Priorities, Efficiency Are Focus of School Construction Law

Priorities, Efficiency Are Focus
of School Construction Law

Gov. Jon Corzine’s signing on July 9 of the $3.9 billion in school construction met a goal of NJSBA. However, the funding bill (A-2873) comes with a new focus on priorities and efficiency.

The legislation authorizes the New Jersey Economic Development Authority to issue an additional $3.9 billion in bonds to finance the state’s share of school facilities projects. School districts overseen and entirely funded by the School Development Authority—formerly called Abbott districts and now called “SDA districts” —will receive $2.9 billion of the $3.9 billion. All other school districts will receive the remaining $1 billion, with county vocational districts receiving at least $50 million of the $1 billion.

The new law directs the Commissioner of Education to establish a priority process for the financing of school facilities projects in the non-SDA districts. These priorities will include health and safety; overcrowding; providing in-district programs for disabled students who are currently in out-of-district programs; in-district programs for the projected disabled student population; and full-day kindergarten facilities in the case of a school district that is required to provide full-day preschool under the provisions of the state’s school funding law, the “School Funding Reform Act of 2008,” P.L.2007, c.260.

The $8.6 billion Educational Facilities Construction and Financing Act that was passed eight years ago required the state to fund at least 40 percent of eligible school-construction costs. That 40-percent threshold is maintained in the new law. The state assistance provides needed property tax relief, because prior to the facilities act of 2000, 240 school districts received no state aid for school-construction projects, and another 108 received 25 percent or less.

Priorities The new law also directs the education commissioner to create a process to allocate school construction grants to non-SDA districts.

Under the process, the commissioner will annually notify districts of the date on which the state Department of Education will begin to receive applications for grant funding. A district will have 90 days from that date to submit an application. The commissioner will then make a decision on a district’s application within 90 days, and will allocate the grants based on priority.

Standardized Designs Another interesting provision of the new law directs the SDA, in consultation with the Commissioner of Education and program stakeholders, to conduct a study of the potential cost savings that could be realized through the use of standardized design elements, components, and construction materials. The study must be submitted to the governor, the legislature’s Joint Budget Oversight Committee, the Senate President and the Assembly Speaker by April 1, 2009.

The Office of Legislative Services has projected that the state’s total debt service costs will range from $6.33 billion to $7.14 billion, depending on interest rates, from fiscal year 2011 through 2044. The lower amount represents a 3.5 percent annual interest rate and the higher bond represents a 4.5 percent interest rate.

Continuing Demand The School Development Authority (SDA) has estimated that, after considering the additional debt authorized by this bill, an additional $14 billion is still needed for SDA districts. An estimated $9 billion may still be needed for non-SDA districts, bringing the total amount of unmet school-construction needs to a figure as high as $23 billion.

However, those estimates are in current dollars, or the estimates of what it would cost to perform all construction today—and the figures will rise as construction costs increase over time.

Surrounded by legislators and state and local school officials, Gov. Jon Corzine signs the school construction bill July 9 at the Oliver Street Elementary School, Newark, which was built in 1869.