School Facilities Funding & Policy Legislation in the 2019 Session
The Build to Learn Act
On March 15, the House Appropriations Committee approved House Bill 727 with amendments, and provided a detailed one-page outline of the bill as amended.
• Authorizes $2.2B in MSA revenue bonds (30 year bonds). Paid for by $125m ETF beginning FY 2021. Allocates $2.2B in the bill as percentages to counties.
• In order to participate, school systems and counties must have MOU with MSA approved by lAC.
• LEAs choose whether to have MSA manage the project. If opt to use MSA, must be part of MOU. (Baltimore City must use MSA.)
• School construction projects subject to same lAC rules, procedures and approvals as any other project, or as agreed in MOU if MSA managing projects.
• Revenue bond proceeds represent State share of eligible costs for the projects; counties must provide local share and any ineligible costs (except as described below for small systems).
• In using the bond proceeds under the program, LEAs must give priority schools that are the oldest buildings in the system with significant facility deficiencies, schools with high concentrations of students eligible for free and reduced price meals, and schools with high number of relocatable classrooms.
The bill also includes provisions for the use of public private partnerships in Prince George’s County and an expanded definition of eligible costs for small school systems.
Also, see below for much more information on the status and MABE’s positions on state regulations and background on the landmark 21st Century School Facilities Act of 2018.
School Facilities Funding & Policy Issues
IAC Proposed Regulations
On October 11, 2018 MABE hosted a meeting of school facility planners to provide a forum for their discussion on the proposed draft regulations, originally distributed on Sept. 5, 2018, governing the Public School Construction Program and to implement the 21st Century School Facilities Act of 2018. The outcome of the meeting was the agreement to develop a set of comments on the proposed regulations, but also to identify several major concerns relating more broadly to communication and the policy-making process. MABE greatly appreciates that this is a time of momentous change as the State shifts from a decades-old process of IAC and Board of Public Works governance, to the newly restructured IAC. The following comments were submitted on Oct. 30, 2018. The regulations were scheduled for action on Nov. 15, but consideration was postponed.
Knott Commission Bill – The 21st Century School Facilities Act
House Bill 1783 was passed through a gubernatorial veto override on March 5th, 2018.
House Bill 1783 was introduced on March 1 and heard in the House Appropriations Committee on March 7. See the bill’s Fiscal and Policy Note for more detailed information. This bill is aligned with the recommendations adopted by the Knott 21st Century School Facilities Commission and its Final Report.
House Bill 1783 was amended to address major concerns raised by MABE and others, including amendments to clarify that no action will be taken on developing a school facility index or ranking system to override local priorities; and the removal of the section of the bill calling for a study of no longer providing state funding for systemic renovation projects (roofs, HVAC, etc.).
A major amendment was adopted to remove from the Board of Public Works any final decision-making authority on school construction projects. Instead, all final decisions on 100% of state funding for school construction projects will be made by an expanded and restructured Interagency Commission on School Construction.
The Committee also adopted an amendment to create a $10 million annual school facility safety fund.
Knott Commission Final Report
- First, responsibility for the design, construction, and maintenance of public school facilities is best left primarily to local school systems.
- Second, the State has a critical and appropriate role in overseeing the construction of public school facilities in the State but should, within reasonable boundaries, minimize the burden on local school systems and offer flexibility to accommodate local priorities.
- Third, the State must focus its limited resources on critical areas of need, especially in low-wealth jurisdictions including those with a higher proportion of students living in poverty and those experiencing excessive enrollment growth;
- Fourth, resource limitations at both the State and local levels mean that more needs to be done to encourage innovative strategies that either reduce capital and/or facility operating costs or use public funds to leverage private resources; and
- Finally, the entire process of designing, funding, building, and maintaining public school facilities must be fully transparent.
MABE extends much thanks to Warner Sumpter, MABE’s former president and Somerset County board member, for his years of dedicated service as MABE’s representative on the Knott Commission. MABE encourages board members and all those interested to read the brief but recommendation-packed Final Report of the Knott Commission. MABE anticipates and will be reporting on legislation to implement the Knott Commission recommendations.
Senate President Thomas V. Mike Miller, Jr. and House Speaker Michael E. Busch announced in December of 2015 the formation of a commission to review the State’s school construction policies and make recommendations for more efficient and effective school construction practices into the future. The 21st Century School Commission is chaired by Martin Knott, President of Knott Mechanical, a mechanical services company. The Commission is comprised of private sector representatives from the construction services and development industry; local government and educational members; as well as State officials. A press release issued on April 19th announced the Commission roster and provided additional background information. MABE has been represented on the Commission by past president Warner Sumpter.
On January 22, 2018, the Knott Commission presented its Findings and Recommendations to the House Appropriations Committee.
On December 14, 2017, the Knott Commission adopted final recommendations. The Commission considered and approved, with only minor changes, all of the recommendations developed by the Subcommittee on Funding and the Subcommittee on Process, Procedures, and Educational Specifications. In addition, the Commission adopted several alternative recommendations.
The Department of Legislative Services maintains a 21st Century School Facilities Commission webpage.
Knott Commission Final Recommendations
On December 14, 2017 the Knott Commission adopted more than 30 recommendations, including several significant changes in state law and practice concerning school construction funding and procedures.
Major funding recommendations include:
- Conduct a statewide facility assessment using a uniform integrated data system; and continually update the assessment.
- The State’s short-term funding goal should be at least $345 million; increased to $400 million after FY 2019; and determined by the results of the facility needs assessment, which may result in a higher goal.
- Explore creating a school construction authority to accelerate school construction funding.
- Consider increasing the share of state funding for projects with costs materially below the regional average cost.
- Consider allowing school systems to enter into lease agreements that allow entities other than the school system to own the building.
Major process recommendations include:
- Final project proposals should be subject to review and approval by IAC.
- Eliminate the required DGS review and IAC approval of design and construction documents for those school systems that complete a voluntary certification process.
- Repeal the requirement that all schools undergoing renovation qualify as emergency management shelters.
- Require local school systems to report annually on their preventive maintenance schedules and the preventive maintenance measures they have carried out on all major functional systems in each of their school buildings.
Knott Commission Background & Highlights
The Commission’s charge included:
- Reviewing existing educational specifications for school construction projects and determining whether the existing specifications are appropriate for the needs of 21st century schools
- Identifying best practices from the construction industry to determine whether there are efficiencies that can be made in the construction of public schools and charter schools
- Identifying a long-term plan for jurisdictions with growing enrollment, as well as maintaining facilities in jurisdictions with flat and declining enrollment
- Identifying areas where innovative financing mechanisms including public-private partnerships, as well as alternatives to traditional general obligation debt can be used for construction and ongoing maintenance
- Determining areas for efficiencies and cost-saving measures for construction and maintenance
- Evaluating the appropriate role for State agencies including the Maryland Department of Planning, Department of General Services, Board of Public Works, as well as the appropriate statutory structure for the Interagency Committee for Public School Construction
- Reviewing the relationship between State agencies and local governments on school construction projects
- Reviewing the Kopp Commission findings and progress toward implementation
In January of 2017, the 21st Century School Facilities Commission submitted a brief progress report of the work accomplished during 2016. Link to Knott Commission Interim Report
“The commission’s charge from the Senate President and Speaker of the House focuses on a critical set of issues related to improving school construction in Maryland. As the commission started delving into the issues outlined in the charge, there was a quick awareness that more time would be needed to sufficiently examine all of them and to develop concrete recommendations. This progress report highlights four major themes that emerged from the eight meetings held in 2016 as a result of the expert presentations and information discussed at the meetings and the input of the commissioners themselves with the varied backgrounds and expertise that they brought to the deliberations. Other themes, in addition to the four major themes, are also identified for further examination in 2017. While consensus was reached on these themes, the commission would like additional time to make specific recommendations.”
The interim report outlined the major themes to pursue following the 2017 legislative session regarding flexibility, cost efficiency, and the role of the Interagency on School Construction (IAC). Findings included:
- State/IAC review of LEAs should be differentiated based on LEA’s previous experience in construction and maintaining schools and capacity of the LEA (i.e., ed specs, schematic design, design development, construction documents, project contract, change orders);
- Shorter/limited review of projects for LEAs that have good track record in school construction and maintenance will allow the IAC to focus more resources on LEAs that need additional technical assistance;
- Schools should be built to allow flexibility in spaces and uses in the future;
- School construction review process should be streamlined wherever possible – too cumbersome, time consuming, bureaucratic, and ultimately expensive – while maintaining accountability for State investments;
- Reduce the duplication of effort at the State and local levels (i.e., ed specs, schematic design, design development, construction documents, contracts, change orders etc.);
- Encourage LEAs to take advantage of what is already allowed under State law and regulations by providing monetary or procedural incentive/pilot programs: Alternative construction methods and materials, Alternative project delivery, Innovative design, Alternative Financing, Use of Prototypes/Repeat School Design (Limit State review to changes from previously reviewed prototype);
- State/IAC should be clearinghouse for research-based best practices in all areas of school design and construction;
- State/IAC should research and provide technical assistance for innovative design/construction materials/project delivery/energy conservation etc. and then partner with LEAs to pilot promising practices.
MABE Priorities & Positions
For MABE and Maryland’s 24 local school boards, the mission to provide all of Maryland’s students with high performing school facilities conducive to learning is a top priority. The Maryland Constitution requires that the State provide a “thorough and efficient” system of public education. MABE believes that this includes the duty to equitably provide safe, high quality school facilities in which all students can learn. Key areas of concern for local boards include rising costs of construction, unmet demands for new construction and renovations to upgrade aging schools and increase capacity, and escalating costs of deferred maintenance. Other cost drivers include Maryland’s prevailing wage requirements and Leadership in Energy and Environmental Design (LEED) standards. MABE supports optimizing local flexibility to achieve cost savings and efficiencies through alternative methods of project delivery, alternative financing, and cooperative purchasing. Importantly, today it is widely recognized that $350 million per year better reflects the base amount of the state share of the costs of construction to meet school facility needs than the $250 million amount recommended by the Kopp Commission more than a decade ago.
MABE Leaders Testify
On July 21, 2016 MABE leaders testified before the Commission, including President-elect Donna Brightman, Legislative Committee Chair Joy Schaefer, and Legislative Committee Vice-Chair Stacy Korbelak.
Ms. Brightman requested the Commission’s best efforts to develop recommendations to improve Maryland’s public school construction program. Specifically, she requested the Commission’s pursuit of changes in law, regulations or procedures to facilitate the availability of alternative financing methods for school facilities projects. She emphasized that MABE has adopted a legislative position which “supports the pursuit of innovative funding policies and strategies to maximize the capacity of state and local bonding authority in support of school facility project funding.”
Alternative financing refers to financing a project completely or partially using approaches other than traditional revenue bond financing or pay-as-you-go (PAYGO) financing. Alternative financing methods include sale-leaseback arrangements, lease-leaseback arrangements, public-private partnership agreements, performance-based contracting, and design-build arrangements. MABE supported the School Facilities Act of 2004, which enhanced efforts to address Maryland’s public school facility needs by providing clear statutory authority for local boards and governments to utilize alternative financing methods.
Ms. Brightman highlighted several examples of successfully completed school projects which were financed through the sale-leaseback or other alternative financing approach. She observed that the merits of alternative financing are often very case-specific, but these methods can also generate much needed revenue when traditional financing methods are lacking. (read more)
Ms. Schaefer requested the Commission’s recognition of local discretion in the use of repeat or standardized school designs; and changes in the law to lessen or mitigate the impact of prevailing wage rates on school construction project costs. She emphasized that local boards are accountable to our local communities to design, build and maintain outstanding school facilities for student learning. Local school systems not only develop capital improvement plans (CIPs) and construct and maintain school facilities in accordance with adopted procurement and construction laws and regulations, but also strive to reflect our community preferences and priorities. Therefore, MABE believes that local school systems should remain able to prioritize project requests according to locally established criteria, and opposes any state mandated standard school designs or school sizes for elementary, middle or high schools.
Ms. Schaefer highlighted that, in light of the cost savings that can be achieved, MABE does encourage local school systems to consider the use of repeat school designs, and knows that many systems have benefitted from doing so. She shared that the Frederick County Public School System (FCPS) has been utilizing standardized school designs, or prototypes, at every level (elementary, middle and high) for decades. Benefits include: cost savings and cost avoidance through decreased costs in architectural and engineering fees (10-20% per project), more efficient and accurate bid process, the opportunity to refine design with each iteration resulting in further cost reduction through value engineering or design improvements, and the provision of equitable facilities across the system. FCPS notes the following challenges in using standardized, prototype designs: limitations as a result of unique, unpredictable school sites, the need to update or change designs in response to changes to construction requirements or new/additional programmatic demands. Lastly, Ms. Schaefer reiterated that in the interest of cost containment, MABE supports repealing or limiting the scope of prevailing wage requirements as they apply to school construction projects. (read more)
Ms. Korbelak requested a $100 million annual increase in the minimum state investment in school construction, for a total of $350 million. She informed the Commission that adequate funding for school maintenance is essential to allowing school systems to preserve aging school facilities while at the same time moving forward on major renovation and school construction projects. Although school construction costs continue to escalate and existing facilities continue to age, local boards are tasked with providing school buildings in each of our communities that are able to address the needs of ALL learners. For MABE and Maryland’s 24 local school boards, the mission to provide equitable school facilities to all of Maryland’s students is a top priority.
She noted that adequately maintaining school facilities requires significant investments from both state and local governments, in part because the General Assembly has enacted significant mandates affecting school construction procedures and project costs, including strict environmental design standards and minority business enterprise contracting participation standards; and the recently expanded scope of prevailing wage rates. Under the current $250 million approach, we’re finding that project costs that dramatically exceed projected cost estimates means the anticipated state and local appropriations for pending projects just aren’t enough. (read more)
For more information, contact John R. Woolums, Esq., MABE’s Director of Governmental Relations, at firstname.lastname@example.org or 410-841-5414.