DEFP

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DEFP

  1. 1. SBBC DEFP 1FLORIDA LEGISLATURE ROBBING PETER TO PAY PAUL Ramifications of State Legislation on Broward’s District Educational Facilities Plan Julie Rada Barry University July 15, 2009
  2. 2. SBBC DEFP 2 Ramifications of State Legislation on Broward’s District Educational Facilities Plan Prior to adoption of their annual capital outlay budget, school districts are required byFlorida Statute §1013.35 to prepare and adopt a District Educational Facilities Plan [DEFP](School Board of Broward County, Florida, 2008b). The DEFP is intended to serve as a tool forkeeping the school board, as well as the general public, fully informed. It is also meant topromote utilization of sound policies and practices in meeting essential needs of students, anddemonstrate that public confidence in district operations is warranted. The DEFP format begins with an overview of current economic climate and other factorsaffecting projections, and an explanation of student enrollment projections (School Board ofBroward County, Florida, 2008b). It then addresses the School Board of Broward County’s[SBBC] plans for compliance with class size reduction, a partially funded mandate, followed byconcurrency, an unfunded 2005 legislative mandate. Long term planning for concurrencyincludes ILAs [intralocal agreements] for public school facility planning. These agreements areintended to ensure coordination of efforts between school boards, municipalities and developersto provide planning sufficient to effect the purpose of concurrency, i.e. that facilities areavailable to serve a proposed development coincident with the community’s realization of thatdevelopment’s impact. Broward’s ILA includes the county, the school board and the 27municipalities within the county. Also preceding the projections section of the DEFP are discussions of the following areasaddressed in the plan: (1) indoor air quality; (2) new schools, capacity additions, remodeling andrenovations; (3) land acquisition and development; (4) relocatables [portables]; (5) technology;(6) health and safety; (7) capital improvement program; (8) Americans with disabilities; (9)equipment; and (10) debt service. An additional factor affecting Broward’s allocation ofresources is a settlement agreement between the district and Citizens Concerned about our
  3. 3. SBBC DEFP 3Children (School Board of Broward County, Florida, 2008b). The intent of this agreement is toensure the promotion of diversity and equity within SBBC. For facilities, the implication is topromote structural parity across the county. Annual preparation of the DEFP begins with a review of the needs assessmentscompleted by the principal at each school. Other stakeholders providing input include areasuperintendents and district departments whose functions are dependent upon the DEFP.Additionally, the diversity committee and Facilities Task Force, both of which havememberships consisting of volunteers, predominantly parents and private sector interests, areafforded opportunity to provide their recommendations. School board members individuallymeet with staff to rate their project preferences, followed by public workshops in accordancewith Sunshine standards. Review progresses to the parties of the ILA, and then on to publichearings prior to formal adoption. Ten sources of capital budget funding are itemized in the DEFP adopted 08-06-08 (2008).First, the district may sell local bonds after voters authorize their issue. These funds may be usedfor land acquisition; renovation, remodeling, or of expansion of existing facilities; new schoolconstruction; and payment of issuance costs. Second, Capital Outlay Bond Issues (COBI) areissued by the state solely for capital outlay purposes and repayment is from capital outlay anddebt service revenues. The source for the third vehicle is motor vehicle license revenue.Allocated by the Office of Educational Facilities, Budgeting and Financial Management, theseare “Capital Outlay and Debt Service” funds that may be used in “acquiring, building,constructing, altering, remodeling, improving, enlarging, furnishing, equipping, maintaining,renovating, or repairing of capital outlay projects … for projects on the Project Priority Listpresented to the State Department of Education” (School Board of Broward County, Florida,2008b). COPs [Certificates of Participation], general funds via the sale of lease certificates are
  4. 4. SBBC DEFP 4obtained and used to finance acquisition of land and new construction, and purchase ofequipment. Debt service is paid from capital millage proceeds. Next source: impact fees paid bydevelopers. Funds usage is tied to enrollment increases in the locus of the development, andinures to the benefit of the service area in which the fees are collected. Expenditures forconstruction or expansion of new facilities, site acquisition, or equipment are eligible for thissource of funding. The largest source of capital funding is the millage revenue collected throughad valorem taxation. These funds may be used without restriction for authorized expenditureswithin the capital budget. Gross utilities tax back PECO [Public Education and Capital Outlay]funds whose permissible uses include debt service, remodeling, new construction, furniture andequipment, sites, and library books. School Infrastructure Thrift [SIT] programs awards arebonds issued from Florida Lottery. An incentive program encouraging “functional, frugalfacilities and practices”, (School Board of Broward County, Florida, 2008b), rewards up to 50percent of the amount saved when districts realize cost savings in construction of educationalfacilities. Class size reduction is a source of funding from the state’s general revenue.Encumbrance authorization requires that the Department of Education determine and verify theadequacy of district compliance with class size reduction legislation, and that the DEFP includesall capital outlay revenue available to the district, among other conditions. The final source offunding listed is FEMA disaster relief funds the district receives from state and federal revenue. Approval process for SBBC’s 2009-2010 DEFP is approaching the public hearing stages.The passage of Proposition I in January of 2008, together with other economic factors impactingthe state, and South Florida in particular, created challenges in preparation of the 2008-2009DEFP. Additional budget reductions imposed by the state on SBBC appropriations haveexacerbated those challenges this year. Adding to the loss of revenues caused by the housing market downturn, and increased
  5. 5. SBBC DEFP 5property tax exemptions provided by “Save-Our-Homes” legislation, the state legislature’sapproved 2008-2009 budget reduced from 2.0 mills to 1.75 mills the amount a district can levyfor capital outlay. The .25 mills was redirected to the Florida Education Finance Program tooffset declining revenues in lieu of increasing taxes (School Board of Broward County, Florida,2008b). Measures undertaken by SBBC to alleviate the impact of reduced appropriations in the2008-2009 DEFP included the elimination of unfilled full time equivalent positions fundedthrough the capital budget, and removal of redundant and obsolete legacy projects from the five-year plan. At a meeting of business interests in November, SBBC reported that the impact to theDEFP was a net loss of $417 million for capital outlay projects (School Board of BrowardCounty, Florida, 2008a). The legislature reduced capital outlay millage by an additional .25 mills to 1.5 mills inMay of 2009, resulting in a loss to SBBC, as well as other districts, of millions of dollars forcapital projects (School Board of Broward County, Florida, 2009). It also placed many districtsin jeopardy of losing their credit ratings by putting some districts below the debt servicebenchmark set by rating agencies. Further exacerbating the situation, last year the state predicteda 21.7% increase in property values over the next five years. The current state estimate is now a19.8% decline over the same period, representing a net negative swing in the state’s projectionsequaling 41.5%. The table in Appendix A compares major revenue sources and appropriations in theTentative DEFP for fiscal years 2009-10 to 2013-14 (2009b) with the adopted DEFP for each ofthe past four fiscal years (School Board of Broward County, Florida, 2008a) (2007) (2006)(2005). Effectively the impact to the five-year plan is that the total capital program for 2009-2010 is half of the $5.0 billion in the adopted 2008-2009 DEFP (School Board of BrowardCounty, Florida, 2009a).
  6. 6. SBBC DEFP 6 When it initiated the DEFP review process for this fiscal year [2009-2010], the office ofthe chief financial officer advised staff that non-discretionary capital expenditures included $150million per year for debt service, and $60 million for maintenance transfers and other fixed costs,leaving $25 million available for essentials such as life safety, Americans with disabilities, andindoor air quality. The directive indicated that $830 million would have to be cut from the DEFP(Facilities Task Force). The strategy employed to accomplish the reduction objective was to identify projects thatwould fit into one of the following three categories: (1) fully funded, not under construction; (2)partially funded, not under construction; and (3) not funded or under construction. Fully fundedprojects would be completed (Facilities Task Force). Partially funded projects would bereviewed to determine feasibility of performing work in phases, or whether it would be moreeconomically viable to cancel the contract and incur the penalty for payment of work performedplus ten percent. Benchmarks were established for preservation of assets, life safety, indoor airquality, and Americans with disabilities. The first public hearing on the tentative DEFP isscheduled to occur on July 21, 2009. Tax credit bonds are part of the Obama administration’s economic recovery package(American Recovery and ReinvestmentTax Act of 2009). SBBC qualifies for up to $49,913,000in allocations for 2009 (Roth) and has included the Quality School Construction Bonds as anestimated revenue source in the 2009-2010 DEFP. The state’s decision to transfer millage fromcapital to provide funds to the operating budget has severely impacted SBBC’s capital program.Unless there is a reversal of that practice, or the district is able to participate in the stimuluspackage, the closure of facilities and personnel layoffs that have been averted thus far will beforced upon the district.
  7. 7. SBBC DEFP 7 ReferencesAmerican Recovery and ReinvestmentTax Act of 2009. (n.d.). Legislation: American recovery and reinvestment tax act of 2009. Retrieved Jul 9, 2009, from Ed.gov: http://www.ed.gov/print/policy/gen/leg/recovery/modernization/leg-arrta,htmlFacilities Task Force. Facilities Task Force Minutes, Thursday, May 14, 2009.Florida Department of Education. (n.d.). Class size: class size reduction amendment. Retrieved Jul 11, 2009, from Florida department of education: http://www.fldoe.org/ClassSize/Roth, A. M. (n.d.). Qualified school construction bond allocations for 2009. Retrieved Jul 5, 2009, from Florida Department of Education: http://www.fldoe.org/ARRA/pdf/taxQ.pdfSchool Board of Broward County, Florida. (2008a, Nov 19). Business community meeting, November 19, 2008. Retrieved Jul 11, 2009, from Office of chief financial officer, Broward County Public Schools: http://www.broward.k12.fl.us/comptroller/cfo/capbudget/capsys-doclinks.htmCapital Millage Reduction June 2009 (2009a). [Motion Picture].School Board of Broward County, Florida. (2008b). District Education Facilities Plan for fiscal years 2008-2009 through 2012-2013. Ft. Lauderdale: School Board of Broward County, Florida.School Board of Broward County, Florida. (2005). District educational facailities plan for fiscal years 2006-2007 through 2010-2100. Ft. Lauderdale: The School Board of Broward County, Florida.School Board of Broward County, Florida. (2004). District educational facilities plan for fiscal years 2005-2006 through 2009-2010. Ft. Lauderdale: The School Board of Broward County, Florida.School Board of Broward County, Florida. (2007). District educational facilities plan for fiscal
  8. 8. SBBC DEFP 8 years 2007-2008 through 2011-2012. Ft. Lauderdale: The School Board of Broward County, Florida.School Board of Broward County, Florida. (2009). Tentative district educational facilities plan for fiscal years 2009-2010 through 2013-2014. Retrieved Jul 11, 2009b, from Office of chief financial officer, Broward County Public Schools: http://www.broward.k12.fl.us/comptroller/cfo/capbudget/capsys_dodlinks.htmState of Florida. (2008). The 2008 Florida Statutes: Title XLVIII, Chapter 1011. Retrieved July 11, 2009, from Statutes & Constitution: View Statutes: http://www.flsenate.gov/STATUTES/index.cfm?p=2&App_mode=Display...&URL=Ch10 11/SEC69.HTM&Title=-%3ECh1011-%3ESection%2069
  9. 9. SBBC DEFP 9 Appendix A Major Revenue Sources and Appropriations Comparison Estimated 5-year TotalDEFP Millage COPs Appropriations2005-2006 $1,523,542 $1,276,986 $2,988,9412006-2007 $1,903,517 $1,253,139 $3,421,8522007-2008 $1,959,646 $1,352,409 $3,530,4242008-2009 $1,841,080 $1,006,097 $3,005,3712009-2010 $1,108,355 $3,500 $1,274,992

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