Making the Operational Budget Work Through Act 32 and a Five Year Plan Steve McNeal Vice President of Educational Services Corporate Contractors, Inc

Making the Operational Budget Work Through

Act 32 and a Five Year Plan

Steve McNealVice President of Educational ServicesCorporate Contractors, [email protected]

Nick LaubuschWI Business Development [email protected]

Overview• Creating and communicating a five year facility plan with priorities

• State budget constraint have made planning a necessity• Sets the stage for funding and implementation strategy

• Assessing your district facility educational and infrastructure needs

• Maintaining a long term facility vision/perspective to support district goals

• Three Funding Options• Operating budget – reactive repairs and short term fixes• Act 32 projects - funded from energy and operational waste streams and retiring debt• Referendum - new additions/major remodeling

• Consideration of a facilities referendum to fund greater needs• Using local business partnerships to garner support• Key factors to running a successful referendum campaign

Covey – End in Mind: Classroom Environment Link to 21st Century Methods

Maintaining a Long Term Vision

Based on the specific district goals, answer these three questions:

• What do you need to do short term?

• What should you do?

• What is your dream?

• Making the Operation Budget Work Through ACT 32 and a Five Year Plan• How is your district utilizing ACT 32 and using it to your advantage during these tough budget times? This• session will help districts better understand what you can do with ACT 32 and some of the projects that can• be done that could potentially save your district from using valuable operation budget monies. We will help• with suggestions on how to keep a long term vision by creating a five year plans that help guide your district• budget while still addressing your critical facility needs. The purpose of this session is to have open• discussion about ideas and thoughts districts have that can be shared with each other so to aid districts in• decision making going forward. We will talk about how using business partnerships can create an• advantage for your district’s budget and operation. This presentation will also touch on the referendum• process and share ideas that help navigate districts through a successful referendum campaign.• Presenters: Steve McNeal, Vice President, Corporate Contractors, Inc., and Nick Laubusch,• McKinstry—WI Business Development Manager •

Creating and Communicating the five year plan

• Thinking Long Term not Short Term• Using long term facilities planning to help preserve your operating budget

• Not getting caught up in the “now” problems by letting today’s problems create larger problems in the future

• How many referenda do you have in you?

• State of the state in school budgeting• Operating budget constraints are tough

Creating a Five Year Plan

• Based on funding options• Creation of priority list by year• Blending future savings into formula• Informing the public early and often

Total budget planning approach - Thinking A to Z

• Creating a plan with everything in mind• What effect does today’s decisions have on tomorrow?• Where do we want the district to be in five years?• Is our district efficient with human resources?• Is our district efficient with facilities and energy?• Is our district efficient with busing?• What are our long term facility needs?

Where can we reduce budget waste and help fund infrastructure renewal?

Facility Assessment – Catalyst for thinking different

Why should a school district assess current conditions and develop a five year plan?

• Make an objective appraisal of the quality and capacity of existing school facilities

• Make more effective decisions regarding the types, amounts, and quality of new and existing school facilities and the disposition of facilities, based on estimated pupil population

• Coordinate a program of total school and community planning

• Maintain a program of continuous comprehensive planning and financing of school facilities

• Gather and organize factual information about current state of facilities which can be communicated to build the business case for implementation

Assessment desired outcomes

• Contractor – Facilities Condition Assessment

• ESCO – Energy and technology

• Property risk expert – Facilities review

• Educational expert – Programming and staffing

Assessing facility needs by building Age/Condition Identify and prioritize issues/needs in three broad categories

• Educational Space limitations

Adequacy for the 21st century learnerGrade configuration adjustmentsTechnology Platform

• SafetyFire and security systemsStudent drop-off Building accessibility

• Existing Deferred Maintenance / Capital Projects Mechanical systems – HVAC/Plumbing/ControlsLighting and Electrical systemsRoofsWindows/Building Envelope

Technology Upgrades

Example Summary

Overview: original High School, built in 1965, 82,000 GSF Educational

• Space limitations—standard classroom size, library, Special Ed, gymnasium, music room location, teacher lounge, staff restrooms, health room, locker rooms, science rooms

• At capacity today

Safety • Main office separate from main entrance • Drop-off & bus loading • Traffic patterns (parking lot, playground access) & blind spots • Handicap accessibility

Existing Deferred Maintenance / Capital Projects • HVAC, temperature control, ventilation, air conditioning &

dehumidification • Windows, doors, roofing

Funding Sources - Scopes

Existing Budget

• System Repairs• Small Upgrades• Compromised

technical decisions• Incremental

approach

Act 32

• Infrastructure renewal• HVAC• Lighting• Electrical• Roofs• Windows/Building

Envelope

Referendum

• New School• Major renovations• Special use additions

• Arts Center• Gymnasium• Athletic

Facilities•

Funding options:1. Use of general fund 102. Use of fund 10 and ACT 323. Use of fund 10, ACT 32 and referendum

A way to keep the referendum total lower4. All in with referendum

Interest Rates Favorable - Need Updated Chart

Considering funding options working with ACT 32

• Variables• How dire are your immediate needs?• Where do you want to be in five years?• Will you need a referendum soon to fulfill your district needs?• What is the state of your operating budget?• Are you retiring debt from a project or previous referendum?

Energy Efficiency Revenue Limit Exemption

Wisconsin Statute 121.91(4)(o)1

2009 Wisconsin Act 28Created the Energy Efficiency Exemption (EEE) for projects completed within the fiscal year.

2011 Wisconsin Act 32The law is modified such that a district may adopt a resolution to increase its revenue limit by the amount spent by the district in that school year on a project to implement energy efficiency measures or to purchase energy efficient projects, including the payment of debt service on bonds or notes issued to finance the project if:

• The project results in the avoidance of, or reduction in, energy costs or operational costs;

• The project is governed by a performance contract entered into under s. 66.0133; and

• The bonds or notes to finance the project, if any, are issued for periods not exceeding 20 years.

Determining ACT 32 eligible projects and how it can be utilized

• McKintry …..

• Energy• Technology• Safety and secure vestibules• More….

Facility Optimization Summary by SiteDunwiddie

1. Heating System Upgrade• High Efficiency

Boilers• Classroom units• Validated air

changes

2. Air conditioning• Classroom areas• Multi-purpose

room

3. BAS /Direct Digital Controls • Classroom Night Setback• Optimal Start• Re-commissioning

4. Lighting upgrade • Interior retrofits• Exterior lighting

5. Building Envelope• Door seals• Sealed gaps• Roofing plan

Saukville

1. Heating System Upgrade• High Efficiency

Boilers• Classroom units• Validated air

changes


3. Lighting upgrade• Interior retrofits• Exterior lighting


Lincoln

1. BAS Integration • Classroom Night Setback• Optimal Start


3. Building Envelope• Door seals• Sealed gaps• Roofing Plan

High School

1. BAS /Direct Digital Controls • Classroom Night Setback• Optimal Start• Re-commissioning• HVAC

Occ/Unoccupied Control


3. Building Envelope• Door replacement• Door seals• Sealed gaps• Roofing plan

TJMS



3. Pool Gutter Repair


District Office



Project Cashflow

Act 32 Steps Project Timeline

DPI Reporting and Measurement and Verification

• Project Goals• Reduce energy operating costs related to lighting by $38,941 annually• Mitigate occupant safety risk with failing fixtures• Reduce the capital and maintenance and operating costs associated with lighting

• Project Results• Energy Savings are tracking with estimates when weather adjustment is made the baseline year.• Savings estimate of just under $39,000 is on track

Funding Opportunities• Early Identification

• Close working relationship with District’s financial advisor

• Financing Options• Bonds

• QZAB, QSCB, BAB• State Trust Fund Loans• Municipal Lease

• Incentives• Focus on Energy• Local Utility• EPACT

• Other Opportunities• Energy Efficiency Revenue Limit Exemption

What if it comes up Referendum?

• Best sold with solid plan

• Demonstrate integrity of five year plan

• Have all reports assessing needs and savings

• Develop core community group

• Get your community partners to lead the charge

• Know your finances – costs and savings

Using business partnerships

• What are business partnerships?

• Why develop them?

• What can they do for you?• Donations• Cheerleaders in the community

Facilities and Referendum Planning Establishing the vision

• Creation of Educational vision (configuration)• What grade configuration desired• Specific educational needs

• Programming• Interventions• Enrichments

• Understanding the districts history• Research• Develop chart with dates of construction and remodels

• Facilities analysis for space and needs• District growth or enrollment projections• Programming needs or desires

• Define specific facility needs• Architect • Outside consultants

• HVAC• Roofing• Infrastructure

• Understanding School Finance• State Aid formula• Mill Rates

Referendum Planning• Presentation to board

• Review/discuss specific educational vision• Report current facility conditions• Review specific facility needs

• Revising the Vision• What do we need to do?• What is best educationally (what should we do)?• What is the dream?• District identity

• Must be more than buildings• Drive home accomplishments

• Development of Community listening/advisory group• People from all walks around the community• One time meeting to listen and discuss

Referendum Planning

• Assemble committee to bring the idea to the community• People who believe in the district• Base group that grows• Must stand united!• Must train on presentations.

• Know all facts • Never guess• Know the answers to questions before they ask…

• Develop a schedule for presentation to community. Never cancel!• Schools• Community Locations• Community Groups• Companies• Staff communication• Key Groups

• Chamber• City Council• Progressive Economic Groups

Referendum Planning

• Surveys to the community • Pros and cons• Must be timely

• Marketing• Social Media

• Face Book• Blogs• Web site• Videos of Presentation

• Easy Guides• Frequently asked questions• Referendum talking points• Facts of the Day

• Brochures and Informational Sheets• Distributed in public settings• Readers Digest Version• Both English and Spanish

• Gather endorsements• Monitor Opposition

• See what they are saying• Get facts out• No battles!

Negotiated General Contractor

• CHOICE: Instead of relying strictly on price alone as you would under the hard bid approach, when a project is negotiated you get to choose who you work with based on qualifications and competitiveness. You then also are able to interview and meet all the people who will be involved with your project. This is important because while the strength of the organization is significant, it’s their people, knowledge, experience, skills and commitment to serve you that makes all the difference.

• PARTNERSHIP: In a negotiated delivery, the Contractor is part of your team and will always explore opportunities to add value to the project. In contrast, the hard bid format is known to produce adversarial relationships, as the Contractor must look primarily at their own bottom line since their service has been purchased as though it’s a commodity. The collaborative process of negotiating allows you to be more informed about your project and you get more information about how your money is being spent.

• COST SAVINGS: Bringing the construction team on board early in the design process allows them to maximize value by providing cost input into design decisions. It also allows Contractors to capitalize on early purchasing of any required long lead-time items. Additionally, under a negotiated format, any savings are returned to you based on contract negotiations, whereas under a hard bid the Contractor retains 100% of any savings.

• FEWER CHANGES: What’s the easiest way to minimize changes during construction? You guessed it: involve your Contractor early during the design phase and prevent changes before construction even begins. They can provide vital preconstruction services, such as reviewing drawings for potential errors ahead of time, thereby reducing the number of changes. Fewer changes means significant savings on any project. In contrast, the hard bid method runs a higher risk of change orders which cause delays that cost you both time and money.

Negotiated General Contractor

• SHORTER SCHEDULES: Managing the schedule also begins early during the design phase. Including your Contractor in these preliminary steps enables them to efficiently analyze and fast-track your project and start construction sooner in the process than would be possible in a hard bid situation.

• HIGHER QUALITY: As the Owner, you benefit when your Contractor is brought on board early so they can provide input into the best possible means, methods and materials for life-cycle costs. Plus, when working on a partnership basis, you reap the rewards when the Contractor knows their own reputation is at stake. No construction company would want to do poor-quality work and risk losing your recommendation or potential repeat business.

• INCREASED TRANSPARENCY: Negotiated delivery is built on the premise of a trust-based relationship between you and the project team. You get to see exactly how your money is being spent. Transparency in the preconstruction phase enables you to see and decide where you are spending your money before construction begins.

• COMPETITIVE PRICING: There is a common misconception that negotiating your project is costly rather than competitive. The truth is that the only thing you are negotiating is the Contractor’s fees. Not only are those fees minimal relative to the overall cost of any project, but unlike the hard bid method, you gain the ability to negotiate fair terms for them. With both methods, the Contractor’s fees are included and all subcontractor and supplier work is acquired competitively. The advantage of the negotiated approach is that the Contractor will manage risk on your behalf by prequalifying subcontractors and suppliers before accepting bids. As the Owner, you get the best of both worlds: driving competitive pricing while maximizing quality and minimizing risk

Questions and

Discussion

Documents

Making the Operational Budget Work Through Act 32 and a Five Year Plan Steve McNeal Vice President of Educational Services Corporate Contractors, Inc