January 26, 2010
SAB considers cutting facilities grants
For the first time, the State Allocation Board will consider decreasing the School Facility Program grant at a hearing scheduled for today in the Capitol. The Office of Public School Construction has also proposed the board lower the developer fees index by one penny per square foot for residential rates. As with other areas of public school funding, construction grants are based on a formula driven by business conditions, so Californias struggling economy is largely to blame.The SAB annually increases pupil grants based on a construction cost index. The board increased grants by a maximum 6 percent in 2008 and since 1998, grants have risen by 80 percent for elementary and middle school grants and 75 percent for high schools.The state shares 50 percent of expenses for new construction and 60 percent for school modernization projects with local educational agencies. Wednesday, the OPSC has proposed two grant options for the board to consider, both of which would result in schools receiving less money for their construction projects. Legislation in 2006 also authorized the board to adjust grants up or down based on a study of costs and funding. A third option, as always, is that the board could take no action.The board has historically approved a grant index adjustment to the per-unhoused-pupil grant each January. The index comes from Marshall and Swift, a company that specializes in evaluating construction costs.Each year, when determining an appropriate per-unhoused-pupil grant, the SAB has a choice between two Marshall and Swift indexes: one index that charts construction costs for eight California cities, and another that charts costs for ten western states. In determining an appropriate funding index, the board has typically bounced back and forth between the two options. But for the first time this year, both indexes fell the California cities survey by 6.74 percent and the ten western states index by 6.22 percent.OPSC staff recommends using the California cities index this year, which would provide less funding for school districts than the alternative but is considered a more accurate depiction of construction costs in California.The board will also decide whether to adjust developer fees, an item that is taken up every two years. As with the grant adjustment, the board also relies on the two Marshall and Swift indexes.The companys California cities index for developer fees shows costs dropping by one penny per square foot for residential to $2.96. The commercial and industrial rate stayed the same at 47 cents per square foot over the two-year period. The western states developer fee assessment would increase funding in 2010, up three cents per square foot for residential from $2.97 per square foot in 2008 to $3.00 in 2010. With the western states model, the commercial and industrial index would again stay flat at 47 cents. For the developer fee adjustment, OPSC recommends the California cities index.
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