Chapter V

School Construction

Connecticut provides school construction grants to towns for projects undertaken by local school districts, regional school districts, regional education service centers, endowed academies (subject to conditions), and approved interdistrict schools. Each town or regional district is eligible to apply for a grant that will provide partial reimbursement for school construction costs.

Eligible/Ineligible Costs

Projects that create new facilities or alter existing ones to provide or enhance instructional programs are generally eligible for school construction grants. Also eligible are projects intended to remedy code violations and supply comparable facilities among schools and grade levels within a school district. Infrastructure improvement, such as installing wiring and cable or other system upgrades to support telecommunications, is another category of eligible projects.

Further clarification of eligible projects is found in the State Board of Education's regulations which summarize eligible costs as:

• the costs of acquiring, constructing, altering or renovating buildings or structures;
• site preparation and development costs incurred on and for a school site construction project;
• equipment and furnishings for such school buildings or school site construction projects;
• architectural, engineering, construction management and legal fees ordinarily and reasonably necessary to the above costs; and
• bond issue costs incidental to financing the above costs, including bond advertising, preparation and printing of official statements, and bond execution costs.

Generally, school construction projects related to repair, replacement, or maintenance are not eligible for reimbursement. A major exception is work specifically required for correction of cited code violations or the replacement of roofs greater than 20 years old, which are eligible for reimbursement, and roofs between 15 and 20 years, which are eligible for reimbursement on a prorated basis.

Also not eligible for reimbursement are projects comprised solely of the following:

• stand-alone equipment and/or furnishing purchases, except for regional vocational agriculture center;
• stand-alone site acquisition, except for special situations for priority school districts;
• swimming pools;
• auditoriums;
• outdoor athletic facilities;
• tennis courts;
• elementary school playgrounds;
• site improvements or garages or storage; and
• parking or general recreation areas.

However, such projects can be eligible for some level of reimbursement if they are a minor component of a comprehensive project and there is an integral relationship between this work and the comprehensive project. In the case of a swimming pool, auditorium, tennis court, or outdoor athletic facility, where such work does qualify its reimbursement rate is set at one-half the reimbursement percentage assigned to the overall project.

Reimbursement Calculation

Towns are reimbursed for eligible costs based on a rate determined by their relative wealth rank. By state statute the poorest town's reimbursement rate is set at 80 percent and the wealthiest is fixed at 20 percent.

The rates for single town districts falling between the poorest and wealthiest districts are based on where the town's wealth rank places it on a continuous scale ranging from the 80 percent reimbursement rate for the poorest town to the 20 percent rate for the wealthiest. For example, the second poorest town would be reimbursed at a rate of 79.64 percent, the third at 79.23 percent and so on until reaching the wealthiest town's rate of 20 percent.

The reimbursement rates for towns in multi-town school districts are determined using a population-weighted methodology. The population of each district town is multiplied by its adjusted equalized net grand list per capita ranking (i.e. a measure of wealth) and the results are summed. Dividing the total by the district's combined population yields a number that is rounded and used to determine the reimbursement rate applicable to each town in the district.

In the case of a magnet school, regional vo-agricultural school, or regional special education project, the reimbursement rate is set at 100 percent.

Under certain circumstances, the percentage a district is eligible to receive in the form of a reimbursement may be adjusted upward. These statutorily mandated adjustments include:

• in the case of a secondary regional school district, the sum shall be increased by 5 percentage points, except no such percentage shall exceed 85 percent;
• in the case of a K-12 regional school district the sum shall be increased by 10 percentage points, except no such percentage shall exceed 85 percent;
• in the case of a cooperative arrangement, the percentage shall be increased by 10 percentage points;
• if an elementary school building project includes space for a school readiness program, the percentage determined by the above shall be increased by 5 percent, but not to exceed 100 percent for the portion of the building being used for readiness;
• if the school building project is used to convert a school building to a lighthouse school, the percentage shall be increased by 5 percentage points;
• if the school building includes out-of-district students participating in an interdistrict program, the percentage shall be increased by the percent of spaces attributable to the out-of-district students up to a maximum increase of 10 percentage points; and
• if the school building is in a priority school district or is a priority school and the project is necessary to offer full-day kindergarten or reduce class size the percentage shall be increased by 10 percentage points for the portion of the building used for such purposes.

It should be noted that simply applying a town's reimbursement rate to the estimated total project costs might underestimate the local share. The miscalculation can occur because not all expenses are eligible for reimbursement and some costs may only be eligible for limited reimbursement.

Award Process

The process for obtaining a school construction grant begins with the authorization of a local legislative body for the board of education to apply to the commissioner of education for a school building grant. The actual application is made by the superintendent of schools on the form provided by the commissioner of education. Among other items an applicant is required to include are:

• certified copies of all local legislative authorizations;
• purpose of the project;
• educational specifications for the project;
• the board of education's written approval of the education specifications;
• cost estimates and related worksheets;
• financing information;
• square footage of the project;
• enrollment projections over the next eight years; and
• grade range.

School construction grant applications fall into two broad categories. One category is known as Non-Priority List projects and includes applications for projects intended to remedy damage from catastrophic events, correct code violations, replace roofs, or relocatables.

Non-Priority List projects are subject to the review and approval of the commissioner of the State Department of Education. The commissioner may issue grant commitments for Non-Priority List projects at the time a completed application is received and approved. Non-Priority List projects are funded under a general bond authorization set by statute.

The other school construction grant category is titled Priority List projects and includes such things as new schools, building renovations, building purchases, new technology infrastructure, and vocational agriculture equipment. Applications for Priority List projects must be submitted to the commissioner of Education by June 30 for consideration by the General Assembly and governor during the following calendar year. A final grant commitment can only be made if the project is approved by the General Assembly and signed into law by the governor.

The commissioner has the authority to receive, review, and recommend to the governor and General Assembly approval or disapproval of all Priority List applications based on whether the request is in compliance with requirements of the State Fire Marshal and the Department of Public Health, has a life-cycle cost analysis approved the Department of Public Works (if applicable), and meets the standards or priorities set by the State Board of Education.

In reviewing the grant request the education commissioner and education department staff consult with the applicant on any matter that is unclear or appears ineligible for reimbursement. At the conclusion of the review, the commissioner assigns Priority List project applications to one of three categories described below:

A. to provide for mandatory instructional programs (typical examples: new school, additions necessary due to increased enrollment, addition to women's locker room to comply with Title IX);

B. to enhance mandatory instructional programs and provide for comparable facilities among schools to all students at the same grade level or levels within the district (typical examples: extension of media center to make comparable with another school, purchase vocational agriculture equipment, new school to replace one in disrepair); or

C. to provide supportive services other than athletic, storage, parking, or recreational facilities (typical examples: window replacements, relocate central administrative offices).

In the late fall applicants are sent a letter notifying them of the category to which their project has been assigned. The commissioner prepares a list of eligible projects organized by category and submits it to the governor and General Assembly on or before December 15, with a request for authorization to enter into grant commitments.

A committee from the General Assembly composed of two members appointed by the speaker, two by the House minority leader, two by the president pro tempore of the Senate, and two by the Senate minority leader reviews the list and determines if each project is in compliance with the categories and State Board of Education standards. The committee may modify the listings if it finds the commissioner has acted in an arbitrary or unreasonable manner.

The committee after reviewing the list and if necessary seeking clarification from the State Department of Education submits an approved or modified list to the governor and General Assembly's Education Committee by February 1. After passage of the bill containing the listed projects and related cost estimates, the commissioner of education is required to enter into grant commitments with the authorized projects.

Each approved project has until June 30 of the year following the legislative authorization to notify the State Department of Education that funds for the local share of the project have been authorized. The commissioner may grant up to three one-year wavers of this requirement. The department of education must approve the project's plan before work can start. If construction does not begin within two years of the legislative authorization or any extension granted by the commissioner, the commissioner may disapprove the project.

For projects approved prior to July 1, 1996, or for which an application was submitted prior to July 1, 1997, the district was required to finance 100 percent of the project and the state paid its share in amortized payments to the district over a 20-year period for projects with costs over $2,000,000 and over a 10-year period for projects with costs under $2,000,000. Public Act 97-11 of the June 1997 Special Session changed this procedure. Now the district is only required to finance its share of the project. The state's portion of the eligible costs is paid based on the progress made toward completing the project.

Analysis

The driving force behind the state's financial commitment is the number and scope of the construction projects school districts choose to undertake. The state has no direct control over the quantity or dollar value of projects for which the districts seek reimbursement. If a district submits an application for an eligible project it is likely to be accepted by the commissioner of education, placed on the Priority List, and approved by the General Assembly and governor. It will then be funded based on the reimbursement rate derived from the appropriate formula set forth in the state statutes.

In discussing school construction grants it is important to distinguish between commitments and expenditures. Commitments represent an estimate of the cost of projects approved by the General Assembly and governor. If in the opinion of the commissioner a project changes significantly in scope or cost the commissioner has the authority to submit the revised project to the General Assembly and governor for reauthorization. It is also possible for a project to be withdrawn by the district or never obtain final approval of the commissioner.

Table V-1 shows the number and estimated value of the commitments the state made from 1997 through 2001. The data are broken down into new commitments and substantial revisions in previously made commitments. The table shows there is considerable variability within both categories. New commitments range from 117 to 201 in number and from $240.4 million to $846.9 million in the estimated dollar value. Similarly, the number of previously authorized projects that changed substantially in scope or cost ranged from eight to 39 and in dollar value from $37.5 million to $118.3 million.

The data graphed in Figure V-1 represent expenditures not grant commitments. The meaning of this can be illustrated with an example. Suppose a district received grant commitments for school construction projects in 1986, 1993, and 2000 and the payments for each project were spread over 20 years. The payments received from the state in 2000 for the projects authorized in 1986 and 1993 would be summed and counted as state construction aid expenditures. Money associated with the year 2000 commitment would not likely show up as an expenditure until 2001 at the earliest, since it is doubtful the project would get underway before then.

In terms of actual dollar amounts Figure V-1 shows a substantial and increasing sum of money was expended on school construction grants from 1997 through 2000. In 2000 the state spent slightly more than $400 million on school construction, which was approximately 2.75 times more than the amount the state spent in 1997. Certainly, a part of the increase in construction expenditures is due to the state's move to a pay as you go system for projects approved after 1997.

Figure V-2 shows a comparison of the rates of change in state aid to school districts for construction and all other state education aid. In only one of the four years depicted (1997) did the rate of increase in school construction aid fall below the rate of increase in spending on all other state educational aid programs. The graphic also shows school construction aid grew at a much faster pace than did overall education aid from 1997 to 1999.

The rapid increase in value of grant commitments and expenditures may be cause for concern. If the recent pace were to continue at some point the amount of money the state would have to commit to borrow or fund through taxes might pose a problem. Connecticut cannot infinitely increase its expenditures in this area without eventually having to either reassess the program or its priority relative to other programs and priorities in an outside the education area.

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