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Report of the Working Group on Finance and Facilities - K-12 Education

A PLACE TO LEARN AND WORK
PART 5. DEVELOP AND MAINTAIN ADEQUATE AND APPROPRIATE EDUCATION FACILITIES

This part of the report is organized according to five major school facility policy areas: (1) assuring stable and adequate funding; (2) allocating funds equitably to meet local needs; (3) establishing high standards and accountability; (4) promoting efficiency and effectiveness in the use of capital resources; and (5) establishing environmental review procedures appropriate to assuring a healthy learning environment.

Introduction

We believe that a world-class public education system must include state and local financial support of and shared responsibility for quality educational facilities. While specific criteria must be developed to determine and ensure adequacy for school facilities, there is no doubt that the current model of funding for public school facilities in California is unresponsive to planning and funding needs of school districts, and, therefore, results in the inefficient use of resources for facilities. In particular, reliance solely on state general obligation bonds and the current method of allocating bond proceeds creates a system that has not been conducive to long-term planning for school facility needs at the local level, and that fails to leverage or encourage the development of local sources of funding for school capital needs.

Therefore, we recommend that the current system of providing state facilities financing to school districts should be replaced with a system that ensures that state funding is stable, reliable, and available when needed. School districts would be responsible for assuring a stable source of local revenue to supplement state funding for local facility needs. We also believe that school districts need greater flexibility to use funds most effectively at the local level. Realizing that many school districts have spent several years developing their project applications under the current state allocation system and that they are prepared to construct or modernize facilities when bond funds become available, those districts should be allowed to complete their projects under the current system. We suggest that a transition occur from the current system of state support that relies solely on the allocation of bond proceeds to a system that provides annual appropriations to districts, with the requirement that districts will supplement these annual appropriations to meet state standards and achieve the goals of district school facilities plans.

We further suggest that this transition be structured to ensure that the existing construction / modernization backlog and the needs of critically overcrowded schools that currently exist are given high priority for state bond funding during the transition period. Thereafter, state bond funds would continue to be used to assist districts that experience difficulties in generating their local match, have special needs, or experience unforeseen problems such as natural disasters. The following sections elaborate on these goals.

Adequate Funding

Goal: Provide an adequate, stable and reliable source of funding that is available when needed and that addresses current and future capital outlay needs[27].

Moving to a New Funding Model

Recommendation 5.1:

The working group recommends that the current funding model be replaced with annual state per-pupil allocations that are restricted to assisting school districts in meeting their capital and major maintenance needs according to a long-term Facilities Master Plan adopted by each school district. State and local funding for capital and major maintenance should be protected to prevent the redirection of capital resources when other cost pressures arise and to protect the citizenry’s investment in major capital projects.



School facilities are an integral part of the package of resources necessary to provide a high quality education for students. The Finance and Facilities Working Group proposes a system for financing school facilities that will result in a guaranteed annual per-pupil allocation specifically for capital uses, similar to the current system for financing school operations. Moving from our current system to an annual per-pupil allocation of state funding for school facilities will require a number of steps in sequence. The first step is to determine an adequate level of resources necessary to provide each student with an educational facility that supports a high quality education. The new per-pupil funding model would be developed, in part, by 2006 and be fully operational by 2010. The annual per-pupil funding concept identified by the Legislative Analyst in A New Blueprint for California School Facilities Finance[28] serves as a model for the approach we recommend in this paper.

Transition Period for New Funding Model

Recommendation 5.2:

The working group recognizes that moving to a new paradigm for school facilities funding will require a transition period. We recommend that a ten-year transition plan be adopted during which the reliance on state General Obligation bonds to fund facilities will be phased out and funding through annual per-pupil allocations from the state General Fund will be phased in.



The specific elements of this concept can be found in our first recommendation, and are represented graphically in the chart below:

(Chart 2)

Chart 2

2002-2006: State facilities funding will continue to be provided primarily through statewide bonds and through the current application process for the purpose of making existing facilities adequate. Specifically, we recommend that through 2006, priority for state bond funding be given to projects that will clear the current backlog. In addition, we recommend a set-aside of funds specifically for districts with critically overcrowded schools, as defined by the Legislature. Further, we recommend that planning and necessary legislation be adopted during this period to begin moving to a per-pupil allocation system in 2006.

2006-2008: We recommend that the state, beginning in 2006, transition to a new per-pupil allocation model by providing annual apportionments to school districts for use in renovation, modernization and major maintenance projects. School modernization projects would be funded from a per-pupil allocation model sufficient to support a projected level of modernization need for a future period of 25 years, amortized to establish an appropriate annual per-pupil allocation amount. New construction, equalization efforts and special adjustments will continue to be funded through the State Allocation Board’s application process, but reliance on that process begins to diminish.

2008-2010: Gradually phase out facilities funding through the existing allocation process, so that, by 2010, the state has fully adopted a financing system for the construction of new facilities through annual state per-pupil allocations. This annual allocation will be restricted and protected by law to meet established Quality School Facility (QSF) standards and school districts would provide local resources to supplement the State’s QSF allocation to ensure adequate funding, should districts’ facilities master plans determine that such local participation is necessary. Ongoing maintenance would continue to be funded from district Proposition 98 allocations.

After 2010: The primary source of capital outlay funding for K-12 education is a constitutionally guaranteed annual allocation, the level set by the state and supplemented with local resources. This constitutional guarantee, while similar to Proposition 98, would not otherwise impact the calculations used to determine state funding of school operations under Proposition 98. With the advent of Quality School Facility allocations to school districts and the expectation that school districts will provide locally raised supplemental funding, there are likely to remain some low-wealth districts that will be unable to provide their full contingent of local match, growing districts that may have capital and ongoing maintenance needs that exceed the level of funding provided under the QSF formula, or special funding needs brought on by unforeseen circumstances such as natural disasters. Therefore, after 2010, the State should maintain an application-based process to address the additional school facilities needs that may occur as a result of these special circumstances.

Local school districts will be expected to supplement the State per-pupil allocations for capital outlay from their Proposition 39 bonding capacity, from developer fee revenues or any other local source available to the district. Moreover, the Legislature should consider establishing additional local revenue options (e.g., tax increment financing) that would supplement currently available sources.

ALLOCATIONS AND EQUITY

Goal: Facilities funding must be equitably allocated to meet the local needs of school districts throughout the state.

Within the framework of the funding model that the working group is recommending, there are three issues within the topic of allocations and equity that were discussed and addressed:

Allocation Amounts

The working group recommends that the state base per-pupil grant amount be appropriate to the varying levels of education. For instance, the base per-pupil allocation for an elementary school district should not be equivalent to the base per-pupil allocation for a unified school district.

Leveling Up

Students and teachers within and among school districts throughout the state should work and learn in facilities that will promote and support a high quality education. Meeting the existing backlog of need for facility construction, renovation and repair will “level up” all facilities in the state to a comparable standard of adequacy. The group proposes to achieve this by emphasizing within the years of 2002-2006 state bond funding based upon projected need. Once all school districts have achieved levels of adequacy for their facilities and the state transitions into its base per-pupil allocation, the issue of equity moves from one of “leveling up” to one of accommodating special circumstances.

Special Adjustments

While it is anticipated that a standardized per-pupil allocation for each type of school will be developed to support Quality School Facilities, and that this allocation will be adjusted annually to reflect rising construction costs, the working group recognizes that there are some special circumstances among school districts throughout the state that may increase the cost of facilities construction.

Recommendation 5.3:

Therefore, we recommend that the Legislature consider authorizing a limited number of adjustments to supplement the state base per-pupil allocation. As with our recommendations for adjustments to school operating fund allocations (see the Part 2: Categorical Program Adjustments), we believe special circumstances related to geography, land use and unique school district factors may warrant consideration for additional funding beyond the annual per-pupil grant.[29]

GUARANTEEING QUALITY SCHOOLS: STANDARDS, ACCOUNTABILITY & INTERVENTIONS

Goal: Through common standards and accountability systems for schools throughout the state, assure that all students, teachers, administrators and other staff have appropriate learning and working environments to provide a high quality education. Assure that standards are met and maintained in each school through appropriate monitoring, assistance and intervention.


Common standards will establish an expectation of the condition and quality of school facilities throughout the state. The linkage of the standards to a reliable source of annual state funding is direct and logical: The state establishes the expectations and guarantees the provision of resources to meet them. The condition and quality of each district’s facilities will be measured against the standards in the first year and deviations from the standards will be identified. The specific facility deviations from the standards are addressed in a five-year corrective action plan, which quantifies the facility needs of the district in terms of capital dollars needed. The action plan is a part of the Facilities Master Plan of the District.

Statewide Facilities Standards

Recommendation 5.4:

Establish clear, concise and workable standards that are characteristic of facilities that provide a high quality/high performance teaching and learning environment.

The Facilities Group recommends the following language be amended to Education Code Section 17251(g) in reference to developing statewide facilities standards:

Education Code Section 17251 (g)--The California Department of Education shall develop standards for use by school districts to evaluate existing school facilities. The application and use of the state standards is the responsibility of the local school district governing board. The standards shall include, but not be limited to, the following categories:
1) Classrooms: address the adequacy of the number and size of classrooms to deliver the local educational program
2) Maintenance: address the conditions of the building – good repair, painted, roofs in good condition, and inspections occur on an adequate periodic basis
3) Cleanliness: address litter and graffiti; assure clean and adequate food preparation and serving facilities
4) Safety: address fire hazards, emergency telephone accessibility, air quality, and other health issues.
7) Drinking water: fountains are operable, safe, and clean

Recommendation 5.5:

We recommend that each school district prepare and, with appropriate public review, adopt a five-year facilities plan to meet or exceed state facilities standards[30].


As a means of ensuring public accountability, each school district would be required to develop and annually update a Facilities Master Plan that would identify long-term capital and ongoing maintenance needs for the district, along with a plan of finance to address these needs. The finance element of the plan would delineate the amount and source of state and local funds the district anticipates receiving over the course of the prescribed term, along with a contingency plan in the event any proposed funds do not materialize. The district plan would be subject to public review and comment during local hearings, and a final plan adopted by the local board would be filed with the county office of education and the State Department of Education. Current restrictions that dictate the timing and use of state funding would be eliminated and replaced with this new system of accountability.

The initial five-year plan must be designed to ameliorate all deficiencies within the first five years with the recognition that appropriate state funding support will be in place. The five-year plan will be designed to allow for flexibility in adjusting the plan to meet emergent needs. The five-year plan must be updated annually, and would allow for rolling benchmarks and goals.

Each district at annual budget adoption will reassess itself against the statewide standards and affirm its five-year plan, translating it into funds specifically budgeted for projects required to bring the district into compliance with the standards. The educational specifications that are unique to individual districts may be included in and become part of the locally applied standards, and the annual reassessment and planning.

Intermediate Agency Role and Responsibility

Recommendation 5.6:

Adopt necessary policy and statutory changes so that the annual budget for each school district includes a capital spending component that is reviewed and assessed as part of the AB 1200 financial and management accountability process. Technical assistance, which may be warranted based on such a review, shall be available to school districts through regional and state agencies.


The role of intermediate agencies, such as county offices of education, is to assist local school districts within their respective counties in providing high quality education. County offices of education achieve this objective by providing direct support to school districts and aiding them in student academic development and professional development. Further, county offices of education often provide supplemental programs for students, teachers and administrators in their districts that compliment those programs offered by the school districts. Finally, county offices of education review the financial health of school districts through the budget review and approval process.

The Working Group recommends that county offices of education, or other successor intermediate agencies, incorporate a review of capital budgets against school district facilities plans and offer, where needed, further support by providing technical, early intervention and prevention assistance to their respective school districts regarding adequate educational facilities. County offices of education, as a part of providing such support, would monitor and verify facilities planning and progress of its districts, and when applicable, would intervene by communicating with the local board of education and the district superintendent when the district fails to meet statewide facilities standards – noting the nature of the departure from the standards and offering assistance, including direct intervention. If the county office of education logistically cannot bear the burden of direct intervention, the agency would be granted the power to contract for those services on behalf of the district[31].

Failure of districts in making assessments, creating plans to address deficiencies or failure to make progress toward established standards may warrant direct intervention by a county office of education or other agencies. The intervention may include continuous monitoring, commenting and direct management assistance, the creation of an alternative school repair and/or construction program, state assumption of local board authority and the use by intermediate agencies or the state of statutorily authorized emergency powers to expedite the correction of unsafe or sub-standard facilities to be paid for by emergency loans, if necessary. State QSF funding for school districts that are determined to be out of substantial compliance with their Facilities Master Plan could be withheld until compliance was achieved. Intervention by the state would be implemented only after all administrative processes of the local district and intermediate agencies have been exhausted.

Statewide Inventory

Recommendation 5.7:

It is the recommendation of the group that the state create a statewide school facilities inventory system that will assist state and local decision makers to determine short and long term school facilities needs. It is imperative that the state collects only the most critical, basic information needed to make necessary management decisions. The state will utilize information contained in existing data collection reports before requiring school districts to report any additional information needed for the school facilities inventory system.

Facilities Planning and Local Supplemental Funding

If, as part of developing or updating its Facilities Master Plan, a school district finds that its capital and ongoing maintenance needs are less than the amount projected from the State’s QSF allocation, matched by local effort, the school district may reduce its local effort proportionate to the reduced level of total funding needed. If, as part of this process, a school district finds that its capital and ongoing maintenance needs are less than the amount projected solely from the State’s QSF allocation, the state will reduce the QSF allocation to that district accordingly.

Local Autonomy

Regarding public education at large, the role of the local school district is to coordinate and implement an educational program conducive to academic excellence and achievement. Part of such a program is to provide adequate educational facilities that are safe, clean, appropriate and conducive to high quality education. Local school districts achieve facilities goals in tandem with state efforts through a partnership to provide adequate, stable and reliable funding.

Recommendation 5.8:

The Working Group recommends that local districts be given autonomy to expend state and local funds as appropriate to meet their local educational programs insofar as such expenditures of funds enables the district to meet or exceed statewide standards for adequate facilities. Local districts would be subject to required, annual self-assessments and assessments against their Facilities Master Plans, and be required to publicly share the results of those assessments with members of their communities – students, parents, and community leaders – annually.

EFFECTIVENESS AND EFFICIENCY

Goals:

  • Contain costs through measures that promote efficiency
  • Promote shared/joint-use of facilities among schools, colleges and universities, municipalities and other public agencies
  • Size schools appropriately to promote the most effective learning environment for students
  • Develop statewide technology infrastructure that enhances and supports the classroom and facilitates accountability and assessment of district goals and objectives.

Recommendation 5.9:

The working group recommends that the state provide financial incentives to school districts to promote joint or shared use of facilities. We also recommend that the state develop a technology infrastructure among, between and within educational entities that would promote improved education delivery and access to a wider range of education resources. This system of shared facility and technology infrastructure would allow districts and schools to better manage and assess financial and physical resources.

ENVIRONMENTAL REVIEW

Goal: Develop statewide environmental standards appropriate for school facilities to assure a safe learning environment for children.

When evaluating human health risks for school sites with potential contamination, the Department of Toxic Substances Control (DTSC) uses standards described in the Preliminary Endangerment Assessment (PEA) Guidance Manual (DTSC, 1994, revised 1999). Partially based upon US Environmental Protection Agency (USEPA) risk guidelines, the screening risk analysis used in Preliminary Endangerment Assessments (PEAs) assumes residential or unrestricted land uses for school sites. In the unrestricted land use scenario, it is assumed that individuals will be exposed to all contaminants for 24 hours a day, 7 days a week, 350 days a year for a period of 30 years (6 years as a child plus 24 years as an adult). DTSC has historically viewed school properties as being equivalent to residential properties in order to ensure the safety of children. In general, DTSC has determined that a cumulative cancer risk that is greater than one excess cancer in a population of one million indicates a potentially significant health threat and DTSC may require further investigation, such as soil sampling or removal activities. To pursue such sites, in some cases districts may be required to undertake time consuming and expensive Response Action cleanup or remediation efforts in order to achieve an “unrestricted” use of the land.

Per AB2872 (1999-2000 legislation), the Office of Environmental Health Hazard Assessment (OEHHA) has been charged with developing a guidance document for assessing child specific exposure at school sites. The results of their studies are anticipated to be published by the end of 2002. In addition, the same legislation authorized OEHHA to evaluate five chemicals per year, starting in 2002, to determine if children are more sensitive than adults and therefore require additional safety margins. At this time it is not known how these school specific exposure guidelines and toxicity factors will affect current assessment of school sites.

Contamination Health Risk Screening Analysis for School Sites

Recommendation 5.10:

The working group recommends that the Legislature ensure timely adoption and implementation of OEHHA’s guidance document by DTSC and other state and local agencies for assessing exposures and health risks at existing and proposed school sites.

Table of Contents
Summary 1. Finance 2. Equity 3. Community
4. Accountability 5. Facilities Appendices Members