Officials examine options to stretch dollars for school construction

September 18, 2011|By JULIE E. GREENE |
  • Mike Callas Stadium at North Hagerstown High School will be among the projects discussed Monday by school officials during a public school construction program seminar in Annapolis.
File photo

Sustained economic woes and the need to upgrade and build public schools is driving education officials to consider new ways of financing projects.

Maryland’s Public School Construction Program is hosting a seminar Monday in Annapolis for local school systems to learn about alternative funding and financing methods.

The Task Force to Study Public School Facilities’ 2004 report, known as the Kopp Commission Report, estimated $3.85 billion would be needed to bring schools statewide up to minimum standards.

As a result, a goal was set for the state to provide its share of the funding to meet that target of $2 billion or $250 million annually for eight years, said David Lever, executive director for the Public School Construction Program.

The last fiscal year for that $250 million pool from which local school systems can apply for school construction money is 2012-13, Lever said.

“It’s been a tremendous amount of money and it’s been a tremendous help. There’s no question about that. We hope that that will continue, but we need to do more,” Lever said Wednesday.

If you take the 2004 facilities survey’s results and adjust it only for increases in construction costs, the price tag would now be almost $6 billion, Lever said.

Even the annual $250 million pool doesn’t meet the demand for school project money, Lever said. For the current fiscal year, the state had requests for about $612 million in projects and was able to fund about $260 million, Lever said.

With state and local governments continuing to look at tough economic times, Lever’s office is encouraging discussion about financing alternatives, such as a “design build finance maintain operate” model.

Under such a model, the local school system would provide specifications for a new school and would own the school, but a private entity could handle design, construction, finance and operations such as preventative and corrective maintenance, cleaning and security, Lever said.

Alberta, Canada, has a contract with a private group that handles maintenance, but the school system continues to handle custodial services, Lever said.

Representatives from Canada and the United Kingdom will make presentations at Monday’s seminar, which will include a presentation by Washington County Public Schools officials about naming rights, according to the agenda. Specifically, local education officials will talk about the Mike Callas Stadium project at North Hagerstown High School, Lever said.

“My hope is that we’ll be able to put together a very good study group ... and explore this more to see whether it does make sense,” Lever said of alternative financing ideas.

If the biggest task statewide is tackling existing school buildings that need renovations, the private vendor model might not work well, Lever said.

Deputy Schools Superintendent Boyd Michael, who will be one of the local presenters at the seminar, said he wants to hear about alternative financing arrangements, but either way “(we) still have to pay money to somebody.”

Washington County

Even with the annual $250 million school construction pot, which sometimes was even higher, some local school systems haven’t been able to take advantage of the state funding because the county government couldn’t provide the matching funds due to bond or debt capacity issues, Lever said.

That hasn’t been the case in Washington County, where the county government has been fairly conservative and tries to maintain its bond rating, Michael said.

“So far, they’ve come through with all the school requests we’ve had, so I’m hoping that will continue,” Michael said.

The county has a healthy bond rating of AA, the second highest possible rating, County Budget and Finance Director Debra Murray said.

The recommended debt capacity for the county was reduced from $16 million last fiscal year to $14 million for the current fiscal year based on projected economic conditions, Murray said. The proposed projects for the year are just more than $12 million, Murray said. These include school, road and bridge projects that are supported with tax dollars. That debt capacity does not count toward construction-related projects for self-supporting operations such as water, sewer and the landfill.

Future funding

The goal to provide $250 million for school construction projects for one more year, fiscal 2012-13, is still there but isn’t required by state law, Lever said. The size of that pool is determined by the governor and state lawmakers, he said.

While Lever said he’s optimistic there will be adequate funding next fiscal year, the state is going through rough times.

“I think everybody has uncertainty,” Lever said.

Les Knapp, associate director for the Maryland Association of Counties (MACO), said the organization is concerned about the possible lapse after fiscal 2013 and wants to see the $250 million annual pool extended in future years.

Recognizing the current economic situation, Knapp said MACO officials think keeping the $250 million annual level is a “reasonable goal.”

MACO recently adopted updated legislative initiatives, including encouraging the state to develop and adopt a new multiyear funding strategy for school construction to replace the one that expires in fiscal 2013, Knapp said.

Ideally, a new study about school facility needs would be completed, but there isn’t money for such a study, Knapp said. Extending the previous funding is a “reasonable compromise,” he said.

“Part of the reason we have such a well-regarded school system (in Maryland) is we have such good school facilities,” Knapp said.

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