STATE WANTS ASSURANCE SCHOOL DISTRICTS UNDERSTAND FACILITY MONEY NO LONGER GUARANTEED

+ smf’s 2¢  $40 billion

By Kimberly Beltran SI&A Cabinet Report | http://bit.ly/P2JqJb

Wednesday, September 19, 2012  ::  State officials are considering new rules governing school construction funds that would require districts to acknowledge in the application process that the money isn’t guaranteed and that eligibility requirements are subject to change.

The proposal, set for consideration by the State Allocation Board today, represents a major policy shift for California schools where traditionally acceptance of an application by the state had been an assumed agreement for funding.

But over the past four years, as school construction funding sources have become increasingly depleted, the SAB has been forced to come up with an alternative process designed to allow school districts to continue working on and submitting new facilities project applications even though there is no matching state funding available.

The proposed rule changes, crafted by the Office of Public School Construction, include a requirement that districts include as part of the application a resolution passed by their local board acknowledging the funding is not guaranteed and eligibility rules might change.

The rule changes are necessary because the state School Facility Program’s bond authority for various types of project funds is depleted or soon will be. Officials and members of the state Legislature are pushing to have a statewide facilities bond in 2014 to replenish the program.

In the meantime, concerned about the implications of ceasing all program functions, SAB members and staff have struggled for more than a year to determine the best course of action that allows schools to continue moving forward under current guidelines without state funding.

At issue was whether OPSC should continue to accept and process project applications for which there is no bond authority. One school of thought was that doing so would open the state to liability from districts reading application approval as a guarantee of funding.

While at least one board member advocated not accepting new applications until a new bond is approved, the majority opinion – of both the board and school construction officials – was to keep taking new applications, which would show voters the need for a new bond come election day.

Applications accepted beyond existing bond authority would be placed on a special list in order of the date received and presented to the SAB “for acknowledgement, but not approval,” according to staff.

“Because the applications would not be fully processed for final grant determination, the project funding amounts on the list would be estimates only, and would likely be different, if finalized,” the staff report reads.

In addition, an application would be required to include a school board resolution “acknowledging that state bond authority is insufficient for the district’s funding request, that a future bond may have different eligibility and funding requirements, that there is no guarantee of funding, and that the district’s Approved Application may be returned to the district.”

The proposed new regulations, which also include definition updates and grammatical corrections, are to be adopted under emergency regulations so that they may be put into place faster.

As of Aug. 31, according to staff, the OPSC has received district applications exceeding available new construction authority by about $58.4 million as well as applications exceeding available modernization bond authority by approximately $116.2 million.

In April, the School Facility Program received a surprise infusion of $619 million when the state treasurer’s office sold $1.3 billion in general obligation bonds.

On Monday the treasurer’s office announced a Sept. 25 sale of about $1.6 billion in GO bonds but a spokesman said not until after the sale will it be decided where these funds go. 

 

smf: It has been reported to me that, at LAUSD:   “  Everyone is scrambling around to try to figure what the impact will be. Also wondering how this would impact allocations from future State bond issues. Last time (anyone) checked, the State had over $40 billion of authorized, but unissued, debt for a huge variety of purposes – and huge issues as to when any of it will be sold, and who goes first. … but, looks like High Speed Rail will not have to wait because, after all, that is the most important thing that State government now has to do for the citizens. ”