School Facilities Financing Working Group

Reporting Back: School Facilities Financing Work Group

Notes from Meeting on August 21, 2013

I. Process

A. Review and Comment Process

1. The process appears to have grown in scope. MDE should review the process and eliminate unnecessary paperwork so as to minimize the compliance burden on districts consistent with statutory requirements.

2. MS 123B.71 requires the Commissioner to complete review and comments within 60 days of receiving the proposal. When MDE requires additional information, it restarts the 60 day time period, so the overall process can last more than 60 days. To avoid delaying projects, MDE should strive to complete the entire process within the initial 60 day period. Since MDE rarely if ever issues a negative or unfavorable review and comment, the purpose of review and comments should be reexamined. For example, it appears that review and comment is more valuable for new construction than alternative facilities and deferred maintenance. MDE does work with districts to make changes so that a positive review and comment can be issued; usually, the changes relate to project financing.

B. Health and Safety

1. There is a lot of data to collect and analyze, taking a significant amount of time.

2. There is some redundancy between MDE and the local health and safety codes.

II. Process and Roadblocks

A. Industry Standard

1. Can we develop an industry standard for deferred maintenance based on the price and life expectancy of a building?

• Percentage of price of building paid out each year

• Careful not to paint with broad brush

2. Replacement v. Maintenance?

B. Lease Levy Cap

1. Sharing facilities with municipalities eats up a lot of lease levy that could be used for Pre-K, etc.

III. Simplification

A. 10-year Plan

• Develop a 10-year plan for all facilities.

B. Combining funding streams

• Have a basic investment strategy that covers many things

IV. Technology

A. Set technology not as specific target, but as vision that needs to change as technology evolves.

B. For consolidation of districts to be effective, we need to cover our online needs.

V. Pre-K (School Districts should be preferred vendor)

A. Ripple Effect

1. Requirement of Pre-K causes a ripple effect needing more facilities.

2. Students need additional gyms, lunchroom space and technology as well as classrooms.

B. Sharing facilities across governmental entities (rethink lease levy)

VI. Equity/Adequate

A. Cross-funding has become a problem. (Using one stream of funding to cover another need including using operating funds for facilities.)

B. The size of the district does matter.

C. What is the timing of the needs?

D. Districts need a stable revenue source.

• This would assist with planning.

E. Those without access to alt. funding do not have equal funding.

F. How do we compare to other states?

G. Roofing is a constant need for a source of funding.

VII. Taxes

A. Implications for overall tax policy for the state.

• The public perception of districts that do not have alternative facilities funding may be negative because these districts have to ask the voters for money to cover deferred maintenance, while neighboring districts that do have alternative facilities funding have far nicer buildings, but do not have to ask the voters for money.

• This gives the impression that the districts receiving alternative facilities funding are more efficient, when this may not be the case.

B. Ability to use property taxes for facilities should be discretionary.

VIII. Historic Perspective

A. The legislature’s perception for taxing differs between districts and local governments.

IX. Equalization Aid

A. Districts want it.

B. Equalization aid: Need a mix of state and local dollars.

C. Equalization aid is unstable, because of property value changes. Districts need more stability in the state share of facilities funding.