Location:
SCHOOLS - CONSTRUCTION;
| March 13, 2009 | 2009-R-0149 | |
SCHOOL CONSTRUCTION BONDING AND PROPOSED CHANGES IN SCHOOL CONSTRUCTION GRANTS | ||
By: Judith Lohman, Chief Analyst | ||
SUMMARY
The authorization and allocation process for school construction bonds operates on a separate track from the legislative approval of grant commitments for particular school construction projects. Bond authorizations and allocations for school projects are made in lump sums on an annual basis. The amounts are based on the State Department of Education's (SDE) estimate of the aggregate payments to school districts that will be required for projects under construction during that year and which had their grant commitments approved in prior years.
The governor is proposing three changes to reduce state school construction grants. None of the changes would apply to projects whose grant commitments have already been approved. In addition, the proposal to reduce the state's share of the costs for interdistrict magnet school projects from 95% to 80% excludes magnet schools that help the state achieve the desegregation goals required under the 2008 Sheff settlement agreement. Thus, none of the governor's proposed school construction changes would affect the East Hartford-Glastonbury magnet school because (1) it has already received a state grant commitment and (2) it is a Sheff magnet school.
SCHOOL CONSTRUCTION BONDING PROCESS
State Commitment for School Construction Grant
Except for certain projects involving emergencies or code violation repairs, commitments for school construction grants must be authorized by the General Assembly. The education commissioner submits a priority list of proposed school construction projects, by category, with their estimated project costs and grant amounts to the General Assembly by December 15 each year. Grant estimates for projects must be determined by multiplying the town's reimbursement percentage by the total estimated project costs the applicant submits to the SDE.
The school construction priority list must be referred to a special eight-person committee selected by legislative leaders. The committee may approve the list or modify it if the committee finds the commissioner acted arbitrarily or unreasonably in establishing it. The committee must submit the list to the full General Assembly for approval by February 1. Once the special committee has acted, the General Assembly's Education Committee drafts the priority list in the form of a bill. The school construction bill is treated like any other bill in the legislative process. It is subject to a public hearing and committee approvals (usually by the Finance, Revenue and Bonding Committee as well as the Education Committee). It must be passed in the same form by the House and Senate and signed by the governor.
Once the General Assembly authorizes it, the State Board of Education (SBE) must enter into grant commitments for the listed projects. Then, the town must submit final project plans to the SDE for approval, begin construction, and apply for funding. State funds are paid during construction as districts submit reimbursement requests. These payments are called “progress payments. ” The SDE holds back 5% of the grant pending an audit of the completed project. The commissioner may disapprove the funding application if the district does not begin construction within two years after the effective date of the General Assembly's authorization.
Bond Authorization and Allocation Process
State school construction grants are financed with state general obligation bonds. The process for authorizing and allocating bonds for school construction grants is separate from the school project approval process described above. The bonding process requires the General Assembly to authorize an amount of state bond funds for a particular purpose by passing authorizing legislation. The governor must sign the legislation before it can become law.
The school construction bond authorization is based on the total amount SDE estimates will be needed to make progress payments to districts for projects that will be under construction during the period the authorization is in effect, as well as to pay for emergency and other projects that do not have to receive legislative approval on the priority list. Because the money is paid out for projects under construction, the bond authorization is based on grant commitments and projects that received legislative authorization in previous years, not on the projects that are in the school construction priority list in the year the authorization is requested.
In the 2009 session, the governor is requesting a school construction bond authorization of $ 655. 7 million for FY 10 and $630. 4 million for FY 11 (SB 836, § 7). The request is currently under consideration by the Finance, Revenue and Bonding Committee. Once the legislature approves the authorization, the bonds must be “allocated” by the State Bond Commission before the bonds are sold and the money committed.
The State Bond Commission is a 10-member commission consisting of the governor as chairperson, the state treasurer, attorney general, comptroller, the Office of Policy and Management secretary, the Public Works commissioner, and the Senate and House chairpersons and ranking members of the Finance, Revenue and Bonding Committee. The commission generally meets monthly to approve (1) funding for projects authorized by the legislature and (2) the timing, conditions, and amounts of state bond sales. The governor establishes the commission's agenda.
The bond commission typically approves the school construction bond allocation on an annual basis, not project by project.Projects under construction are thus funded up to the overall authorization amount and the SDE can issue progress payments to districts for the state share of a legislatively approved school project.
GOVERNOR'S PROPOSED SCHOOL CONSTRUCTION GRANT CHANGES
The governor is proposing three changes in state school construction grants. If adopted, these changes would affect projects appearing on future priority lists.
Reimbursement for Interdistrict Magnet School Projects
The governor proposes to reduce the state's share for interdistrict magnet school construction projects from 95% to 80% of the reasonable cost, except for projects that help the state meet the goals of the 2008 Sheff settlement agreement. Sheffprojects would still be reimbursed at the current 95% rate. Under the bill, the reduced reimbursement rate starts in FY 10. It would not affect projects approved before FY 10 because, under the school construction law, project grants must reflect the reimbursement rate in effect during the fiscal year in which their local funding is approved (CGS § 10-283(d)).
Annual Limit On School Construction Grant Commitments
The governor is also proposing a $ 450 million limit on total state grant commitments for school construction projects on the school construction priority lists. The bill requires the commissioner's priority list both to specifiy each project category in priority order, which it already does, and to list projects in priority order within each category. It requires the commissioner to use the priorities to comply with the overall limit the bill sets. Any eligible projects left off the list because of the limit must be listed first on the list in the following year.
The proposed annual limit applies to projects on each school construction priority list starting with the list to be submitted in December 2009. Thus, the bill does not affect projects that the legislature has already authorized or that it authorizes in the 2009 session and for which the commissioner submitted a list in December 2008.
Reduced State Reimbursements For Local School Construction Projects
The state reimburses towns for local school construction projects on a sliding percentage scale, with the actual reimbursement percentage depending on town wealth. The governor's proposal is to reduce the state's reimbursement range to 15% to 65% from the current 20% to 80%. The proposed new reimbursement rates would apply to projects for which towns file grant applications on or after July 1, 2009 and that the General Assembly authorizes during and after FY 10. Thus, it does not affect projects that already have approved grant commitments or that are approved in the 2009 session.
JL: ts
