have submitted applications for funding reimbursement and technical assistance as available from energy utility companies to promote indoor air quality and energy efficiency in public schools. [Application] Applications for school building aid shall be submitted before [January 1] September 1 of each year in order to be eligible for school building aid in the fiscal year following the year of submittal. [The department of education shall not approve the plans, specifications, cost, or purchase estimates, if in the department’s judgment the facilities planned will not adequately meet the educational requirements, or if its cost estimates are excessive or unreasonable. The department of education shall not approve the plans, specifications, cost, or purchase estimates if in the department’s judgment the proposed construction or purchase is in conflict with effective statewide planning pursuant to RSA 9-A or the principles of smart growth pursuant to RSA 9-B]
II.(a) The commissioner of the department of education shall accept school building construction proposals based upon completeness. By January 15 of each fiscal year, the department of education shall consider and rank each proposal based on the following criteria:
(1) Unsafe conditions.
(2) Obsolete, inefficient, or unsuitable facilities or mechanical and building systems.
(3) Overcrowding and associated influences to instructional areas and programming.
(4) Enrollment projections and population shifts.
(5) Whether a school district has made a reasonable attempt to accommodate maintenance activities including scheduled and unscheduled repairs, upkeep, minor alterations, enhancements to buildings, and preventive maintenance necessary to achieve the design life expectancy of building systems and components.
(6) Any other criteria that the commissioner of the department of education may determine are necessary.
(b) The commissioner of the department of education shall develop a list of all school building construction proposals submitted by school districts in descending order of priority. The department of education shall propose interim rules pursuant to RSA 541-A no later than November 1, 2012, and final rules pursuant to RSA 541-A no later than April 30, 2013, relative to the criteria set forth in this paragraph and the procedures necessary to implement this paragraph.
(c) A school district, a city maintaining a school department within its corporate organization, a cooperative school district as defined in RSA 195:1, a receiving district operating an area school as defined in RSA 195-A:1, or a receiving district providing an education to pupils from one or more sending districts under a contract entered into pursuant to RSA 194:21-a or RSA 194:22, with projects for which there is insufficient state grant funding may resubmit those projects to the department pursuant to the provisions of this section.
III. Necessary costs of the purchase of school buildings may be determined by any recognized method of real estate appraisal with appropriate adjustments for remodeling or other expenditures. Upon approval of the construction or purchase, or both, by the department of education, the school district shall be entitled to receive [an annual] a grant as provided herein.
4 School Building Aid; Proration and Unexpended Funds. Amend RSA 198:15-e to read as follows:
198:15-e Proration and Unexpended Funds. [If] In any fiscal year, the amount appropriated for distribution as school building grants in accordance with the version of RSA 198:15-b in effect prior to July 1, 2012 shall first be awarded to a school district for an eligible project funded before July 1, 2012. If the amount appropriated is insufficient [therefor, grants for eligible construction work approved by the legislative body of the school district since the approval of the most recent state biennial budget shall be deferred and included in a request for a future appropriation, or partial grants may be made to the extent of the available appropriation. Any partial grant made shall be prorated proportionally among all districts with eligible construction work approved since the approval of the most recent biennial budget. The department of education shall include any unpaid grant amounts in the next biennial budget or request a supplemental appropriation. If the amount appropriated is insufficient after deducting all grants approved since the approval of the most recent biennial budget,] the appropriation shall be prorated proportionally among the districts entitled to a grant. If the amount appropriated exceeds the amount necessary to fully fund grants to a school district for eligible construction projects funded before July 1, 2012, the remaining amount of the appropriation shall be awarded to a school district for an eligible new proposal in the ranked order developed pursuant to RSA 198:15-c, II(a) and II(b). Such a district shall receive a grant equal to 100 percent of the eligible amount of the request until the amount appropriated has been exhausted. A partial grant may be awarded to the extent that funds are available. If a school district declines a full or partial grant, a grant shall be made to the next ranked school district until the amount appropriated has been exhausted. Any amounts not distributed in the first year of any biennium may be distributed in the second year if required to distribute the maximum amount permissible under RSA 198:15-a.
5 Effective Date. This act shall take effect 60 days after its passage.
LBAO
11-0680 Revised 02/02/12
Amended 01/23/12
HB 533 FISCAL NOTE
AN ACT establishing a cap on the amount of school building aid grants distributed in each fiscal year.
FISCAL IMPACT:
The Department of Education states this bill, as amended by the House (Amendment #2011-2801h), may decrease state expenditures and local revenue by $2,296,655 in FY 2015, and $4,906,655 in FY 2016, and decrease local expenditures by an indeterminable amount in FY 2014 and each year thereafter. There is no fiscal impact on state or county revenue, or county expenditures.
METHODOLOGY:
The Department of Education states this bill caps the annual amount of school building aid paid by the state to local school districts at $50,000,000, and also changes the methodology by which these aid payments are made. The Department states the budgeted amount for the school building aid program in FY 2013 is $47,076,655, and it estimates the eligible amount of aid under the program to increase annually by approximately $2,610,000, the average increase during the years 2001 through 2010. As a result, the Department estimates the cap will have no effect on the program in FY 2014, as it projects school building aid spending of $49,686,655 ($47,076,655 FY 2013 budget + $2,610,000 average increase). However, the Department estimates the cap may decrease aid under the program by $2,296,655 (($49,686,655 + $2,610,000) – $50,000,000) in FY 2015, and by $4,906,655 (($49,686,655 + $2,610,000 + $2,610,000) – $50,000,000) in FY 2016, resulting in decreases of those amounts in state spending and local revenue.
The Department also states the changes to the manner in which school building aid payments are made are significant, although the net impact of those changes is zero. The Department states this bill would now require school building aid grants to be paid to local school districts as a lump sum amount at the beginning of each project, as opposed to the method in current law which pays the grant annually over the term of the project financing. By receiving school building aid payments as a lump sum at the project beginning, the Department assumes local school districts will be required to borrow a smaller amount, which in turn will result in a decrease in local debt service expenditures of an indeterminable amount. The Department states the amount made available by this bill for new projects, approved for the program after July 1, 2013, will be equal to the $50,000,000 cap less the payments on old projects, those approved for the program before FY 2011. The Department states as time goes on, the amount available for new projects increases as the so-called ‘tail’ on old projects is extinguished. The Department estimates the amount available for new projects as follows:
Tail Payments Amount for
Fiscal Year Cap Amount for Old Projects New Projects
FY 2014 $50,000,000 ($43,593,773) $6,406,227
FY 2015 $50,000,000 ($42,174,416) $7,825,584
FY 2016 $50,000,000 ($39,589,383) $10,410,617
FY 2017 $50,000,000 ($35,096,242) $14,903,758
FY 2018 $50,000,000 ($33,521,192) $16,478,808
The Department states, because of the lump sum nature of this bill’s changes, the number of school districts receiving school building will decline substantially from the current number of roughly 20 projects, especially in the next few years as the bulk of funding will go towards ‘tail’ payments.
The Department states the average amount of new construction approved annually by school districts in the four years before the moratorium was put into place was about $100,000,000. At the grant program rate of 30%, the Department estimates a state portion of $30,000,000. Due to ‘tail’ payments, the Department estimates that $30,000,000 of state funding for new projects in the program would not be available until at least FY 2024, and by that time the Department also assumes inflation will have driven construction costs significantly above $100,000,000. The Department states this potential shortfall in state funding may force school districts to increase the share of local funds used, or defer projects until state funding is available, which the Department states may increase safety risks and lead to more costly repairs. The Department states this bill eliminates the incentive for construction of high performance schools, which typically cost 2% more than standard construction to build but could also see a reduction of annual operating costs by as much as 25%.