School Construction Grant Process

You asked for a summary of the school construction grant process and requirements. You also asked how school construction grants are calculated and for the FY 07 state reimbursement rate for Region 16. As you requested, we have highlighted major changes in the law since 2002.

To get a school construction grant for a school project, a school district must apply to the State Department of Education (SDE) and submit plans and data on the project to the department for its approval. Before applying, the district must have local approval for the local share of the project costs. Once approved, the SDE places the project on the annual school construction priority list, which it submits to the General Assembly for its approval. No grants can be paid unless the General Assembly has approved the project. The project must also comply with various bidding and contracting requirements in order to receive a grant.

Grants are based on eligible project costs, which are limited by state standards and criteria. Towns are reimbursed for from 20% to 80% of those costs, depending on the town wealth. Regional school districts are reimbursed based on a weighted average of the wealth of their component towns. Certain interdistrict projects receive a 95% reimbursement. Grants are paid on a current basis during construction (“progress payments”). SDE withholds 5% pending the outcome of a final audit.

The state recalculates reimbursement rates annually. For projects approved in FY 2007, Region 16's reimbursement rate is 67. 5%.

The first step in applying for a state school construction grant is for a town's legislative body to authorize the local board of education to apply to the education commissioner for a grant. For any grant application filed on or after July 1, 2002, the school district must secure approval for the local share of the project's funding before submitting its application to the state. Applications are made by the superintendent of schools on a form and in a manner the commissioner prescribes. To be eligible for inclusion on the commissioner's annual school construction priority list submitted to the General Assembly for approval each December 15, the SDE must receive applications by the preceding June 30.

According to state regulations, applications must include (1) educational specifications for the project as approved by the local board of education and (2) a certified copy of the legislative resolution establishing a building committee for the project and authorizing at least the preparation of schematic drawings and outline specifications and the filing of the notice of the proposed school building project. The educational specifications that must be provided are (1) a description of the project's general nature and purpose, which may include the applicant's long-range plan and the project's relationship to the plan; (2) enrollment data and proposed project capacity; (3) the nature and organization of the educational program; (4) support facilities; (5) space needs; (6) accommodation for educational technology; (7) specialized equipment; (8) site needs; and (9) any other supporting documents the commissioner considers necessary.

The education commissioner reviews project applications on the basis of categories and standards established by the State Board of Education. Each project is assigned a category based on its primary purpose. The three project categories, in priority order, are those that:

1. provide for mandatory instructional programs, physical education facilities that bring a district into compliance with federal law requiring equal facilities for males and females, or code violation corrections;

2. enhance mandatory instructional programs or provide comparable facilities for students in the same grades; or

3. provide for support facilities, other than swimming pools, auditoriums, outdoor athletic facilities, tennis courts, elementary playgrounds, site improvements, garages, storage, parking, and general recreation areas.

The commissioner must notify the district, by October 1, of the project's category. The commissioner can place the project in another category based on additional information received or developed after that notice.

Part of the application process is an SDE-scheduled design conference. Appropriate department staff, the applicant's superintendent, one member of the applicant's building committee, one representative of the architectural firm that is to design the project, and any others the commissioner requires must attend the conference. The commissioner may waive the conference, hold it by telephone or in person, or otherwise determine its scope and nature.

Except for certain projects involving emergencies or code violation repairs, no grants may be authorized without the General Assembly's approval. The commissioner must submit a priority list of proposed school construction projects, by category, with the estimated project costs and grant amounts to the General Assembly by December 15 each year. Grant estimates for projects must be determined by multiplying the town's reimbursement percentage by the total estimated project costs the applicant submits to the department.

The school construction priority list must be referred to a special eight-person committee selected by legislative leaders. The committee may approve the list or modify it if the committee finds the commissioner acted arbitrarily or unreasonably in establishing it. The committee must submit the list to the governor and the full General Assembly for approval by February 1. Although the law generally bars the General Assembly from adding projects to the SDE priority list after that date, it commonly does so by waiving the prohibition.

The commissioner must notify each applicant whose project was on the list of the General Assembly's action within 30 days after it takes action. Once the General Assembly authorizes it, the State Board of Education must enter into grant commitments for the listed projects. Then, the town must submit final project plans to SDE for approval, begin construction, and apply for funding. The commissioner may disapprove the funding application if the district does not begin construction within two years after the effective date of the General Assembly's authorization.

All contracts for school construction projects are subject to competitive bidding unless the district decides to use a state Department of Administrative Services or Department of Public Works contract. State regulations require districts to file with the commissioner notice of the date the first construction contract was executed for the project. Districts must also file final project plans in a manner the commissioner prescribes including (1) a copy of final plans and bid specifications for the project or project phase, which specify the project site; (2) a professional cost estimate for the project or phase and of any site acquisition; and (3) certification that these documents have been approved by the district and the building committee. The commissioner must review the plans and specifications for compliance with state laws, regulations, and codes.

No phase of a project may go out to bid unless the commissioner notifies the district in writing that (1) he approves the final plans and bid specifications, (2) the plans and specifications comply with educational specifications for the project, and (3) he approves the project site. Projects must comply with standard space specifications and, if the district applies for a site acquisition grant, with state standards for site eligibility.

The requirements for state plan approval and bidding do not apply to design-build projects the education commissioner authorizes under a five-year design-build pilot program established in 2002.

School building projects for classrooms or libraries approved by the General Assembly on or after July 1, 2005 must comply with the American National Standard for acoustical performance criteria, design requirements, and guidelines for schools unless adequate acoustical modifications cannot be made without compromising health and safety or the educational purpose or function of the space.

Local or regional boards of education may ask the education commissioner to waive these requirements for relocatable classrooms that will be used by the same school for under 36 months. The commissioner must grant the waiver if the board shows that it held a public hearing on the effects the required acoustical standards might have on a student's ability to learn and provided notice about the hearing to parents, students, and teachers.

When a school building project is receiving a state school construction grant, no professional or consulting fee that is based on a percentage of the total project cost can be increased because of price increases for construction materials during the project.

Architectural services contracts for state-reimbursed school construction projects entered into on or after July 1, 2006 must meet statutory standards. School districts that fail to comply with the contract standards are penalized by a 10% reduction in their project grants, determined after SDE's audit of the completed projects.

The required written agreement between a school district and a school project architect must include the architect's promise to work as an independent contractor and give good and workmanlike service. An architect must also agree to follow:

5. all applicable laws, regulations, permits, and codes of federal, state, or local agencies and court orders.

No agreement may limit the architect's liability for errors and omissions in the performance of architectural services.

Architects must keep confidential any information they obtain from a school district as a result of their contracts for school projects. They cannot sell or otherwise publish the information or use it for their own or another's benefit without the district's prior written consent. The district and the SDE own any reports and documents the architect prepares as part of the contract and the architect cannot use these documents for anything other than what the service agreement allows, unless the district gives prior written consent.

For a new school, an extension of an existing school, or the major alteration of an existing building for use as a school, a district's grant is the lesser of either its reimbursement percentage multiplied by the eligible cost of the project, or its reimbursement multiplied by the product of (1) the highest projected enrollment for the facility during the eight years starting from the date the district notifies the SDE of the project, (2) a per-pupil square foot allowance determined by SDE, and (3) the project's gross cost per square foot.

Eligible costs include the reasonable cost of construction; site preparation and development; equipment and furnishings for the site or building; architectural, engineering, or construction management charges; and ordinary and reasonable legal fees. Any federal or other state grants received for constructing the building must be deducted from the total project costs before the grant is calculated.

The education commissioner can approve reimbursement for otherwise ineligible repairs and replacements on renovation projects if (1) the district's application for the project is filed after June 30, 1995 and (2) the district documents the need for the work and the savings to both the district and the state. Renovation projects are exempt from the SDE's standard space specifications if SDE receives the application for the project after June 30, 1995. A renovation project is one that totally refurbishes an existing building into a school with the same useful life as a new school but that costs less.

Starting July 1, 2005, very small school districts are exempt from standard per-pupil space limitations for reimbursable costs. To be exempt, a district must have a total enrollment of fewer than 150 students in grades K-8. The education commissioner must modify the standard limits for school construction projects in such districts. In practice, the exemption applies only to Union.

SDE must approve the final plans for all construction work on any “turn-key” school project for which a school district makes a grant application on or after July 1, 2006. In a “turn-key project,” a school district buys a building after another party builds or renovates it according to an agreement with the district. These projects may be exempt from standard space rules and districts can be reimbursed for otherwise ineligible repairs to a turn-key building, if the district documents that (1) the work is needed, (2) buying the turn-key facility will cost less than building the project in a different way, and (3) the facility will have a useful life comparable to a new building.

The state reimburses school districts for from 20% to 80% of eligible school construction costs. To determine the reimbursement percentage, towns are ranked from 1 to 169 according to their adjusted equalized net grand lists per capita. The poorer the town, the higher the reimbursement percentage. Regional school districts receive a reimbursement percentage based on the weighted average of the wealth of their component towns. K-12 districts receive an extra 10% and high-school-only districts receive an extra 5%.

The law also allows bonuses for certain projects designed to provide space for school readiness programs, the interdistrict school choice program, or the state's K-3 class size reduction and all-day kindergarten programs in priority school districts. The maximum reimbursement for a district project, even with bonuses, is 85%. The reimbursement rate for interdistrict magnet school, regional vocational agriculture, and regional special education facility projects is 95% of eligible costs.

Starting July 1, 2006, for school projects costing more than $ 10 million, state reimbursement for construction change orders and other change directives is limited. If change orders total more than 5% of the project's authorized cost, the reimbursement for any amount exceeding 5% is reduced to half of the otherwise eligible amount. A “change order” is an amendment to a school construction project that does not have to be publicly bid but must be approved in advance by SDE.

SDE must submit for legislative reauthorization any project whose cost or scope has increased by at least 10% since its previous authorization. Starting with the December 2006 project list submitted to the General Assembly, SDE must list projects being submitted for a second reauthorization separately. Starting July 1, 2006, (1) SDE can submit a project for legislative reauthorization only twice and (2) no school project not previously authorized as an interdistrict magnet school can receive a higher percentage reimbursement through a legislative reauthorization.


September 25, 2006		2006-R-0595
SCHOOL CONSTRUCTION GRANT PROCESS

By: Judith Lohman, Chief Analyst