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School Board Member's Guide to Purchasing

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U.S. Department of Education: Conducting a Safety Audit 

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U.S. Department of Education: Conducting a Safety Audit 

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March 2005

Although federal legislation has focused attention on upgrading curricula, teacher qualifications and testing standards, school districts continue to fall behind on modernizing schools. A National Education Association study in 2000 estimated the cost to repair and modernize America's schools was more than $300 billion. Many school districts are hard-pressed to fund needed upgrades, so they postpone major changes as long as possible. However, rapid changes in technology, new government mandated programs and unsafe conditions are making delay increasingly detrimental.

Three factors generally trigger a decision to take a serious look at an aging school: health and safety deficiencies, outdated or poorly operating building systems, and program changes.

Before a school district embarks on a major renovation project, it must determine whether it is better to replace the existing facility with a new school. Maine mandates such a study before it allocates monies. Some states also are beginning to offer financial incentives for reusing older buildings that are salvageable. While sometimes the cost of replacing outdated systems, upgrading life and safety deficiencies, and accommodating program expansions within existing K-12 schools far exceeds the cost of building a new facility, there may be good reasons for to renovate an older building rather than build a new one.

Question of character

Generally, schools built in the 1950s or earlier have impressive architectural character and often are fixtures in their neighborhoods. They are structurally sound and can accommodate new systems. In addition, there is often strong sentiment to keep them in some form.

Newer schools built in the 1960s and '70s generally lack architectural character, are not energy-efficient and are constructed of cheaper materials. These get torn down more often or become hand-me-down conversions from high schools to junior highs or from junior highs to elementary schools.

For schools built in the 1980s, the dilemma is not so much whether to replace or renovate but how to add to the structure in an economical and aesthetically pleasing manner.

Another important reason why older buildings are renovated is because there is no new land available to move the school or the available land is prohibitively expensive.

A final factor is whether a renovation can be undertaken while a school is in use. If the goal is to continue to occupy the building, developing a phased construction schedule, which separates construction from occupied areas, is critical.

It is impossible to generalize. Community needs and sentiment, facility deficiencies and economics all play roles. Renovating can simply be the right thing to do, make the most economical sense or provide a school district with the right space given available funds. One thing is certain: Renovating older schools is challenging.

Health and safety upgrades

The news is rife with stories about unsafe and unhealthy schools that are unexpectedly closed because of mold contamination, indoor air quality problems or other unsafe conditions. Safety and health problems leave little room for procrastination. The immediate problem can be diagnosed and fixed, but the situation triggers a serious review of all systems.

A major cause of many indoor air quality problems relates to poorly ventilated spaces. Older schools often were designed without ventilation systems; with the exception of some unit ventilators, open windows served that function. Even the ventilation provided in more recent schools does not always meet codes for outdoor air.

Other health- and safety-related issues that can trigger major upgrades include electrical systems that are inadequate and unsafe, lack of sprinkler systems, asbestos in flooring and pipe insulation, inadequate fire alarm and emergency systems, poorly designed access measures to meet ADA requirements, and inadequate or nonexistent security systems.

Often, the cost of bringing an older school building up to present-day safety, health and access codes can be considerable, adding 10 to 20 percent or more to a budget. Even so, if the basic structure of a building is sound and has not been substantially modified, renovating the building and replacing systems may very well turn out to be the more economical solution.

If updating spaces to accommodate newer or different uses results in significant reconfiguration of walls, however, then the cost may increase dramatically. Again, the type of construction and the materials used will also affect the cost of a renovation. Load-bearing concrete or masonry walls will be more costly to modify than walls of stud construction. Removing load-bearing walls to reconfigure program space may now involve reinforcing the structure, adding columns and beams, and underpinning foundations, which add significant cost.

System upgrades

Most mechanical systems with regular maintenance have an average life of 20 to 30 years. Upgrading them is a prudent but expensive step. However, upgraded systems can provide economic benefits. Today's mechanical systems come with sophisticated controls, are more dependable and are highly energy-efficient. Individual spaces can be controlled with sensors that can lower temperatures and ventilation rates when a room is unoccupied. The impact of the sun can be modeled and a control system designed to accommodate the increased or decreased amount of solar heat.

Design guidelines such as ASHRAE 90.1 provide energy guidelines that can be used as a minimum benchmark for upgrading or replacing mechanical systems.

Efficient, modular boilers can be used, minimizing stand-by losses. Radiant floor heating systems operate at temperatures between 90 and 115 degrees and not the 180 to 190 degrees required in more traditional systems. In areas where air conditioning is required, today's cooling systems run on 0.60 to 0.80 kw per ton of cooling, versus older systems that require 1.0 to 2.0 kw per ton of cooling. The energy and operational cost savings in newer HVAC systems can be considerable and result in a 5- to 10-year payback. Some states have established energy guidelines for schools and offer financial incentives to schools using highly efficient systems.

Electrical systems

Electrical systems designed two decades ago are inadequate for today's technology. Older classrooms often have extension cords and a variety of other cables snaking around the sides of the room and up and down walls to accommodate an abundance of projectors, computers and other teaching technology. Many teaching spaces now include a computer for the teacher, two or more computer workstations for student use, television monitors, videocassette and DVD players, video projectors and enhanced sound systems. All of these devices require more power and more cable. The use of wireless technology does eliminate some of the visible wiring, but it does not completely eliminate the significant increase in the electrical needs of a modern school.

New high-efficiency lamps, multiple lighting levels, direct and indirect lighting, occupancy sensors and light monitoring sensors, and other devices can provide greater control and improved comfort in the classroom. Many older schools still use T-12 fluorescent lamps. In modern schools, it is more common to use the energy-efficient T-8 and T-5 lamps. This change alone in a large school can save considerable amounts in operating costs. For quality of light, the best fixtures are direct/indirect fixtures. These throw light on the ceiling as well as on task surfaces and the illumination is uniform and without glare.

Recent studies have shown that adequate lighting and, in particular, daylight can increase student achievement. Windows in older buildings that were boarded up in the '70s in the name of energy efficiency took what used to be bright, naturally lit, albeit drafty, classrooms and reduced them to dark caves with no change in the electric lighting. Providing adequate windows that are energy-efficient and help reduce reliance on electric light may improve academics while reducing costs.

Once a building is slated for renovation and the structure is fully evaluated, building envelope issues inevitably arise, such as an inadequate roof structure and leaky windows. Reroofing an older building may require upgrading the structure because of changes in codes. For example, snow loading codes have dramatically tightened.

Older windows usually are single pane and don't function properly. Schools of the '60s and '70s may have used a curtainwall system that is not energy efficient.

Program upgrades

Over the last four decades, state and federally mandated programs, usually unfunded or under-funded, have become a significant challenge for schools. Schools are hard-pressed to find spaces for many of these programs. Closets become meeting rooms; classrooms get divided; hallway dead ends are partitioned.

In addition, changing teaching methods and educational practices require radically different types and sizes of teaching spaces. An example is common spaces where several classes of students can meet at the same time to work together, create large projects or participate in interdisciplinary learning. This modern curriculum will require much greater access to infrastructure, such as power, data, plumbing and mechanical systems, than is available in older buildings. Schools have also become centers of community activities, which require specialized spaces as well.

Aesthetic gains

While aesthetics alone rarely trigger a major renovation, appearance is an added benefit and major focus once design begins. Skeptics may question the viability of turning a tired school into a bright, attractive environment that enhances learning during the abandon-or-renovate analysis. Invariably, the final product will dispel any lingering doubt. Teachers, students and administrators have the opportunity to create environments, in conjunction with the architect and interior designer, that enhance and support their educational philosophy.

Cost and sensitivity to the original design have a lot to do with how a renovation turns out. When it comes to adding on to an older building, it can be relatively easy to match the materials and detailing of the original depending on the style. On much older buildings, this may not be so easy or cost-effective.

Assessments are key

Good school facility executives are generally up to speed on what needs to be upgraded, even before an architect or engineer is hired. They are looking for confirmation as well as the expertise that an architect has to offer. If a school does not have a facility executive or the expertise to know what needs to be upgraded, then the school may look to an architect or engineer to do the evaluation and analysis, and present that information to the school board or building committee. A good analysis should be comprehensive and look at all aspects of a building, documenting the condition of each component, estimating the life expectancy, and determining the cost of replacement or upgrade.

Maine requires every school department or district to do a building assessment on every building and to analyze all of the above items. These assessments must include energy use and maintenance costs. Then these items are compared with new buildings to evaluate how well the building is performing. Schools cannot receive funding from the state's renovation fund without first doing the assessment. The proposed upgrades need to be prioritized and budgeted. Maine considers life safety issues to be a top priority, building system upgrades as a second priority and new or renovated program space as a third priority.

Surprises and contingencies

With any renovation, there will be surprises. Few schools have copies of original drawings. Even if drawings do exist, past renovations or additions may not be documented. Some schools do renovations and additions themselves, and there is no documentation. Even the best set of documents, however, may not provide every answer.

There will always be hidden elements that no one can predict, such as deteriorating structural elements and mold. Asbestos removal, lead paint and other hazardous building products also must be removed.

Not knowing how a building was constructed, what is above the ceiling or behind the walls, or what the foundation is really like can make it difficult to assess renovation costs. That's what contingencies are for.

Contingency plans for renovations should include flexible approaches to accommodate surprises. For example, don't demolish the existing kitchen until the new kitchen is up and running, and keep temporary classrooms on site in the event that classroom space is needed. In addition to the planning to accommodate schedule changes, set aside money for unforeseen conditions. Existing utilities and foundations may not be exactly where expected nor properly dimensioned on old drawings. This often leads to on-site adjustments.

Benefits

There are significant benefits to renovating older schools. The older the school, the more it is viewed with considerable sentiment, particularly if it occupies a prominent location in a community. Keeping these schools enhances a community's traditions and history. A second benefit is an economic one. New building systems will reduce maintenance and operational costs, as well as provide an environment as good as any found in a new school. A final benefit is related to health and safety. Older schools, not slated for abandonment, need to provide safe and healthy environments for students and teachers.

An older school can be transformed into a vibrant, lively, efficient place of learning. Projects all over the country have proven that.

Jeffrey Larimer, AIA, is an associate, and Clif Greim, PE, is a principal with Harriman Associates in Auburn, Maine.

One school's choice: Renovation and expansion provide more room on a prime site

A central location and sentiment won out when the town of Scarborough, Maine, addressed solutions to its severely overcrowded high school. Rather than starting with a clean slate, the town chose to expand and renovate the existing facility. Once this decision was made, the challenge for the architect, construction manager and the school administration was how to pull off the multiyear project safely with minimal disruption to teachers and students.

The town never seriously considered a new school on a new site. The existing 135,000-square-foot high school was part of a centralized campus of town facilities that included several schools, town offices, the town library and a winter skating pond. In addition, there was enough sentimental and financial equity in the existing facilities to warrant the upgrade and expansion.

The new 300,000-square-foot school will relieve severe overcrowding that had students eating lunch in the auditorium and taking classes in undersized classrooms, trailers and rooms once used for storage. In addition, many of the core facilities, such as a cafeteria, kitchen and gymnasium, which were undersized and had outdated building systems, will be larger.

Build new or not? State steps in to force the analysis

Maine requires schools to analyze renovation and replacement to evaluate whether it is more economical or reasonable to renovate an older school rather than abandon or demolish it.

This analysis must be performed on any new school project that includes abandoning or demolishing an existing school. The cost of renovating an older school to bring it up to code may exceed the cost of building new.

A lot of this is driven by the State Planning Office's involvement in trying to avoid sprawl by reusing existing schools that are typically located in an established neighborhood setting as opposed to buying undeveloped land that doesn't have the needed infrastructure, arrangements for bus transportation and other issues established locations offer. Schools from the '60s and '70s tend to be on larger parcels of land to begin with and are usually easier to renovate or add on to.

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New Construction vs. Renovation for Older School Facilities

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March 2005 Although federal legislation has focused attention on upgrading curricula, teacher qualifications and testing standards, school districts continue to fall behind on modernizing schools. A National Education Association study in 2000 estimated the cost to repair and modernize America's schools was more than $300 billion.

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Renovating Facilities to Fit the Needs of the Campus 

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Renovating Facilities to Fit the Needs of the Campus 

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School construction across the country has drastically slowed, yet the need for modernized facilities remains and continues to grow. School districts may soon face a dilemma, scrambling to make up for lost time as the economy rebounds. While school boards, administrators and facility managers cannot predict the pace of the economic recovery, now is the time for the all-important process of planning for their schools' future.

The design of a new or renovated building often begins with what architects call programming. In simple terms, a building program is the written inventory of required functions and spaces, quantities, relationships and square footage. Yet as important as a building program is as the foundation for design, it should not be the true starting point.

Instead, a much more comprehensive approach is the appropriate first step. While the essential elements in any educational process are teachers willing and with the skills to teach and students equally prepared to learn, school facilities that encourage such healthy interaction become the "tipping point" of growth and success. What districts need are schools that function as a three-dimensional textbook and enhance student-centered learning, a reversal from the current paradigm that forces programs to fit buildings.

In many public school jurisdictions, the typical approach to facility planning is embodied in statutory educational policy. Districts are obligated to ensure that equitable schools are provided across economic, demographic and geographic boundaries. They initiate this process with a wish list of ideas, recognizing the important role that properly functioning facilities hold in the educational delivery system.

In contrast, the more comprehensive approach is the educational facilities plan, which begins with visioning, an overused and misunderstood term. Within the framework of Pre-kindergarten through 12th grade (PK-12), visioning for expansion or modernization entails:

Engaging stakeholders - board, administrators, faculty, parents and community - in a strategic discussion of needs, aspirations and goals.

Developing or refining the district's core model program, which becomes the baseline that informs individual building initiatives. A core model program lists out every space in a school (quantity, square footage, etc.) and prioritizes how critical it is to have that space in a building. The program quantifies the ideal elementary school, driven by individual school needs, and compares the model to what the school wants to have in the final building.

Formulating and communicating highly detailed benchmark information about the district and its facilities as a "plan" for the transformation, from where the district is now to where it wants to be.

The outcome is the educational facilities plan document, which incorporates stakeholder input and feedback, the district's core model program, the existing facilities condition assessment, and next steps.

The educational facilities plan employs "smart planning" where the basics are fixed and the details build upon strengths to leverage and re-energize a given school district. On a school-by-school basis, the plan benchmarks how buildings either detract from or reinforce the delivery of meaningful student instruction. In essence, the plan clearly demonstrates to the public how schools are instrumental to learning and equity, and at what quantifiable relative cost.

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Fit School Buildings to Program Needs - Facilities Management Insights

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School construction across the country has drastically slowed, yet the need for modernized facilities remains and continues to grow. School districts may soon face a dilemma, scrambling to make up for lost time as the economy rebounds.

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Are you facing the decision to add on and modernize, or build new? You are not alone; most education institutions have faced this decision, as well as whether to demolish, abandon or sell a facility.

As education programs change, older structures become less adaptable to support the curriculum. Older buildings typically are void of large- and small-group learning spaces, flexible teaming areas, planning areas for staff, adequately sized classrooms and proper spaces for administration. Major physical hindrances can impede student learning and staff development.

But don't base the decision on this criterion alone. Some older facilities are characterized by higher test scores, more parental involvement and greater community pride. But when parents, staff, students and community members express frustrations about a facility, and students leave for newer schools in neighboring districts, it may be time to consider new construction. Excessive repair needs, high energy consumption and operating costs, thermal discomfort and the inability to physically support the education program are evidence that a building no longer provides a good environment for learning.

Start with a long-range plan

How does an institution begin deciding whether to renovate or build new? Look at the "big picture" and develop a campus- or districtwide master plan. Begin in-house discussions with administrators, staff, school board, parents and community groups. A facilities-planning specialist can evaluate building conditions and educational adequacy, and conduct dialogue with stakeholders. Form a facilities task force of parents, administrators, teachers, students, agencies, community members and business leaders to craft a facilities master plan.

A long-range master plan includes assessments of deferred maintenance, educational adequacy, life-cycle comparisons, construction costs (short- and long-term), parity and equity, mandates and code compliance. The assessments take into account the institution's teaching mission and educational philosophy. Master planning helps to measure a building's useful life, identify needed improvements and map out its future as it relates to enrollment demographics and educational adequacy. The process for decisionmaking is more all-encompassing than setting a "percentage threshold" comparison to replacement cost.

A master plan becomes an effective tool in determining whether to add on and modernize, or to build new. Look at the following areas to help arrive at a decision:

Factors to consider

Goals and objectives. Confirm vision/goals/philosophy outcomes, technology needs, flexibility/expansion expectations, district identity and the community interaction process.

Facilities assessment. Evaluate building deterioration, deferred maintenance, capital-renewal issues, mandated health and safety upgrades, facility obsolescence, physical-plant condition, site, structure, envelope, mechanical, electrical, codes and accessibility.

Educational-adequacy assessment. Determine quality of space, function, expansion needs, aesthetics, safety and security, site size and circulation, square footage, grade-level configuration, instructional aids, program support, flexibility, capacity, space utilization, core facilities, seating efficiency, state education mandates and re-purposing opportunities.

Operational assessment. Develop and assess project costs, life-cycle costs, replacement analysis, energy efficiency, administrative and transportation efficiencies, demographics and maintenance measures.

Community assessment. Investigate historical significance, political aspects, new and existing site analyses, board preference, effect on property values and community opinion.

Environmental assessment. Compare the sustainability impact of maintaining an existing facility with new construction.

Implementation assessment. Determine the effect of maintaining school operations during construction, phasing and sequencing considerations, time, and the effect that different building solutions will have on learning.

Addressing all planning components provides a thorough process for making decisions. When evaluating whether to modernize or build new, education institutions should rank their priorities and consider how each option will:

Enhance student learning.

Realize short- and long-term cost savings.

Save construction time.

Avoid disruption of curriculum and learning.

Affect the process of purchasing a new site.

Extend the building's useful life.

Best manage project scope and budget through phasing opportunities.

Minimize any breach of safety and security if construction takes place while school is in session.

Enhance the area's historical character.

Provide higher-quality finishes for long-term value.

Address neighborhood values.

Achieve sustainability credits with products, systems and less construction waste.

Maximize operational costs based on student capacity.

Enhance program function with fewer building constraints.

Define cost certainty with fewer unforeseen conditions.

Manage design and construction fees because of risk and other issues.

Provide positive design solutions with fewer building constraints.

Maximize energy-efficient construction.

Address educational state guidelines standards.

Address safety and security more effectively in design.

Maximize funds for instructional technology and infrastructure routing.

Whether building new or adding on and modernizing, it is essential to properly maintain school facilities. Education institutions must keep facilities in excellent operating condition. A school that is well-maintained extends its useful life, reflects the institution's leadership, enhances student achievement, instills community pride and protects long-term viability.

Revitalizing the neighborhood

After analyzing districtwide needs, Robbinsdale (Minn.) Public Schools decided to demolish Forest Elementary School in Crystal, Minn., and build a new facility over the existing building footprint. No land was available for a new site; the existing site was in an established neighborhood, adjacent to a community park.

Because of the presence of asbestos and mold, and the need for major repairs, the district concluded it would be more cost-effective to demolish the school and build a new facility. That decision prompted the city to provide funds for a larger gym and invest in upgrading the adjacent park.

With the new building, instructional space now supported the educational program, energy-efficiency and sustainable-design strategies were used, and community pride increased. Students were relocated to an nearby school for one year until construction was complete.

The decision to build a new school was made after considering all the long-range planning factors. Success builds on success; the district is seeking more new school "replacements" with the help of federal stimulus low-interest bond funding opportunities.

Erickson, AIA/NCARB/REFP, is president of ATS&R Architects/Engineers/Planners, Minneapolis, a firm specializing in school facilities planning, design and construction. He can be reached at [email protected] .

Notable

29
Percentage of school districts completing some form of construction project in 2008.

57
Percentage of colleges and universities completing some form of construction project in 2008.

Source: AS&U' s 35th Annual Official Education Construction Report, May 2009

Related Stories

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Are you facing the decision to add on and modernize, or build new? You are not alone; most education institutions have faced this decision, as well as whether to demolish, abandon or sell a facility. As education programs change, older structures become less adaptable to support the curriculum.

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Various tools provided by the Texas School Safety Center.

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K-12 School Safety and Security Audit Toolkit 

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K-12 School Safety and Security Audit Toolkit 

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K-12 School Safety and Security Audit Toolkit | Texas School Safety Center

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At least once every three years, each school district shall conduct a safety and security audit of the district's facilities.

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The Bond Guarantee Program (BGP), using the corpus of the Permanent School Fund (PSF), guarantees bonds issued by a school district or charter school. The PSF guarantee has received "AAA" ratings from the major bond rating services and replaces the need for private bond insurance.

Both districts and charters must apply to the TEA and be approved by the commissioner of education to participate in this program. The TEA reviews each application according to statutory requirements and State Board of Education (SBOE) rules. This review must confirm that the application is complete and accurate. The district or charter must also be financially sound. The TEA also reviews the School FIRST rating or Charter FIRST rating, the annual financial audit report, accreditation status, and any complaints.

Law and Rules

Information on Applying for a Guarantee

The TEA only accepts applications for the BGP through the Municipal Advisory Council (MAC) website.

The link to the sign-up page for the BGP is located on MAC home page. Click that link.

If you currently have an account with the MAC, click the Please enable my account button (indicating that you will be completing PSF Bond Guarantee applications). This action will send the MAC an email instructing them to give you access to the application.

If you do not currently have an account, the link will first take you to a page to create an account (at no charge). On the succeeding page, click the Please enable my account button. This action will send the MAC an email instructing them to give you access to the application.

Once you have been granted access to the application, you will see a link for the PSF application under My MAC (on the left side of the page). Click on that link to begin the process.

1. Click Create New Application.

2. Review the application requirements.

3. Click Begin PSF Application.

4. Complete the application as instructed by the system.

If you have any questions about the online application process, please send an email to the MAC at mac@mactexas.com or call Laura Slaughter or Terrence Spencer at (512) 476-6947.

Applications for New or Combination Issues

Applications for new or combination (new and refunding) issues are subject to a monthly prioritization system in accordance with SBOE rules. Applications that are received on or before 5:00 p.m. of the last business day of the calendar month will be held until the fifteenth business day of the subsequent month. The commissioner of education announces the results of the prioritization on this day each month.

Each district or charter that submits a valid application will be notified of the application status on the fifteenth business day of the month that follows the application deadline.

If a district does not receive a guarantee, the commissioner will consider the application withdrawn. The TEA will not retain applications that were denied a guarantee. However, a district or charter may reapply for a guarantee in a subsequent month.

If the guarantee is granted, but the bonds are not approved by the Office of the Attorney General within 180 days of the application deadline, the commissioner will consider the application withdrawn.

Applications for Refunding Bonds with Present Value Savings

Applications for refunding bonds with present value savings (that refund previously guaranteed bonds) require a separate application form and are not subject to the monthly prioritization system.

Information for Charter Schools

Percentage of Students in Open-Enrollment Charters

19 Texas Administrative Code 33.67(d)(1) requires the commissioner of education to post information each year stating the percentage of students enrolled in charter schools. This information is used to calculate the available capacity of the Permanent School Fund to guarantee bonds for charter schools. Charter schools enrolled 316,064 (5.85%) out of a total enrollment of 5,399,373 students in the 2018-2019 school year.* As a result, we will use 5.85% of total available capacity of the bond guarantee program for charter school guarantees beginning with the February 2019 round.

* Per statute, these numbers are based on enrollment data submitted by school districts and charter schools to the Public Information Management System (PEIMS) during the fall 2018 submission.

Payments for Remittance to Charter District Bond Guarantee Reserve Fund

Texas Education Code (TEC) § 45.0571 authorizes the commissioner to establish rules related to the Charter District Bond Guarantee Reserve Fund. Those rules are established in 19 TAC Chapter 33, Subchapter AA §33.1001.

The amount to be remitted is based on the savings to the issuer as a result of being able to access the guarantee. To determine the payment required, the commissioner will calculate an amount equal to 20% of the savings over the life of the bond to the charter district resulting from the lower interest rate on the bond due to the guarantee by the Permanent School Fund. The formula for calculating the amount due will be R = (P x S x 0.2) ÷ (1 + PV)T.

"R" is the annual amount to be contributed to Charter District Bond Guarantee Reserve Fund;

"P" is the outstanding principal amount on the closing date of the bond or the outstanding principal amount on the anniversary of the closing date of the bond, as applicable.

"S" is the savings to the charter district as a result of the bond guarantee under §33.67 of this title, which is computed as the difference between the preceding 36-month moving average of the Thomson Reuters Municipal Market Data index yield for the Baa twenty-year maturity and the preceding 36-month moving average of the Thomson Reuters Municipal Market Data index yield for the AAA twenty-year maturity. If the Thomson Reuters Municipal Market Data index is discontinued, the commissioner shall choose another data source for a reasonable period of time until this section can be amended with another acceptable data source. The savings "S" shall remain constant for the life of the newly guaranteed bond.

"PV" is the present value discount factor, which is the yield to worst of the Bloomberg Barclays US Aggregate 3-5 Year Bond Index on the last business day of the previous month. If the Bloomberg Barclays US Aggregate 3-5 Year Bond Index is discontinued, the commissioner shall choose another data source for a reasonable period of time until this section can be amended with another acceptable data source.

"T" is the number of years from the anniversary of the closing date of the bond.

The payment is equal to the sum of the amount required annually and is due within 30 days of the closing date of the bonds.

The value of "S" is calculated in March and September of the applicable state fiscal year. The value of "PV" is calculated monthly. Both values can be found in this spreadsheet: ( Excel, 12 KB) ( PDF 76 KB).

Bond Resources

For additional information, contact:

Division of State Funding
Cassie Huggins
(512) 463-9232

cassie.huggins@tea.texas.gov

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The Bond Guarantee Program (BGP), using the corpus of the Permanent School Fund (PSF), guarantees bonds issued by a school district or charter school. The PSF guarantee has received "AAA" ratings from the major bond rating services and replaces the need for private bond insurance.

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What are bonds? How long does it take to pay them off?

Bonds for school projects are very similar to a mortgage on a home. To finance construction projects, the district sells bonds to investors who will be paid principal and interest. Payout is limited by law to 40 years.

How do bonds work?

The sale of bonds begins with an election to authorize a specific amount-the maximum the district is allowed to sell without another election. The school district sells them as municipal bonds when funds are needed for capital projects, usually once or twice a year. Bids are taken from interested buyers, usually large institutional investors, and are sold at the lowest interest rate offered. The rate is based on the district's bond rating: the higher the bond rating, the lower the interest rate to sell the bonds. Principal and interest on the bonds are repaid over an extended period of time with funds from the Debt Service tax rate.

How can bond money be used?

Proceeds from a bond issue can be used for the construction and renovation of facilities, the acquisition of land, and the purchase of capital items such as equipment.

What, other than bricks and mortar, is typically included in a facility referendum?

A referendum may include money for technology, buses, land for future schools, portable buildings, and the cost of selling bonds.

Why are bonds used to finance nonfacility items?

It is a financial advantage to the district to pay for some capital expenditures such as technology, buses, land, and portable buildings with bond money rather than from the General Fund. First, the cost of the purchases can be spread over the life of the asset rather than coming from a single year's General Fund. In addition, taxes that are levied for bonded debt are not subject to the same recapture formulas that reduce state funding based on General Fund tax revenues.

The district sells bonds that mature at different times, so bond expenditures for items with a shorter lifespan, such as computers, are paid off before the purchase becomes obsolete.

What is a bond election?

A school bond election gives individuals an opportunity to vote on paying for the construction and renovation of school facilities. It is a request to give the elected Board of Trustees the authority to sell bonds when facilities are needed.

What is the difference between a bond authorization and bond sales?

A bond authorization specifies the amount of bonds the district is authorized by the voters to sell. Bond sales may occur over a period of time with the date and amount of each sale determined by the Board on an as-needed basis.

If the bond election is passed, does the school district immediately incur the debt?

The bonds do not cost the district anything until they are sold. Even though the voters approve the bond issue, there are not costs incurred until the bonds are sold.

If the bonds are approved, is the district obligated to spend the money?

No. Voter approval is an authorization for the district to issue bonds. They will be sold in the future only when funds are needed.

Will my district be able to sell its bonds at a favorable rate?

Your district's bonds should receive a high rating due primarily to the guarantee by the Texas Permanent School fund. Whether the market will be favorable for your district's bonds depends on both your district's bond rating and the current interest rates.

Paying for schools

A school district's tax rate consists of two parts: 1) Maintenance and Operations (M&O) and 2) Debt Service (I&S). Maintenance and operations taxes fund the General Operating Fund, which pays for salaries, supplies, utilities, insurance, equipment, and the other costs of day-to-day operations.

The Debt Service tax pays off school bonds, somewhat like paying off the mortgage on a house.

What is the difference between the M&O and the Debt Service tax rates?

M&O taxes are used for day-to-day operations; to pay for salaries, supplies, utilities, insurance, fuel, etc. Revenue from the Debt Service tax rate can be used only to retire bonds sold for specific purposes: construction, renovations, buses, portable buildings, land, technology, and the cost of issuing bonds.

How will this bond election affect homeowners who are over 65?

School district taxes on resident homesteads are frozen in the year the taxpayer turns 65 year of age and will not increase as a result of a school bond election.

Reprinted with permission from Katy Independent School District.

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Bonds for school projects are very similar to a mortgage on a home. To finance construction projects, the district sells bonds to investors who will be paid principal and interest. Payout is limited by law to 40 years. The sale of bonds begins with an election to authorize a specific amount-the maximum the district is allowed to sell without another election.