kentucky department of education division of district support - district facilities branch school...
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Kentucky Department of Education Kentucky Department of Education Division of District Support - District Facilities BranchDivision of District Support - District Facilities Branch
School Funding for School Funding for ConstructionConstruction
20122012
Facilities Planning OverviewFacilities Planning Overview
As a response to the Rose v. Council for Better Education, Inc., the Kentucky As a response to the Rose v. Council for Better Education, Inc., the Kentucky Supreme Court, the Supreme Court, the 1990 Kentucky Education Reform Act1990 Kentucky Education Reform Act was set in place to was set in place to provide greater local school governance and to foster greater “equity and provide greater local school governance and to foster greater “equity and adequacy” in school facilities and funding. adequacy” in school facilities and funding.
Article 183 of the Constitution of the Commonwealth of Kentucky states that the, Article 183 of the Constitution of the Commonwealth of Kentucky states that the, “The General Assembly shall, by appropriate legislation, provide for an “The General Assembly shall, by appropriate legislation, provide for an efficient system of common schoolsefficient system of common schools throughout the State. throughout the State.
Article 18. Article 18. Paragraph 2. describes this efficient system;Paragraph 2. describes this efficient system;
Facilities Planning OverviewFacilities Planning Overview
““The essential, and minimal, characteristics of an “efficient” The essential, and minimal, characteristics of an “efficient” system of common schools, may be summarized as system of common schools, may be summarized as follows:follows:
1)1) The establishment, maintenance and funding of common schools in Kentucky is the sole The establishment, maintenance and funding of common schools in Kentucky is the sole
responsibility of the General Assembly. responsibility of the General Assembly. 2)2) Common schools shall be free to all. Common schools shall be free to all. 3)3) Common schools shall be available to all Kentucky children. Common schools shall be available to all Kentucky children.
4)4) Common schools shall be substantially uniform throughout Common schools shall be substantially uniform throughout the state.the state.
5)5) Common schools shall provide equal educational opportunities to all Kentucky children, Common schools shall provide equal educational opportunities to all Kentucky children, regardless of place of residence or economic circumstances. regardless of place of residence or economic circumstances.
6)6) Common schools shall be monitored by the General Common schools shall be monitored by the General Assembly to assure that they are operated with no waste, Assembly to assure that they are operated with no waste, no duplication, no mismanagement, and with no political no duplication, no mismanagement, and with no political influence.influence.
7)7) The premise for the existence of common schools is that all children in Kentucky have a The premise for the existence of common schools is that all children in Kentucky have a constitutional right to an adequate education. constitutional right to an adequate education.
8)8) The General Assembly shall provide funding which is sufficient to provide each child in The General Assembly shall provide funding which is sufficient to provide each child in Kentucky an adequate education. Kentucky an adequate education.
9)9) An adequate education is one which has as its goal the development of the seven (7) An adequate education is one which has as its goal the development of the seven (7) capacities recited previously. Rose v. Council for Better Education, Inc.”capacities recited previously. Rose v. Council for Better Education, Inc.”
Funding for School ConstructionFunding for School ConstructionThe funds that are available for the construction of schools in the The funds that are available for the construction of schools in the
Commonwealth are divided into two categories; unrestricted funds and Commonwealth are divided into two categories; unrestricted funds and restricted funds. restricted funds. The Chief State School Officer through the Kentucky The Chief State School Officer through the Kentucky Department of Education, Division of Facilities Management, Department of Education, Division of Facilities Management, must must approve funding on all projectsapprove funding on all projects..
The The unrestricted fundsunrestricted funds include; general fund monies that are determined by include; general fund monies that are determined by the “SEEK” funding program. These funds are used for staff and teacher the “SEEK” funding program. These funds are used for staff and teacher salaries, transportation, maintenance, athletics and other school salaries, transportation, maintenance, athletics and other school programs. The district can only use a portion of general fund money for programs. The district can only use a portion of general fund money for school construction.school construction.
The The restricted fundsrestricted funds are those monies that can only be used for school are those monies that can only be used for school “capital” or “major” construction and for no other purpose.“capital” or “major” construction and for no other purpose.
All of these funding sources need to be considered during the District All of these funding sources need to be considered during the District Facilities Planning process.Facilities Planning process.
Funding for School ConstructionFunding for School Construction
Restricted FundsRestricted FundsUsed for “Capital” construction or “major” renovation as noted in Used for “Capital” construction or “major” renovation as noted in priorities 1 – 4 priorities 1 – 4 on the DFP, come from multiple sources and include;on the DFP, come from multiple sources and include;
Student Population BasedStudent Population BasedCapital Outlay FundsCapital Outlay Funds
Property Assessment BasedProperty Assessment BasedBuilding Funds and Growth leviesBuilding Funds and Growth levies
Facilities Support Program of KYFacilities Support Program of KY
Qualified Needs BasedQualified Needs BasedKY School Facilities Construction CommissionKY School Facilities Construction CommissionUrgent-Needs GrantsUrgent-Needs Grants
All of these funding sources need to be considered during the District All of these funding sources need to be considered during the District Facilities Planning process.Facilities Planning process.
Funding for School ConstructionFunding for School Construction Student Population Based Funding Student Population Based Funding
Support Education Excellence in Kentucky (SEEK) Support Education Excellence in Kentucky (SEEK)
The Support Education Excellence in Kentucky (SEEK) funding program is a The Support Education Excellence in Kentucky (SEEK) funding program is a formula driven allocation of state provided funds to local school districts. The formula driven allocation of state provided funds to local school districts. The formula includes funding for transportation costs and special needs students formula includes funding for transportation costs and special needs students as reported by districts. Under this funding program, Districts are allocated as reported by districts. Under this funding program, Districts are allocated funds based on their average daily attendance (ADA). This formula is used funds based on their average daily attendance (ADA). This formula is used to calculate several of the funding sources listed herein. to calculate several of the funding sources listed herein.
Capital Outlay FundsCapital Outlay Funds
Capital Outlay Funds are included in the Capital Outlay Funds are included in the “SEEK”“SEEK” formula. These are calculated formula. These are calculated at at $100 multiplied by a district’s Average Daily Attendance$100 multiplied by a district’s Average Daily Attendance. These . These monies can be used for direct construction costs. Since these funds are monies can be used for direct construction costs. Since these funds are yearly-generated funds, they can be used to pay for direct debt on bonds yearly-generated funds, they can be used to pay for direct debt on bonds that can be issued on the behalf of local school districts (80% of the total that can be issued on the behalf of local school districts (80% of the total funds calculated can be used for debt service). funds calculated can be used for debt service). These funds can only be These funds can only be used on used on 1 – 4 priority projects 1 – 4 priority projects and can be selected by the LEA in any and can be selected by the LEA in any order desired, subject to the approval of the Division of Facilities order desired, subject to the approval of the Division of Facilities Management.Management.
Funding for School ConstructionFunding for School Construction Property Assessment Based FundingProperty Assessment Based Funding
Facilities Support Program of Kentucky FSPK Facilities Support Program of Kentucky FSPK Local Building Funds Local Building Funds Five cents of every one hundred dollars ($100) of a local Five cents of every one hundred dollars ($100) of a local
government’s property tax revenuesgovernment’s property tax revenues is granted to the local school is granted to the local school district to pay for capital construction projects. This money may be district to pay for capital construction projects. This money may be saved and used directly or, since it is a yearly-generated sum, it can be saved and used directly or, since it is a yearly-generated sum, it can be used to pay the debt on bonds that can be issued on the behalf of local used to pay the debt on bonds that can be issued on the behalf of local school districts. This is sometimes called the school districts. This is sometimes called the “local nickel”. “local nickel”. These These funds can only be used on funds can only be used on 1 - 4 priority projects 1 - 4 priority projects and can be and can be selected by the LEA in any order desired, subject to the approval selected by the LEA in any order desired, subject to the approval of the Division of Facilities Management.of the Division of Facilities Management.
Facilities Support Program of Kentucky (FSPK) Facilities Support Program of Kentucky (FSPK) State EqualizationiState Equalizationi
The Facilities Support Program of Kentucky (FSPK) funds are The Facilities Support Program of Kentucky (FSPK) funds are included in the “SEEK” formula. included in the “SEEK” formula. These funds are used to equalize These funds are used to equalize funding for districts with low propertyfunding for districts with low property assessments as a assessments as a percentage of the Average Daily Attendance.percentage of the Average Daily Attendance. These funds can only These funds can only be used on be used on 1 - 4 priority projects 1 - 4 priority projects and can be selected by the LEA in and can be selected by the LEA in any order desired, subject to the approval of the Division of Facilities any order desired, subject to the approval of the Division of Facilities ManagementManagement
Funding for School ConstructionFunding for School Construction
Property Assessment Based FundingProperty Assessment Based Funding
Growth District Local FundsGrowth District Local Funds
In addition to the “local nickel”, certain districts, which met In addition to the “local nickel”, certain districts, which met established criteria in assessments and Average Daily Attendance, established criteria in assessments and Average Daily Attendance, are allowed to increase their local taxing effort by five cents per one are allowed to increase their local taxing effort by five cents per one hundred dollars ($100) to pay for capital construction projects. This hundred dollars ($100) to pay for capital construction projects. This money may be saved and used directly or, since it is a yearly-money may be saved and used directly or, since it is a yearly-generated sum, it can be used to pay the debt on bonds that can be generated sum, it can be used to pay the debt on bonds that can be issued on the behalf of local school districts. This is sometimes issued on the behalf of local school districts. This is sometimes called the “growth nickel”.called the “growth nickel”. These funds can only be used on These funds can only be used on 1 - 4 1 - 4 priority projectspriority projects that relate to the needs established because of district that relate to the needs established because of district student growth and can be selected by the LEA in any order desired, student growth and can be selected by the LEA in any order desired, subject to the approval of the Division of Facilities Management.subject to the approval of the Division of Facilities Management.
Funding for School ConstructionFunding for School Construction
Qualified Needs Based FundingQualified Needs Based Funding
Kentucky School Facilities Construction Kentucky School Facilities Construction Commission Funds (KSFCC)Commission Funds (KSFCC)
Funding for School ConstructionFunding for School Construction
Qualified Need Based FundingQualified Need Based Funding
Kentucky School Facilities Construction Commission Funds (KSFCC)Kentucky School Facilities Construction Commission Funds (KSFCC)
The Kentucky School Facilities Construction Commission (KSFCC) is a The Kentucky School Facilities Construction Commission (KSFCC) is a separate state agency that provides funding to districts based on the separate state agency that provides funding to districts based on the unmet facility need as identified in the District Facilities Planning process. unmet facility need as identified in the District Facilities Planning process. Funding for this program is requested from the General Assembly by the Funding for this program is requested from the General Assembly by the Commission every two (2) years. The unmet need is calculated during the Commission every two (2) years. The unmet need is calculated during the District Facilities Planning process. The “unmet need” of all of the districts District Facilities Planning process. The “unmet need” of all of the districts in the State is combined to create the State unmet need. A portion of the in the State is combined to create the State unmet need. A portion of the total is funded by the General Assembly and each district is allocated total is funded by the General Assembly and each district is allocated money based on their percentage share of the total fund. money based on their percentage share of the total fund. These funds can These funds can only be used on only be used on 1 - 4 priority projects 1 - 4 priority projects , , based on their priority order; for based on their priority order; for example, priority 1 projects shall be completed prior to priority 2 projectsexample, priority 1 projects shall be completed prior to priority 2 projects. . All projects within a numbered category (i.e., 1a through 1d) are considered All projects within a numbered category (i.e., 1a through 1d) are considered equivalent and can be selected by the LEA in any order desired, subject to equivalent and can be selected by the LEA in any order desired, subject to the approval of the Division of Facilities Management.the approval of the Division of Facilities Management.
Funding for School ConstructionFunding for School Construction
Qualified Need Based Funding Cont.Qualified Need Based Funding Cont.
Urgent- Needs GrantsUrgent- Needs Grants
In the 2002 Legislative Session, the General Assembly voted to provide In the 2002 Legislative Session, the General Assembly voted to provide Urgent-Needs Grants to 15 school districts to replace schools that were Urgent-Needs Grants to 15 school districts to replace schools that were listed as “category 5” (very poor condition, had not had significant listed as “category 5” (very poor condition, had not had significant renovation in the building’s life, had a student population that exceeded renovation in the building’s life, had a student population that exceeded KSFCC minimum requirements and were in districts that could not KSFCC minimum requirements and were in districts that could not reasonably afford to replace the schools. These monies were granted to reasonably afford to replace the schools. These monies were granted to the districts for bonding to replace the “category 5” buildings with new the districts for bonding to replace the “category 5” buildings with new schools. schools. These funds can only be used on specific projects identified by These funds can only be used on specific projects identified by the State Legislature for the use of these funds, subject to the approval the State Legislature for the use of these funds, subject to the approval of the Division of Facilities Management.of the Division of Facilities Management.
Build America Bonds Build America Bonds BABsBABs
The American Recovery and Reinvestment Act of 2009The American Recovery and Reinvestment Act of 2009created the Build America Bond (BAB) Program.created the Build America Bond (BAB) Program.
An issuer may elect that any bond that would qualify for tax An issuer may elect that any bond that would qualify for tax exemption be issued instead as a taxable bond.exemption be issued instead as a taxable bond.
The issuer receives a tax credit equal to 35% of the interest on The issuer receives a tax credit equal to 35% of the interest on the Bonds. The tax credit rebate is applied to each semi-annual the Bonds. The tax credit rebate is applied to each semi-annual payment.payment.
Currently bond issues are bid as taxable or tax-exempt.Currently bond issues are bid as taxable or tax-exempt.
Current provisions apply only to bonds issued prior to January Current provisions apply only to bonds issued prior to January 1, 2011. Congress must reauthorize BABs and establish the tax 1, 2011. Congress must reauthorize BABs and establish the tax credit percentage.credit percentage.
Qualified School Construction Bonds Qualified School Construction Bonds QSCBsQSCBs
The American Recovery and Reinvestment Act of 2009The American Recovery and Reinvestment Act of 2009created the Qualified School Construction Bond (QSCB)created the Qualified School Construction Bond (QSCB)Program to provide Program to provide little or no-interest financing little or no-interest financing for;for;
The renovation, repair and construction of school buildingsThe renovation, repair and construction of school buildings
The purchase of land on which school buildings will be builtThe purchase of land on which school buildings will be built
The purchase of equipment to be used in the portion orThe purchase of equipment to be used in the portion orportions of the public school facility that is beingportions of the public school facility that is beingconstructed, rehabilitated or repaired. constructed, rehabilitated or repaired.
New construction New construction DOES DOES qualify under this programqualify under this program
Qualified Zone Academy Bonds Qualified Zone Academy Bonds QZABsQZABs
The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 created the Qualified Zone Academy Bond (QZAB)created the Qualified Zone Academy Bond (QZAB)Program to provide Program to provide little or no-interest financing little or no-interest financing for;for;
10% private contribution (business or “in-kind” service)10% private contribution (business or “in-kind” service)
Renovation projects onlyRenovation projects only
35% Free and reduced lunch35% Free and reduced lunch
17 year financing17 year financing
Criteria to be developed by KDE for application by the districtCriteria to be developed by KDE for application by the district
Qualified Zone Academy Bonds Qualified Zone Academy Bonds QZABsQZABs
The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 created the Qualified Zone Academy Bond (QZAB)created the Qualified Zone Academy Bond (QZAB)Program to provide Program to provide little or no-interest financing little or no-interest financing for;for;
2008 allocation of 2008 allocation of $7,145,000 $7,145,000 has been offered and were issued by has been offered and were issued by December 31, 2010December 31, 2010
2009 allocation of 2009 allocation of $25,009,000 $25,009,000 has been offered and were issued has been offered and were issued by December 31, 2011by December 31, 2011
2010 allocation of 2010 allocation of $24,481,000 $24,481,000 has been offered and were issued has been offered and were issued by December 31, 2012by December 31, 2012
2011 allocation of 2011 allocation of $6,896,000 $6,896,000 has been offered and were issued by has been offered and were issued by December 31, 2013December 31, 2013
Future Challenges for KY SchoolsFuture Challenges for KY Schools
Over 40% of the School Districts in the Commonwealth will experience a Over 40% of the School Districts in the Commonwealth will experience a decline in enrollment in the next 25 years.decline in enrollment in the next 25 years.
At the same time 99% of the School Districts in the Commonwealth will At the same time 99% of the School Districts in the Commonwealth will experience an increase in their over 65 population that will double the experience an increase in their over 65 population that will double the population in this age group. population in this age group.
Some districts like yours face a potential decrease in student population.Some districts like yours face a potential decrease in student population.
Your current infrastructure will be taxed to its limits. While at the same Your current infrastructure will be taxed to its limits. While at the same time you will be forced to address the economic and demographic time you will be forced to address the economic and demographic challenges posed by having significantly fewer students.challenges posed by having significantly fewer students.
How will you wisely deal with a increasing student population and the How will you wisely deal with a increasing student population and the decrease in funding needed to run a school system?decrease in funding needed to run a school system?