COLTS NEXT SCHOOLS
Q. Why are these projects necessary?
A. Maintaining our school facilities for current and future use is a responsibility of the district. Our students and staff are entitled to safe, secure, and heatlthy learning environments. The Colts Neck Board of Education annually budgets for ongoing maintenance and repairs; however, projects identified for the referendum are too expensive to fund within any single annual budget.
Q. Why are these projects being proposed now?
A. The systems that are proposed to be replaced are past or at the end of their lives. These systems are essential to the operation of our school.
A. The State is currently officering facility aid funding which will cover up to 40% of costs for eligible projects. The District applied and received approval for such State funding in May 2018. The district can only receive this State funding if the referendum passes.
A. Current borrowing rates are low.
A. By financing the projects, the district will avoid costly “band-aid” fixes in the future budgets.
Q. Is the State paying for a portion of the project costs?
A. Yes. The State has agreed to pay for 40% of costs for eligible projects. The State will be providing such funding through “debt service aid”. The district can only receive this State funding if the referendum passes. It should be noted that in the “Estimated Tax Impact” the Board has conservatively assumed that the State will only be paying 34% as opposed to 40%. This assumption is based on past State practices, and ensures that our estimated calculations are on the conservative side. The final, actual tax impact will be passed on exactly as the final State funding actually occurs.
Q. Would the district still receive State debt service aid if the voters defeat the referendum?
Q: What is a bond referendum?
A: A bond referendum is an election conducted by a Board of Education seeking voter approval to undertake capital improvement projects to a school and to finance such projects through a long term loan (a bond).
Q. Why do we need to have a bond referendum?
A. A bond referendum is the only way that a Board can borrow money to finance significant capital improvements over a long period of time. Otherwise, major improvements can only be done in very small increments over multiple budget cycles.
In addition, by bonding the projects, the school district is able to access State funding for the projects. See below “IS THE STATE PAYING FOR A PORTION OF THE PROJECT COSTS?”
Q. Why can't the district just include these projects in its annual school budget?
A. The annual school budget currently has a 2% budget cap on the local tax levy. Given this restraint, it is very difficult to fit projects of this magnitude in an annual operating budget without harming the excellent academic programs that our students deserve. Because there is a “cap” on how much the regular operating budget can increase each year, major, costly replacements cannot be undertaken through the annual budget. Additionally once installed, such major replacements last a long time, many years in fact. The Board would like to borrow for such improvements and spread the cost of the improvement over the generations that will use it rather than have the current taxpayers pay for it in one year.
How the Process Works: Educational Facilities Construction and Financing Act
Step 1 Long-Range Facilities Plan
All school districts must prepare and submit a long-range facilities plan to the commissioner of education by December 15, 2000. The document must detail the district's school facilities needs and how it will address those needs over the next five years. Computer software for the long-range facilities plan will be piloted in selected school districts during the month of August. The Department of Education will provide regional training on software use in September.
Long-range plan necessary for facilities funding-Prior to submitting an application for a school facilities project, a district must have its long-range facilities plan approved by the commissioner. The plan must comply with the "facilities efficiency standards." These standards will be published in the "New Jersey Register" shortly, and will become effective after a 30-day public comment period. Immediately upon their publication, NJSBA will make the standards available on its Web site at www.njsba.org.
Exceptions-Prior to October 1, 2000, the commissioner may approve a facilities application without the district having filed a long-range plan if (a) the project is necessary to protect health and safety of the school's occupants; (b) it is related to early childhood education programs; (c) the school facility is overcrowded; or (d) the district has received bids on the project and further delay will negatively affect the project's cost.
Time-lines-The commissioner has 90 days from receipt of a district's long-range facilities plan to determine whether it is complete. If the plan is complete, the commissioner has 60 days from the date the district is notified to determine whether to approve the plan.
Step 2 Project Approval
Any district seeking to initiate a school facilities project must submit a project application to the commissioner. The commissioner will review a district's proposed project to determine whether it complies with the facilities efficiency standards and the district's long-range plan. The commissioner must also approve additional space that exceeds the state standards, if the district demonstrates the additional space is necessary for required programs.
Time-lines-The commissioner must make a decision on a district's application within 90 days from the date on which he determines the application is complete. If the commissioner cannot make a decision within the 90-day period, he must notify the district in writing explaining the reason for the delay. Within 60 days of the expiration of the original 90-day period, the commissioner must make a decision on the application or it will be deemed automatically approved.
Approved projects-If the commissioner approves a district's school facilities project, he will calculate eligible costs of the project on which the district will be entitled to receive state aid.
Disapproved projects-If the commissioner does not approve additional space beyond that provided in the facilities efficiency standards, the district may either modify its plan or pay for the excess costs.
Step 3 Eligible Costs
New construction-Eligible costs for construction of new facilities and additions to existing facilities are calculated by determining the amount of allowable square footage (as per the facilities efficiency standards) and multiplying that square footage by $138 (the per square foot cost allowance).
As an example, a school district must build an addition to house 50 additional elementary students. The facilities efficiency standards provide for 125 square feet per elementary student. The total allowable square footage for the project would equal 6,250 (50 students x 125 square feet).
To determine the district's state aid, the square footage (6,250) is multiplied by the square foot cost allowance of $138 ($138 x 6,250 square feet = $862,500 in eligible project costs). Assuming the school district qualifies for the minimum 40 percent state aid, it would be entitled to an up-front cash grant of up to $345,000 ($862,500 x .40 = $345,000).
Renovation-Eligible costs for renovation projects equal the estimated actual costs. The estimated costs of a renovation project may contain only those costs necessary for compliance with the Uniform Construction Code, for health and safety, and/or for educational adequacy as determined by the facilities efficiency standards.
Step 4 Financing and Construction
With the exception of the Abbott districts, school boards must obtain voter or board of school estimate approval for the local share of the construction project. State funding for the project is available once the district secures financing for the local share of the project.
Referendum language-The referendum must identify the final eligible costs of the project, as determined by the commissioner, as well as those amounts that are in addition to eligible costs.
School districts with a state aid percentage of less than 55 percent-A school district with a state funding percentage of less than 55 percent can opt to receive state aid for the project as debt service aid or as an up-front cash grant. It also has the option of constructing the project on its own or using the New Jersey Economic Development Authority (EDA).
Abbott districts, school districts with a state aid percentage of 55 percent or greater, and Level II districts-Abbott districts are required to use the EDA for construction and will have 100 percent of approved costs paid by the state through EDA financing. Districts in Level II monitoring and districts that have a state aid eligibility of 55 percent or greater must also use the EDA for construction of their projects. However, when the eligible costs of a school facilities project are $500,000 or less, the EDA may authorize the district to undertake the project on its own and enter into a grant agreement with the district for the state's share of the financing.
Copyright © 1998 New Jersey School Board Association.
Educational Facilities Construction and Financing Act. (1998). Retrieved May 15, 2018, from http://www.state.nj.us/education/facilities/laws/act_summ.shtml