Capital Reserve FundingDouglas County School District

Presented to the Board of Education

Thursday, February 7, 2008

Capital Reserve Program Agenda

History of Capital Reserve Program - DCSD Insights learned from 20 years Hypothesis and options for future Test hypothesis

Capital Reserve FundThe Capital Reserve fund is a revenue account

that can be used to account for the acquisition of land, construction of new facilities, alterations and improvements to existing structures and the acquisition of school buses and/or other equipment.

History - DCSD Capital Reserve Fund DCSD has always funded cap reserve at the

minimum legal level State determines per student allocation

operational monies to be spent on capital reserve projects annually

Minimum funding level allows for more money available to be spent on other operational expenses

2006 bond package included $11.6M in capital reserve projects, but $17M had been requested

History – DCSD Per Pupil Allocation for Capital Reserve Fund

Per Pupil Allocation Enrollment

Capital Reserve Funding

2000-01 $236 31,666 $7,473,058

2001-02 $248 33,914 $8,410,756

2002-03 $263 35,732 $9,397,547

2003-04 $262 40,048 $10,492,445

2004-05 $268 39,783 $10,661,736

2005-06 $271 42,347 $11,476,121

2006-07 $299 41,467 $12,398,621

2007-08 $292 46,653 $13,622,676

2008-09 $303

Capital Reserve Program History - Allowable Expenditures O&M - Facility improvements & equipment Vehicles – buses, white fleet Technology – software & equipment Security support – cameras, radios, equipment Mobile classrooms – purchase & relocation Risk Management - insurance

Annual School Finance Act required Transfers from General Fund to Capital Reserve Fund

Student Enrollment

Per Pupil Allocation

Capital Improvements

Insurance Reserve Total

2000-01 31666 236$ 5,731,320$ 1,741,738$ 7,473,058$ 2001-02 33914 248$ 6,536,591$ 1,874,165$ 8,410,756$

2002-03 35732 263$ 6,815,441$ 2,582,106$ 9,397,547$ 2003-04 40048 262$ 6,992,445$ 3,500,000$ 10,492,445$

2004-05 39783 268$ 7,961,308$ 2,700,428$ 10,661,736$ 2005-06 42347 271$ 8,476,037$ 3,000,084$ 11,476,121$

2006-07 44493 279$ 9,248,621$ 3,150,000$ 12,398,621$ 2007-08 46653 292$ 10,315,176$ 3,307,500$ 13,622,676$

303$

History – DCSD Capital Reserve Fund Capital Reserve exclusively utilized for building maintenance

& improvements, insurance reserve, buses, vehicles, and mobile classrooms

Late 1990’s technology equipment started to erode Capital Reserve funds

Early 2000’s security communication equipment began being funded from Capital Reserve

2006 first bond election to transfer Capital Reserve Funding needs to bond revenue stream $11.7M was moved, but $17M worth of needs 2006 - Charter Schools promised $2.6M of Capital Reserve Funds

over 3- year period

History – DCSD Capital Reserve Fund Distribution

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08Mobiles/Leases/COP 1,608,750$ 925,874$ 1,319,959$ 1,683,002$ 772,300$ 1,049,133$ 1,060,000$ 1,832,371$ Vehicles 1,250,000$ 1,384,000$ 1,719,000$ 1,916,000$ 2,150,000$ 1,170,867$ 1,709,000$ 2,675,000$ Contingency 379,436$ 380,000$ 400,000$ 400,000$ 840,000$ 272,000$ 400,000$ 400,000$ Insurance Reserve 1,741,738$ 1,874,165$ 2,582,106$ 3,500,000$ 2,700,428$ 3,000,084$ 3,150,000$ 3,307,500$ Facilities 2,417,000$ 3,120,000$ 2,672,000$ 2,001,000$ 2,237,700$ 2,508,000$ 2,156,000$ 2,316,000$ Technology 1,980,511$ 2,564,213$ 2,939,400$ 3,764,850$ 5,766,600$ 6,048,315$ 6,352,288$ 7,636,025$

History – DCSD Capital Reserve Fund Distributions

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

$20,000,000

2000-012001-022002-032003-042004-052005-062006-072007-08

Technology

Facilities

Insurance Reserve

Contingency

Vehicles

Mobiles/Leases/COP

Includes:

•Schools

•Mobiles

•Leased space

•Support Facilities3,51

2,45

4

3,90

4,34

0

3,97

2,68

6

4,53

5,95

2

4,81

1,81

5

4,94

7,86

2

5,27

2,22

9

5,58

9,40

8

5,97

0,32

4

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

History – DCSD Growthin Facilities Square Footage

829.71

951.48

961.43

1,021.32

1,112.32

1,134.14

1,179.54

1,231.94

1,301.94

200

0-01

200

1-02

200

2-03

200

3-04

200

4-05

200

5-06

200

6-07

200

7-08

200

8-09

History – DCSD Growthin Acreage (grounds to maintain)

History – DCSD Building Modification Team Formerly Capital Reserve Committee

Cross Functional team – wide representation Meets quarterly to review and prioritize building

modification requests Authorizes emergency expenditures Maintains priority list of capital improvement needs

as required for E.L. 1.8 Protection of Assets Meets in the spring of each year to determine

which projects will be funded from capital reserve for the following year

History – DCSD Capital Asset Mitigation Capital Asset mitigation are revenues

collected from Developers to mitigate the impact of growth on DCSD.

All revenues collected funnel through Capital Reserve Fund Cash in lieu of land Voluntary impact fees collected Land dedication

History – DCSD Cash-in-Lieu

Castle RockHighlands

Ranch Parker District2003-04 $249,880 $804,018 $950,884 $2,004,7832004-05 $677,542 $13,950 $526,538 $3,222,813

-$400,000 $2,822,8132005-06 $0 $324,057 $1,229,036 $4,375,906

-$400,000 $3,975,9062006-07 $1,500 $103,490 $1,048,100 $5,128,9962007-08 $5,120 $639 $496,621 $5,631,376Total $934,042 $1,246,154 $3,451,179 $5,631,375

Transfers made to General Fund

History – DCSD Impact Fees 1984 Town of Parker began collecting fees as a condition of annexation

Collected $1M Not subject to later court ruling because contractual

agreement 1992 Douglas County Trust Fund Foundation established & voluntarily

contributed $10.5M to mitigate impact of development on DCSD July 1992 – Intergovernmental Agreement between Douglas County and

DCSD established Douglas County would collect impact fees on behalf of DCSD to mitigate the impact of development on school facilities

$.42 - $.83 sf – max. of $3,486 for home more than 4,201 sf.

$21.5M collected (but DCSD had to pay back $11.5M after Court Ruling in 1996)

History – Impact Fees October 1993 – Builders sued Douglas County, stating one

governmental entity could not collect funds for the benefit of another governmental entity

July 1994 – District court ruled in favor of builders March 1996 – DCSD appealed court decision January 1997 – Colorado Supreme Court ordered DCSD to

refund fees ($10.5M)

Refunds begin May 1997 March 1997 – Builders sued for interest

History – Impact Fees January 1998 – Supreme court orders payment of

interest on impact fees January 1998 – DCSD appeals court decision on

payment of interest February 1999 – Board of Education resolves to

begin payment of interest District still was able to keep $10M voluntarily

contributed by the Douglas County Facilities Trust Fund

Insights we have learned . . . Capital Reserve Fund Industry norm = 2% of building

replacement value In 2007-08, industry norm for DCSD equaled $19.5M DCSD capital reserve budget was $7M ($12.5 short)

4 track, year round calendar reduces time available for capital improvement projects to be completed

Emergency Capital Reserve contingency funds have not increased proportionately

When Capital Needs project load exceeded available funding, some bond interest was shifted to Capital Reserve Fund

Insightswe have learned . . . Increased Legal Code Requirements

Fire In 2007-08, $450k was expended to bring fire alarms

into compliance with new codes

Building codes In 2007-08, mobile decking and ramp inspections and

expectations increased costs (estimated $100k) Materials Labor

Insights we have learned…. In 1984, HB1006 addressed rapid growth

counties Allowed County Commissioners to authorize additional tax revenues

for School District Capital Reserve

2% additional capital reserve, if two conditions met: 3% over 3 years in DCSD enrollment growth 2% growth in Douglas County building permits DCSD only District to receive these funds in Colorado

2007 DCSD enrollment meets 3% growth threshold, but County building permit growth does not Loss in DCSD capital reserve revenue estimated at $1.7M

for the 2008 calendar year

Insights we have learned…. Support Space Needs Analysis was conducted in June, 2004

Little has been done to mitigate these needs Resulted in need for more leased space

SITE 2004 needs 5-year 10-yearWilcox Building -21,769 ft2 -30,069 ft2 -31,519 ft2Purchasing/Warehouse -1,331 -5,370 -13,496HR North -327 -898 -1,079Cantril -2,391 -3,172 -3,143UC Chaparral -349 -912 -1,021Trans West -4,930 -4,930 -5,081Trans North -10,370 -11,035 -11,035Trans East -297 -448 - 24,269TOTAL -41,764ft2 -56,834ft2 90,643ft2

Insights we have learned . . . Capital Reserve Requirements have increased exponentially

in last 10 years Increased need for mobile classrooms (118 for schools) Increased leased space (nearly 40,000 sf) at an annual cost over

$600,000 Two Certificates of Participation (COP) which are paid by C.R.

Lone Tree Elementary DC Oakes Castle Rock

Technology – now accounts for 60% of Capital Reserve expenditures Security – did not exist prior to 2003 Buses and white fleet vehicles

Hypothesis - Future Needs

Increase the amount of funds transferred to the Capital Reserve Fund in future bond packages

A “fixed mil” budget authorization will provide additional operational revenue eliminating the need for future mil levy override elections Increases as Douglas County assessed valuation increases Additional operational $ could be used to support Capital Reserve Fund

All proceeds from disposal of District assets should be used to support the Capital Reserve Fund

Reduce dependence on leases as prudent O&M East Stadium #3 – multi purpose

Hypothesis – Test Questions Would the Superintendent and Board of

Education endorse policies predicated upon the hypotheses?

What other questions does the BOE have?