03.27.09: SAB Action on Deferred Maintenance
By David Walrath
On Wednesday, March 25, the State Allocation Board (SAB) acted on Deferred Maintenance and Deferred Maintenance Extreme Hardship project allocations. The SAB did not adopt the SSDA recommendation (see attached) which SSDA believed would provide more security to school districts and would be legal.
Instead, the SAB adopted staff recommendation to fund the basic Deferred Maintenance allocation and Deferred Maintenance Extreme Hardship pursuant to their legal opinion on implementation of Assembly Bill 4 of the Third Extraordinary Session.
Assembly Bill 4 of the Third Extraordinary Session (AB 4 XXX) was part of the final state budget deal. AB 4 XXX included Deferred Maintenance and Deferred Maintenance Extreme Hardship within the categorical programs for which there is absolute flexibility. Because Deferred Maintenance funding is calculated on prior year expenditures, the AB 4 XXX 2008-09 appropriation is for 2007-08. AB 4 XXX creates a baseline for the flexibility categoricals which SSDA believes will be the 2007-08 funding allocations for these programs to school districts. In subsequent years the school districts would receive funding using the baseline. Consequently, once the baseline is established, there could be no new programmatic allocations beyond those needed for the baseline.
The effect of the baseline provisions appears to be that all new Deferred Maintenance money will be allocated for baseline instead of any new Deferred Maintenance Extreme Hardship project approved by the SAB after March 25, 2009.
For Deferred Maintenance Extreme Hardship, the SAB voted to adopt staff recommendation that would not fully fund any project immediately and instead provide supplemental project funding over a five-year period (21% of the approved project cost each year for five years). At the end of the five years schools are expected to receive 105% of the approved funding for the project. Because 100% of project funding will not be provided in the first year, districts will either have to borrow money, internally or externally, to complete their extreme hardship projects, or will have to wait and accumulate their annual Deferred Maintenance appropriations until they have sufficient funds to complete the project.
The SAB action included all Extreme Hardship projects that already have been before the SAB and approved for apportionment.
SSDA will be working with legislators and staff to develop an alternative funding source for Deferred Maintenance Extreme Hardship projects. At this time, however, SSDA encourages any school district that had intended to file for Extreme Hardship to also explore whether the school district would be eligible for a facilities hardship application and if so, apply through that program. The facilities hardship program is not included in AB 4 XXX and, therefore, it is not capped.
