school facilities board;
enrollment projections
HB 2526 makes numerous changes to the statutes relating to the School Facilities Board (SFB).
HB 2526 was amended in the Appropriations Committee with a strike-everything amendment that makes numerous changes to the statutes relating to the SFB. The Appropriations Committee amendment was adopted in Committee of the Whole and further amended.
The SFB was established as part of Students FIRST (Fair and Immediate Resources for Students Today) to administer the State's capital facilities plan for school districts. Monies are transferred annually by the State Treasurer to the SFB. Arizona public school districts receive funding for the correction of deficiencies in existing school facilities, building renewal and new school construction, while maintaining the ability to raise local funds through limited bonding and capital overrides.
Three main funds were established to bring schools up to minimum adequacy standards, for building renewal and for new school construction to meet the demands of a growing and expanding student population.
Deficiencies Correction
The Students FIRST law established a Deficiencies Correction Fund for the purpose of correcting deficiencies in existing school facilities. Deficiencies might take the form of a square footage deficiency or a quality deficiency, and must be corrected by June 30, 2003. The SFB is charged with adopting rules establishing minimum school facility guidelines, assessing school buildings against these guidelines, and providing monies to bring the buildings up to the guidelines. On November 18, 1999, the SFB adopted Building Adequacy Guidelines that now serve as the minimum standards for existing and new school facilities in Arizona.
Building Renewal
The second fund established was the Building Renewal Fund for the purpose of maintaining the adequacy of existing school facilities. These monies can be used for major renovations and repairs of a building, for upgrades to building systems (e.g. heating, cooling, plumbing, etc.) that will maintain or extend the useful life of a building, and for infrastructure costs. Monies from this fund may not be used for new construction, remodeling interior space for aesthetic purposes, exterior beautification, demolition, soft capital items or routine maintenance. A building’s square footage, age and student capacity are used in the building renewal calculation. The SFB distributes building renewal monies to school districts in two equal installments in November and May of each year.
New School Facilities
The third fund established was the New School Facilities Fund for the purpose of constructing new schools to meet the minimum adequacy guidelines. The criteria to determine district eligibility for monies from the new school facilities fund are based on annual evaluation and approval of district enrollment projections and the additional square footage that will be needed to maintain adequacy standards in a district. The School Facilities Board distributes new school facilities monies to school districts based on the following formula: (number of students) x (square footage) x (cost per square foot) = allocation. Land costs are funded in addition to formula funding for new construction.
· Prohibits a school district governing board from reconfiguring grades if the reconfiguration results in a reduction of pupil square footage that would cause the school district to fall below the minimum adequate square footage requirements within three years. A school district may temporarily reconfigure grades to accommodate new school construction if the temporary reconfiguration does not exceed one year.
· Allows the SFB to:
· Use monies in the New School Facilities Fund to pay attorney and witness fees and other costs to sue for the recovery of damages resulting from alleged construction defects or design defects for deficiencies corrections and new school construction that the SFB believes caused or contributed to a failure of the school building to conform to the minimum building adequacy guidelines.
· Lease facilities for new schools or to expand current schools using new school facilities monies if it is determined by the SFB that the lease would be more appropriate for the school district than to construct new facilities. The SFB is required to establish criteria for school districts to lease facilities and is allowed to modify the building adequacy standards except for health and safety standards. Leased facilities must meet the building adequacy standards. The Joint Committee on Capital Review (JCCR) must review the criteria established by the SFB. Additionally, the SFB has the discretion to determine the duration, cost, termination and renewal of leases, except that the initial contract may not exceed five years, but is renewable up to two times for up to five years each renewal. The lessor is responsible for maintaining the facility pursuant to the building adequacy standards, and the school district is not eligible for capital outlay or building renewal monies for that facility. Any proposed leases must be reviewed by JCCR before execution. Monies may not be expended for leasing portable facilities.
· Lease-to-own facilities for new schools or to expand current schools using new school facilities monies if it is determined by the SFB that the lease-to-own would be more appropriate for the school district than to construct new facilities. The SFB is required to establish criteria for school districts to lease-to-own facilities and is allowed to modify the building adequacy standards except for health and safety standards. Leased-to-own facilities must meet the building adequacy standards. JCCR must review the criteria established by the SFB. Additionally, the SFB has the discretion to determine the duration and cost of the lease-to-own agreement, except that the lease-to-own cannot exceed 25 years. The lessor is responsible for maintaining the facility pursuant to the building adequacy standards, and the school district is not eligible for capital outlay or building renewal monies for that facility, except that the facility is eligible for building renewal monies when the lease-to-own agreement ends and the district owns the facility. Monies may not be expended for leasing-to-own portable facilities. The SFB may enter into lease-to-own agreements when the net present value, minus finance and maintenance costs, does not exceed the difference between the amount necessary to fulfill the statutory requirements for the fiscal year and the amount the SFB receives for new school construction. Payments for lease-to-own agreements must be made from the New School Construction Fund. Any proposed lease-to-own facilities and net present value calculations must be reviewed by JCCR before execution.
· Clarifies that school districts may exceed minimum adequacy guidelines and build athletic fields and any other capital projects for leased and leased-to-own facilities.
· Requires the Executive Director of the SFB to provide project managers for new school construction if requested by the school district. If a school district uses their own project manager, the members of the school district governing board and the project manager must sign an affidavit declaring that they understand and will comply with the minimum adequacy requirements.
· Requires surplus monies from new school construction to be returned to the New School Facilities Fund. A school district may retain surplus monies if the SFB determines the project was completed using quality products.
Building Renewal
· Requires the SFB to inspect school buildings annually unless it is determined by the SFB that the building shall be inspected every other year.
· Establishes a school maintenance program administered by the SFB. The SFB, with input from school districts, shall develop and distribute standards for routine and preventative building maintenance and guidelines for determining the appropriate amount of maintenance and operation monies or building renewal monies, whichever is applicable, that should be budgeted for maintenance. The SFB is exempt from the rule-making process for one year to establish the standards. After inspecting a building, if the SFB determines that a building has received inadequate maintenance, the school has six months to rectify the problem. If, upon re-inspection, the school continues to be improperly maintained, the SFB must notify the school district of the amount of monies that the school district must budget for maintenance in the following fiscal years until the facility is adequate. The school district is prohibited from spending these budgeted monies for any other purpose. School districts that fail to maintain their facilities shall be listed in the Arizona Department of Education annual report card as having failed to maintain adequate facilities.
· Requires school districts, prior to receiving building renewal monies, to annually submit:
· A letter signed by the school district governing board members to the SFB stating that the school district understands and will comply with the permissible uses of building renewal monies. The SFB must notify the school district in writing within 60 days if the proposed uses of building renewal monies are permissible.
· A comprehensive five-year building renewal plan. The SFB must notify the school district in writing within 60 days if the proposed uses of building renewal monies are permissible. A school district may revise and resubmit the five-year building renewal plan at any time.
· The current statutory report of the prior year’s uses of building renewal monies.
· Declares that beginning July 1, 2003, a school district is not eligible for building renewal monies until the fiscal year following the completion of all deficiencies corrections projects in the school district. The SFB may make exceptions if extraordinary circumstances exist that make the school district fall below the minimum adequacy guidelines.
Deficiencies Corrections
· Declares that the SFB shall not distribute monies from the Deficiencies Corrections Fund for:
· Projects commenced after June 30, 2003.
· Or for projects not listed in the district assessment signed by the school district and the SFB before June 30, 2001 and supplemental projects after April 30, 2002.
· Extends the Deficiencies Corrections Fund for one year from June 30, 2003 to June 30, 2004.
Miscellaneous
· Requires the SFB Executive Director to aid school districts in the development of reasonable and cost effective school designs to avoid statewide duplicated efforts and unwarranted expenditures in the area of school design. Currently, this is permissive authority.
· Declares that the SFB, in cooperation with the school district, must consider the least expensive plan for serving pupils in school districts, including the use of leases and community cooperatives.
· Repeals the freeze on changing the minimum school facility adequacy guidelines and declares that any proposed changes to the guidelines shall not be adopted unless it is determined that the changes would either:
· Result in cost savings to the state.
· Be necessary to comply with building, health, fire or safety codes.
· Requires any classroom space of new school facilities that were funded in whole or in part by Class B bonds, capital overrides or unrestricted capital outlay to be included in the computations of student capacity for those facilities.
· Requires any classroom space that results from the expansion of existing facilities that were funded in whole or in part by Class B bonds, capital overrides or unrestricted capital outlay that exceeds 25% of the student capacity as of January 1, 2002 to be included in the computations of student capacity for those facilities.
· Allows the SFB to temporarily transfer monies between the Capital Reserve Fund, the Deficiencies Corrections Fund, the Emergency Deficiencies Corrections Fund, the Building Renewal Fund and the New School Facilities Fund if the transfer is necessary to avoid a temporary shortfall in one fund, the transferred monies are restored as soon as practicable and SFB reports to JCCR the amount and reason for transferring monies between funds.
· Makes technical and conforming changes.
·
Contains a retroactive date of May 1, 2002.
HB 2526 was amended in the Appropriations Committee with a strike-everything amendment as follows:
· Prohibits a school district governing board from reconfiguring grades if the reconfiguration results in a reduction of pupil square footage that would cause the school district to fall below the minimum adequate square footage requirements within three years.
· Allows the SFB to:
· Use monies in the New School Facilities Fund to pay attorney and witness fees and other costs to litigate for the recovery of damages resulting from alleged construction defects or design defects that the SFB believes caused or contributed to a failure of the school building to conform to the minimum building adequacy guidelines.
· Lease facilities for new schools or to expand current schools using new school facilities monies if it is determined by the SFB that the lease would be more appropriate for the school district than to construct new facilities. The SFB is required to establish criteria for school districts to lease facilities and is allowed to modify the building adequacy standards except for health and safety standards. Leased facilities must meet the building adequacy standards. The Joint Committee on Capital Review (JCCR) must review the criteria established by the SFB. Additionally, the SFB has the discretion to determine the duration, cost, termination and renewal of leases, except that the initial contract may not exceed five years, but is renewable up to two times for up to five years each renewal. The lessor is responsible for maintaining the facility pursuant to the building adequacy standards, and the school district is not eligible for capital outlay or building renewal monies for that facility. Any proposed leases must be reviewed by JCCR before execution. Monies may not be expended for leasing portable facilities.
· Lease-to-own facilities for new schools or to expand current schools using new school facilities monies if it is determined by the SFB that the lease-to-own would be more appropriate for the school district than to construct new facilities. The SFB is required to establish criteria for school districts to lease-to-own facilities and is allowed to modify the building adequacy standards except for health and safety standards. Leased-to-own facilities must meet the building adequacy standards. JCCR must review the criteria established by the SFB. Additionally, the SFB has the discretion to determine the duration and cost of the lease-to-own agreement, except that the lease-to-own cannot exceed 25 years. The lessor is responsible for maintaining the facility pursuant to the building adequacy standards, and the school district is not eligible for capital outlay or building renewal monies for that facility. Monies may not be expended for leasing-to-own portable facilities. The SFB may enter into lease-to-own agreements when the net present value, minus finance and maintenance costs, does not exceed the difference between the amount necessary to fulfill the statutory requirements for the fiscal year and the amount the SFB receives for new school construction. Payments for lease-to-own agreements must be made from the New School Construction Fund. Any proposed lease-to-own facilities and net present value calculations must be reviewed by JCCR before execution.
· Requires the Executive Director of the SFB to provide project managers for new school construction if requested by the school district. If a school district uses their own project manager, the members of the school district governing board and the project manager must sign an affidavit declaring that they understand and will comply with the minimum adequacy requirements.
· Requires surplus monies from new school construction to be returned to the New School Facilities Fund.
Building Renewal
· Requires the SFB to inspect school buildings annually unless it is determined by the SFB that the building shall be inspected every other year.
· Establishes a school maintenance program administered by the SFB. The SFB, with input from school districts, shall develop and distribute standards for routine and preventative building maintenance and guidelines for determining the appropriate amount of maintenance and operation monies or building renewal monies, whichever is applicable, that should be budgeted for maintenance. The SFB is exempt from the rule-making process for one year to establish the standards. After inspecting a building, if the SFB determines that a building has received inadequate maintenance, the school has six months to rectify the problem. If, upon re-inspection, the school continues to be improperly maintained, the SFB must notify the school district of the amount of monies that the school district must budget for maintenance in the following fiscal years until the facility is adequate. The school district is prohibited from spending these budgeted monies for any other purpose. School districts that fail to maintain their facilities shall be listed in the Arizona Department of Education annual report card as having failed to maintain adequate facilities.
· Requires school districts, prior to receiving building renewal monies, to annually submit:
· A letter signed by the school district governing board members to the SFB stating that the school district understands and will comply with the permissible uses of building renewal monies. The SFB must notify the school district in writing within 60 days if the proposed uses of building renewal monies are permissible. School districts are prohibited from expending building renewal monies on any projects not approved by the SFB.
· A comprehensive five-year building renewal plan. The SFB must notify the school district in writing within 60 days if the proposed uses of building renewal monies are permissible. School districts are prohibited from expending building renewal monies on any projects not approved by the SFB.
· Declares that beginning July 1, 2003, school districts that transfer monies from the Capital Outlay Revenue Limit to Maintenance and Operations sections of the budget shall have a like amount reduced from the school district’s building renewal monies, capped at the amount transferred or the amount received in building renewal, whichever is less.
· Declares that beginning July 1, 2003, a school district is not eligible for building renewal monies until the fiscal year following the completion of all deficiencies corrections projects in the school district. The SFB may make exceptions if extraordinary circumstances exist that make the school district fall below the minimum adequacy guidelines.
Deficiencies Corrections
· Declares that the SFB shall not distribute monies from the Deficiencies Corrections Fund for:
· Projects commenced after June 30, 2003.
· Or for projects not listed in the district assessment signed by the school district and the SFB before June 30, 2001 and supplemental projects after April 30, 2002.
· Extends the Deficiencies Corrections Fund for one year from June 30, 2003 to June 30, 2004.
Miscellaneous
· Requires the SFB Executive Director to aid school districts in the development of reasonable and cost effective school designs to avoid statewide duplicated efforts and unwarranted expenditures in the area of school design. Currently, this is permissive authority.
· Declares that the SFB must consider the least expensive plan for serving pupils in school districts, including the use of leases and community cooperatives.
· Repeals the freeze on changing the minimum school facility adequacy guidelines and declares that any proposed changes to the guidelines shall not be adopted unless it is determined that the changes would either:
· Result in cost savings to the state.
· Be necessary to comply with building, health, fire or safety codes.
· Requires the SFB to include school facilities that were funded in whole or in part by Class B bonds, capital overrides, unrestricted capital outlay, leases or lease-to-owns for student capacity of those facilities for school facility computations.
· Allows the SFB to temporarily transfer monies between the Capital Reserve Fund, the Deficiencies Corrections Fund, the Emergency Deficiencies Corrections Fund, the Building Renewal Fund and the New School Facilities Fund if the transfer is necessary to avoid a temporary shortfall in one fund and the transferred monies are restored as soon as practicable.
· Makes technical and conforming changes.
·
Contains a retroactive date of May 1, 2002.
The Appropriations
Committee amendment was adopted in Committee of the Whole and further amended
as follows:
· Allows a school district to temporarily reconfigure grades to accommodate new school construction if the temporary reconfiguration does not exceed one year.
· Requires the SFB to report to JCCR the amount and reason for transferring monies between funds.
· Requires any classroom space of new school facilities that were funded in whole or in part by Class B bonds, capital overrides or unrestricted capital outlay to be included in the computations of student capacity for those facilities.
· Requires any classroom space that results from the expansion of existing facilities that were funded in whole or in part by Class B bonds, capital overrides or unrestricted capital outlay that exceeds 25% of the student capacity as of January 1, 2002 to be included in the computations of student capacity for those facilities.
· Allows the SFB to use monies in the New School Facilities Fund to pay attorney and witness fees and other costs to litigate for the recovery of damages resulting from alleged construction defects or design defects for new school facilities that the SFB believes caused or contributed to a failure of the school building to conform to the minimum building adequacy guidelines.
· Removes language prohibiting a school district from expending building renewal monies on any project not approved by the SFB.
· Allows a school district to revise and resubmit the five-year building renewal plan at any time.
· Requires a school district to comply with the reporting requirements of the prior year’s uses of building renewal monies prior to receiving building renewal monies.
· Allows a school district to retain surplus monies from new school construction if the SFB determines the project was completed using quality products.
· Clarifies that school districts may exceed minimum adequacy guidelines and build athletic fields and any other capital projects for leased and leased-to-own facilities.
· Declares that a school district is eligible to receive building renewal monies for a lease-to-own facility when the agreement ends and the facility is owned by the school district.
· Removes the language relating to the transfer of monies from the Capital Outlay Revenue Limit to Maintenance and Operations sections of the budget.
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45th Legislature
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Second Regular Session 7 April
6, 2002
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