Mars april 2010 final

Treasurer Timothy P. Cahill, Chairman

Katherine P. Craven, Executive Director

AN INDEPENDENT PUBLIC AUTHORITY

• Created by Ch. 208 of the Acts of 2004;

• 7-member Board; • Chaired by State Treasurer Tim

Cahill; Secretary of Administration and

Finance and Commissioner of Education; 4 members appointed by the

Treasurer:

– professional educators/ design/construction industry professionals.

– Terry Kwan, Lisa Turnbaugh, Richard Bertman and Mary Grassa O’Neill

Who We Are… What We Do…

• Leverage dedicated 1-cent of state sales tax

• Cost-reconcile and pay for approximately $11 billion for 1156 projects authorized under former SBA Program,

• Includes accelerated financing for 423 Projects costing us $5.5 billion that had stalled on state wait list

• Effectively manage, plan & create a new, financially sustainable school building construction and renovation grant program;

• Equitably spread school building construction and renovation grants across the Commonwealth

How is MSBA funded?

– The Commonwealth has dedicated 1 cent of the statewide 6.25 cent sales tax (not including meals) to the MSBA

--Sales tax collections have been very weak over the past few years

--Recent increase to sales tax base (i.e., alcohol) has had some positive effect

– FY2010 budget required a $150M transfer to help the state’s ailing General Fund

– MSBA has relatively small staff and overhead: Administrative costs represent less than 1% of annual budget

– MSBA will never promise funds that they can’t deliver. Program has been curtailed to meet available resources.

– MSBA will fund a capital program of $2.5B over the next few years…

Guaranteed

FY2010 Projected Expenditures

1% Operations

41% Waiting List Debt

Service52%

Prior Grants

6%New Program

Waiting List Debt Service New Program Debt Service Prior Grants Operations

MSBA: Top 4 Fiscal Challenges To Remember

• Wait List cost $1.4B more than legislation anticipated--40% MORE than penny anticipated, absorbed with no additional Legislative appropriation

• Dedicated Sales Tax is 30% LESS than originally anticipated: instead of $900M in 2011, MSBA projects $620M for FY2011

• Old Program Debt of $3,000,000,000 remains, will be paid to communities until 2023 from incoming sales tax revenues ($308M in FY2011)

• Unanticipated $150M “giveback” to the Commonwealth

Recent Changes to MSBA’s Enabling Act

Spending Growth Cap Linked to Sales Tax Revenue Growth The statutory cap on new grants limits growth to the lesser of

the rate of dedicated sales tax revenue growth or 4.5%

Ambiguity removed concerning eligibility of certain local interest costs Clarified the discretionary nature of the MSBA’s grant program

Minimum Grant Rate lowered from 40% to 31%

“Incentive Points” removed from statute allowing MSBA to set Incentive Points by regulations Capped any individual category of Incentive Points at 6% Capped total Incentive Points for a single project at no more than

18% Regulations link Incentive Points to quantifiable/measurable

standards

First 5 Years: Significant Progress Made

• MSBA’s accomplishments to date:

– LOCAL AID EXPEDIENCY: Accelerated over $6 Billion in payments to cities, towns, and regional school districts

– MOVE STALLED PROJECTS & FUNDED THEM: 428 Projects on the Wait List :

• 407 have received a payment or have been completely paid off

• Only 9 still have not started, other projects removed by community


• More MSBA accomplishments to date:

– MASSIVE COST RECONCILIATIONS: Completed and Board-Approved 727 audits of the 800 audit backlog inherited from the former program. The completed audits have:

• Saved the taxpayers of Massachusetts over $900 Million• Generated over $2.3 Billion in avoided local interest

costs

– INVENTORY LOCAL SCHOOLS: Completed first ever capital survey of 1,817 schools in the Commonwealth

– MOVING THE PROGRAM FORWARD: Completed most comprehensive revision of program regulations in 60 years


• Implement Better Business PracticesQUICK TURNAROUND ON PAYMENTS AND AUDITS:

Created and implemented a “pay-as-you-build”

Progress Payment & Audit System for projects: Pro-Pay

• Provides municipalities with much needed cash flow as projects are built

• Reduces the amount of debt a city, town or regional school district needs to issue

•RELY ON PRIVATE SECTOR PARTNERS TO HELP MANAGE BILLIONS OF DOLLARS IN CONSTRUCTION: OPM,

DESIGNERS, ENGINEERS, CONSTRUCTION MANAGERS


• And…..Working with districts on over 100 projects in our

$2.5 Billion, 5-year capital pipeline

EMPHASIS ON REALISTIC BUDGETS AND DESIGNING TO THEM

Designer Selection and Owner’s Project Manager Approval Panels Encourages Accountability

Developed Standard Contracts & Model Requests for Services

Owner’s Project Management Services

Design Services

1. Identify the Problem• Local community identifies deficiencies in school facilities through the

Statement of Interest (SOI) process2. Validate the Problem

• MSBA and local community work together to validate deficiencies identified• Requires the MSBA and the city, town or regional school district to agree on

the problem3. Evaluation of potential solutions

• MSBA and local community work in collaboration to identify potential solutions

• Solution must fit within the MSBA’s available funding, long-term capital plan and will be prioritized based on the priorities established in G.L. c.70B § 8

4. Confirm the solution• MSBA and local community agree on solution and appropriate course of

action5. Implement the agreed upon solution

• MSBA and local community continue collaboration through design and construction

The New ProcessThe MSBA’s enabling statute places tremendous emphasis on planning, due diligence and prioritization of scarce Authority resources. The statute and MSBA regulations also require

collaboration between local districts and the MSBA during all phases of the process.

Statement Of InterestsCollecting “Problems” rather than “Solutions” from School

Districts: • In FY2008, the MSBA received and reviewed 423

Statements of Interest from 163 school districts – has made over 400 visits to more than 140 school districts as

part of the MSBA’s review and due diligence process

• In FY2009, the MSBA received 47 new Statements of Interest from 25 additional districts

• In FY2010, the MSBA received 52 new SOI from 17 new districts (34 repair requests, 15 add reno, 3 new)

• Recent trend is Districts asking for repairs, not new buildings

SOI Update

Diagnosing the Problems with Funding School

Buildings in MA

The New Program:

What is the problem we are trying to solve,

living within a budget?

2010 Needs Survey

•MSBA 2006 Needs Survey found that Massachusetts schools were built 32% to 39% larger, on average, than the maximum gross square footage space requirements allowed

• Buildings were constructed based on inflated or inaccurate enrollment projections.

•Lack of central design review resulted in wide square footage variance per student from school to school, even among schools of similar educational mission and enrollment capacity.

•MSBA has started the 2010 Needs Survey Update

Solutions:

• Create a Competitive Grant Process

Based on Building Condition

• Ensure Districts Identify the Problem and Work Collaboratively on Solution

• Validate Enrollments and Educational Plans

in Scope of Work

• Implement Standard Space Guidelines

• Multi-Step, Pre-Construction Review and Local Approvals

Problem:The State would get the check but never knew what

was being ordered: Emphasis on “solutions only” without management of the decisions prior to state

involvement has left the state with some schools that are built for enrollments that never materialized

and billions of dollars of debt

Solution:MSBA and District Agree on Scope,

Schedule and Budget at Every Project Benchmark

Problem:

State committed more than it could ever afford for local school

construction

Solution:•MSBA Does Not Allow Initial Studies

for Projects Deemed Unaffordable

Problem: Gaps in Quality and Accountability:

•Litigation and Fear of Litigation extended

several projects out for years…

•Many districts didn’t feel that they

“got what they paid for”

Solutions:• Standard Contracts and Procedures

• Professional, Volunteer Designer Selection Panel and

Owner’s Project Manager Review Panel

• Repair Program - Accelerate Projects through MSBA Capital Pipeline that extend the useful life of an

otherwise serviceable building, bulk purchasing efficiency, Maintains the Commonwealth’s $11B investment in local schools

19

Standard Contracts and Procedures

Standard Contracts and Procedures:

• Expedite consultant selection • Provide a Model Request for Services (RFS) and Standard Contract

that meet MSBA expectations and statutory and regulatory requirements

Standard Contracts provide:

• Standard expectations of responsibilities for a school project• Definition of roles and responsibilities of the project participants -

OPM, Designer, Contractor, Commissioning Consultant, Owner• Contract provisions addressing Owner's concerns and liabilities• Uniformity and predictability for the design and owner's project

manager communities• Properly define interface with MSBA and its procedures

Standard contracts available:• Owner’s Project Manager (OPM) Request for Services (RFS)• Owner’s Project Manager (OPM) Contract• Designer Request for Services (RFS)• Designer Contract

20

STANDARD DESIGN CONTRACT• Requires designer to “DESIGN TO BUDGET”

• Reinforces the importance of updated cost estimates and project controls- Standard expectation on deliverables in accordance with

MSBA guidelines

OWNER’S PROJECT MANAGER CONTRACT● Clearly defines the key role as expected by the MSBA and the Owner for

communication, project controls and the substantive role required to properly administer the contract

● Defines communication role and responsibilities for both the Owner and the MSBA

● Includes independent cost estimates

BENEFITS:

Saves Time & Money - MSBA standard contracts facilitate negotiation and contract execution

Protect the best interests of the District, unlike industry contracts

Problem:

Solutions:

If you build it, can a district maintain it or heat it?

Maintenance Issues

1% Maintenance Trust Fund Incentive• MSBA will commit up to 1% of the Total Project Cost for

any District that Agrees to Match

• Funds shall be set aside in a School Maintenance Trust Fund to help encourage multi-year Capital Improvement Plans locally

Solution: Repair Program

Accelerate Projects through MSBA Capital Pipeline that extend the useful life of an

otherwise serviceable building

Bulk purchasing efficiency

Maintains the Commonwealth’s $11B investment in local schools

New Green Schools Initiative – $302M

Qualified School Construction Bonds (QSCBs) – Repair Program American Recovery and Reinvestment Act of 2009 (ARRA) Bill – a limited time

opportunity afforded to the MSBA to issue QSCB Bonds

• MSBA will be required to spend bond proceeds on eligible projects in a restricted timeframe

• MSBA will use proceeds to fund repair projects – roofs, windows and boilers

• Grants will be awarded by the MSBA on a competitive basis

• The MSBA will use this financing source to encourage replacement of older systems with more energy efficient systems that are able to meet the “shovel-ready” federal conditions

• A certain portion of the QSCB funds will be allocated to Charter Schools, per the state legislation

• Reimbursement rates for districts will be set at the statutory base rates of reimbursement – no incentive reimbursement points will be awarded by the MSBA

What are the benefits of this new program?

• MSBA will be able to immediately spread limited resources to more districts across the Commonwealth

• Extend the useful life of otherwise sound educational facilities

• Rare opportunity to address multiple projects in a single community

• Match the shorter maturities (approximately 16 years) of the QSCBs with the useful life of roof, window and boiler projects

The program will target three types of repair projects

Eligible scope will be limited to ROOFS, WINDOWS and BOILERS in educationally sound school buildings with long remaining useful life

ROOFS• Replacing older roofs on otherwise sound buildings using “green” roofing strategies eliminates heat loss, improves indoor air quality by eliminating water infiltration, and creates overall safer environments for students and staff

WINDOWS • Replacing drafty windows from older buildings improves thermal comfort for students and staff and limits heat loss throughout the building, therefore minimizing heating costs

BOILERS • Replacing older boilers with energy efficient boilers will result in improvements to educational environments and heating savings to districts’ operating budgets

How will the QSCB Funds be Allocated?

Tier 1 Projects:

• Priority will be given to districts who have already submitted Statements of Interest (SOI) for potential repairs for roof, window and boiler projects and are in the MSBA Capital Pipeline for a repair project

• MSBA staff will determine which requested repairs qualify for the accelerated timeframe necessary to be eligible for funding

• Initial contact will be made by MSBA staff to eligible districts in Tier 1 whom have filed SOI for repairs over the next few weeks

Tier 1 projects include communities which have filed multiple Statements of Interest for repairs such as:

Attleboro Cape Cod Reg VT RockportBlackstone Valley Reg VT Fitchburg Salem Braintree Marshfield Springfield Brockton Quabbin Westfield

Tier 2 Projects:

•After MSBA staff determines how much of the available QSCB allocation is to be obligated to the Tier 1 projects, the MSBA will open up the process to districts that have not already filed a Statement of Interest and funds will be determined on a competitive basis.

All Projects:• All projects must be completed within the limited time required by the federal government for QSCBs.

Commissioning:

•MSBA will pay for building audits to ensure functions as designed

• Assabet Valley– Potential Roof & HVAC Repair

• Greater Lowell Voc. Tech.– Potential Roof & HVAC Repair

• Minuteman Voc. Tech.– Limited Addition/Renovation

• Nashoba Valley Tech.– Solar Panels, Geo Thermal,

Wind• Norfolk County Agricultural

– Limited Addition/Renovation

• Northampton-Smith – Limited Addition/Renovation

• Northeast Metro Voc. Tech.– District wants new school

• Old Colony Regional Voc. Tech.– Classroom/System Upgrades

• Southeastern Reg. Voc. Tech.– Systems/Roof Repair

• Baypath – Southern Worcester County– Renovation

Solution:

$100M Vocational Technical

School Initiative

• Maintenance

• Science Labs

• Technology

• Vocational Technical High Schools

• Regionalization

• Owner’s Project Managers

• Construction Contract Documents

Goal is to advise the MSBA on recommendations for:

• a system to ascertain what defines excellent, good or poor maintenance of school buildings

• compile resources on best practices to assist districts achieve excellent maintenance

• how to promote excellent maintenance practices for school facilities throughout the Commonwealth to preserve the billions of dollars in school facility investments made to date

Maintenance

Goal - to advise the MSBA on:

• identifying barriers to regionalization and potential solutions to those barriers

• identifying cost savings and other efficiencies that occur when districts regionalize

• Identifying incentives that would encourage the formation of regional school districts

Regionalization Task Force

Accomplishments to date:• The MSBA has provided a forum for all stakeholders and

the discussions have generated many ideas

• The Task Force identified barriers to formation

• The MSBA adopted generous incentive to Regionalize – Up to 6 reimbursement points for districts that form new regional

school districts

• The MSBA has been providing technical assistance to districts in the Regional Assessment category

Regionalization Task Force

Maintenance

A district’s reimbursement rate may be eligible for up to TWO maintenance incentive points:Up to 1 Point - MaintenanceUp to 1 Point - Capital PlanningUp to 2 Points – Total

The criterion for maximum 1 point in Maintenance category is comprised of two elements:

1. Up to .5 points for a Maintenance Plan having defined tasks, staff assignments, schedules and associated budget outlined on an annual basis, based on the following criteria:

– Appropriate number and allocation of staff; appropriate and defined staff qualifications/job descriptions; appropriate staff training

– Work order system (manual or computerized)– Fully detailed preventive maintenance component, including inspections and dates for

maintenance activities– Evidence of effective implementation

2. Up to .5 points for a Maintenance Budget and history of spending that demonstrates the district’s support of maintaining its facilities, based on the following criteria:

– Level or increasing maintenance funding as proven by a 3-year historical budget and substantiated by expenditures per planned budget. (Variances must be explained)

Maintenance Incentive Points

Maintenance Incentive Points (cont.)

The criterion for maximum 1 point in Capital Planning category is comprised of four elements: Up to .4 points for a Capital Plan and funded budget based on the following criteria:

– Inventory of buildings, major system components, age, condition, useful life.– District has evidence of a long-term (5-10 years) capital improvement plan and historical data to

substantiate funding and expenditures associated with the plan. – District has a future 3-5 year budget plan – Consistent participation by facilities staff in the proposed project as indicated by participation in

project meetings or design review comments ongoing throughout planning and design process.– Forecasted maintenance budget for items in the capital plan

• Up to .1 point for segregated local funds reserved for use on capital projects, and evidence of its creation and use

• .25 point for having an established existing process for Facility Re/Retro-Commissioning• .25 point for having an established program for Energy Conservation and Indoor Air Quality

This methodology for awarding incentive points for maintenance targets the main priorities stated in the enabling statute and regulations. The implementation of this methodology will:

– provide school districts with clarity regarding the criteria for earning maintenance incentive

points; – provide guidance for maintenance and capital planning; and – provide information and data to the MSBA which can be used to monitor maintenance and

capital planning practices over time. – The threshold submission of the data will allow MSBA staff to ask questions and gain a better

understanding about a district’s maintenance operations and capital planning protocols.

Regionalization

Regionalization Issues

MSBA required to work with Eligible Applicant – For Regional School Districts, Eligible Applicant is the Regional District

School Committee

Why does MSBA work with Eligible Applicants?– Regional School District establishes district-wide:

– Educational Program– Budget– Coordination of services

– Potential Solutions may not involve town-owned buildings– Potential Solutions to facility issues require a coordinated approach– MSBA required to seek most educationally sound and cost effective

solutions, some of which may be a no-build solutions, re-use of existing facilities, grade reorganization, optimization of current educational spaces, all of which require a district-wide approach

– Regional Educational Program should be driving factor for SOI/school improvements

Regionalization Incentive Points

Newly Formed Regional School District - up to six incentive percentage points (6%) for an Approved Project if:

(1) the Approved Project is at the site of a school facility that is a member of a regional school district, which regional school district either:(a) was newly created as a result of working with the Authority during the Application process; or(b) whose membership changed as a result of working with the Authority during the Application process; and

(2) the Authority determines that a school facility construction, renovation, or repair project was avoided directly as a result of either:(a) a newly created regional school district; or(b) a change in a regional school district’s membership.

• Districts that are not members of a regional school district, or that have not formed a new regional school district or added new members, shall not be eligible for these incentive points.

• Award 6 incentive points for (a) two or more towns that form a brand new regional district, or (b) an existing regional school district adds one or more new members.

• Award 1 point per grade up to a maximum of 3 points for an existing regional district that adds grades to their current grade structure

Regionalization Incentive Points

• A regional school district which is established by some number of districts which do not presently operate under a regional school district agreement is eligible for 6 incentive points;

• An existing regional school district which expands through the inclusion of an additional district or districts which are not presently included within the regional agreement is eligible for 6 incentive points.

• An existing regional school district which expands through the inclusion of additional grades within the existing member towns, which grades are not presently included within the regional agreement, is eligible for an allocation of regionalization incentive points equal to 1 percentage point for each grade added to the regional district up to a maximum of 3 points;

• Regionalization incentive points shall only be applicable for the Total Facilities Grant awarded to the newly established or amended regional district immediately succeeding the establishment of the newly amended regional district. Regionalization incentive points shall not apply to any subsequent Total Facilities Grant for a district, unless the regional district agreement is further amended to add new members or additional grades to the existing agreement;

• Regionalization incentive points, when applicable, shall not be added to the calculation of the Total Facilities Grant (reimbursement rate) until the MSBA has received a certified copy of the local votes required for the establishment, or amendment of the regional school agreement.

Ongoing Projects

Project Status

Burlington $27.1M $21.7M Feb 2010

DistrictProject

BudgetEstimated Bid Date

Wellesley $132M $98.5M March 2010

Woburn $26.5M $19.9M March 2010

Springfield $125M $101.5 March 2010

Middleton $31.3M $24.3M March 2010

Plymouth $92.2M $72M March 2010

Belmont $40M $28.7M April 2010

Rochester $26.5M $20.5M May 2010

Hamp-Wilbraham $78.9M $66.4M April 2010

Ham-Wenham $1.5M $1.2M April 2010

Sharon $49.5M $34.7M June 2010

Ashland $3.1M $2.6M May 2010

Dartmouth $1.3M $1.1M May 2010

Whittier $3.2M $2.6M May 2010

Wayland $70.9M $56.2M November 2010

Nashoba $37.8M $28.8M July 2010

Sturbridge $46.9M $36.4M August 2010

Norfolk $37.5M $28.9M August 2010

Billerica $34M $27.1M September 2010

Southbridge $76.5M $60.1M

Dedham $23.4M $19.9M October 2010

Brookline $29.8M $22.5M October 2010

Grafton $72.4M $57.4M November 2010

Rockland $86.2M $66.5M November 2010

Construction

Budget

2010 Estimated Bid Dates

N. Attleboro $0.8M $0.7M May 2010

Rockport $1.1M $1M May 2010

South Shore $3.2M $2.6M May 2010

Essex-NS $125M $96.5M December 2010

Needham $27.4M $21.9M December 2010

Danvers $79M $62.7M November 2010

Project

BudgetEstimated Bid Date

Construction

BudgetDistrict

Total Project Budget $1.3B Total Construction Budget $1B

2010 Vote Chart(updated April 5, 2010)

Timothy P. Cahill Katherine P. CravenChairman, State Treasurer Executive Director

40 Broad Street, 5th Floor Boston , MA 02109

Phone: 617-720-4466Fax: 617-720-5260

http://www.massschoolbuildings.org

Questions?

Brian [email protected]

g