Volume I, No. 20

April 2, 2009

Summary of School Maintenance Funding and Programs

By Ian Padilla

The following is a summary of changes made to school maintenance funding and programs as a result of the State Budget. 

Deferred Maintenance Program (DMP)

The State Budget includes $234,722,000 in 2008-09 and $250,806,000 in 2009-10 to fund the DMP.  These amounts reflect full funding of the DMP less the 15.4% reduction that all categorical programs received.

Routine Restricted Maintenance Account (RRMA)

The State Budget reduces the amount that school districts are required to set aside in the RRMA from 3% to 1% of the district general fund.  This requirement will be in effect for five years beginning in 2008-09. 

School District Local Match

The State Budget eliminates the requirement that school districts must set at least a half percent of the “current-year revenue limit ADA” funding for maintenance of facilities and submit a related report to the Legislature.  This requirement will be in effect for five years beginning in 2008-09.

Emergency Repair Program (ERP) Funding

The State Budget limits funding for the ERP to no more than $101 million in 2008-09 and suspends any transfer of funds from the Proposition 98 Reversion Account into the school facilities ERP for the 2009-10 fiscal year.  It prohibits school districts from using ERP funds to supplant state funds provided for deferred maintenance, and from depositing these funds into district deferred maintenance accounts.  In addition, at the March 25th meeting of the State Allocation Board, Office of Public School Construction (OPSC) staff announced that an additional $50 million was discovered and will now be available to fund Emergency Repair Program projects. 

Emergency Repair Program and Local Matching Requirement

Current law requires school districts who apply for an Emergency Repair Program to have made their local half-percent match, yet the budget eliminates the requirement for school districts to make their local match.  As a result, a question has emerged concerning how these programs will dovetail.  OPSC is aware of this issue and is currently working with the Department of Finance to find a resolution.   

Use of Net Ending Balances for Maintenance Funding

As part of the categorical flexibility provision, school districts are allowed to use restricted account balances as of June 30, 2008 for any educational purpose in 2008-09 and 2009-10, but maintenance funding is not subject to this provision.  This means that unused maintenance funds cannot be “swept” and used for other educational purposes. 

Deferred Maintenance Extreme Hardship

When the initial Deferred Maintenance Program Basic Grant amounts were calculated after approval of the budget and approved at the February 25, 2009 SAB meeting, the 10 percent reservation to fund Extreme Hardship projects was inadvertently not included.  After considering numerous options regarding how to fund Deferred Maintenance Extreme Hardship projects, on March 25, 2009, the SAB voted to distribute 92.7 percent of the Deferred Maintenance Program funding proportionately to all participating school districts and provide 7.3 percent for Extreme Hardship projects distributed at 21 percent of the project cost among all 126 Extreme Hardship projects.  To implement this action, the SAB will now rescind the allocation approved for Deferred Maintenance Program Basic Grants at the February 25, 2009 SAB meeting, approve an adjusted Deferred Maintenance Program Basic Grant, approve Extreme Hardship apportionments at 21 percent, and declare the Extreme Hardship projects as fully funded and ineligible for future funding from the Deferred Maintenance Program or other school facility programs.  This item is scheduled to be considered by the SAB at their April 22, 2009 meeting, and it is expected that the item will be approved and Deferred Maintenance Program funding will start to flow to districts in May.         

More Information to Come

The Office of Public School Construction is currently drafting an advisory for school districts on school maintenance funding and programs which will be posted on the Office of Public School Construction website and mailed to school districts very soon.