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State Allocation Board takes action on facilities grant agreement and acknowledged projects 

On June 5, the State Allocation board approved the school facilities Grant Agreement Template, and made a determination on how to address facilities projects currently on the Acknowledged List. Both actions will be processed as emergency regulations. 

As part of the 2017-18 budget process (both the initial January proposal and the May Revision), the administration has called for added accountability measures and adjustments to audit guidelines before releasing bond funds pursuant to Proposition 51, approved by voters in November.

These actions by the SAB provide some clarity on those measures and move funds closer to being released, but also put at risk the eligibility of construction projects already submitted for funding by many school districts and county offices of education.

Important: Due to the SAB’s rescheduling of its May meeting, any local education agencies with projects on the Unfunded (Lack of AB 55 Loans) list have until 5 p.m. tomorrow (Thursday, June 8) to request funding. Board members representing LEAs on this list were sent an email from CSBA on June 6.

If you are unsure if your district has a project on this list, click here and/or contact OPSC with questions. Click here to access Fund Release Authorization Form 50-05.

Grant Agreement Template

On a 9-1 vote, the SAB approved the Grant Agreement, which LEAs will have to enter into as a condition of receiving facilities bond money.

CSBA, while generally supportive of the creation of a grant agreement and revisions to audit guidelines, has voiced significant concerns regarding the initial draft of the template. Some improvements were made to the approved version over the initial draft, but concerns still remain. Primarily, the grant agreement still names computers and educational technology as ineligible expenditures, and its list of expenditures which are eligible is finite, which will hinder the ability of LEAs to respond to developments in technology and meet the evolving needs of their students.

 Positive developments are that the grant agreements do not have to be submitted until an LEA requests a release of funds, as opposed to the agreement being required at the time of apportionment, which would have violated the provisions of Proposition 51. Additionally, projects on the True Unfunded List (a total backlog of approximately $386 million) will not be subject to the grant agreement.

Those projects which are on the Acknowledged List are subject to the grant agreement.

 Projects on the Acknowledged List

The current backlog of acknowledged projects, totaling approximately $2.2 billion, has been a focal point of the delay in release of Proposition 51 money. The board weighed two different options for how these projects would be treated, narrowly adopting “Option 1” on a 6-4 vote. The approval of Option 1 means that projects on the Acknowledged List will be processed in order of date received, based upon the submission date for placement on the Acknowledged List.

CSBA had voiced support for “Option 2,” which would have based eligibility for both modernization and new construction on eligibility at time of submittal.

LEAs requesting new construction funding will now be required to submit new construction eligibility updates for the enrollment year in which the application was processed by the Office of Public School Construction.

It is possible that many LEAs that had eligibility at the time of submittal will have to withdraw their applications or file an appeal due to lack of eligibility in 2017-18. This approved option is intended to ensure that bond funds are provided only to projects for which there is a current need for additional classrooms or schools. While LEAs will have the ability to appeal, projects that are deemed ineligible based on this new process would face significant challenges in securing funding.