Volume I, No. 18

March 19, 2009

SAB Gives Go Ahead for “Unfunded Approvals”

By Patti Herrera

The State Allocation Board approved an item at its Special Meeting on March 11 that authorizes the Office of Public School Construction (OPSC) to process funding applications and bring them to the Board for consideration as “Unfunded Approvals.”  The Board approval was contingent upon the condition that the Unfunded Approvals would only be granted up to the current total bonding authority and that the Board would reconsider the matter when that threshold was met.

So, what does this mean?

School districts, notwithstanding the funding freeze initiated by the Pooled Money Investment Board (PMIB) on December 17, 2008, can continue planning their projects for which they will be seeking state assistance.  Further, districts can apply for state funding and if the project is deemed eligible, the Board will grant an Unfunded Approval.

The distinction between an Unfunded Approval and Apportionment is critical.  Unlike an Apportionment, an Unfunded Approval does not trigger School Facility Program (SFP) requirements, such as the requirement to request a Fund Release within 18 months of Board approval.  Additionally, Unfunded Approvals are not subject to the Full and Final provisions of Apportionments and can therefore be adjusted for the annual Construction Cost Index and other grant increases at the time the Board takes action to convert them into Apportionments.  However, unlike Apportionments – and although this may seem semantic in our current environment – Unfunded Approvals are not considered a guarantee of state funds.  They do not reserve state funds in the same fashion Apportionments do.

The advantage of an Unfunded Approval at a time when state bond funds are unavailable is two-fold.  First, it establishes a project’s place in line in the event state bond funds do become available.  The program’s tenet of first-in, first-out applies to those on the Unfunded List.  The second advantage of an Unfunded Approval is that, except for Financial Hardship districts that are subject to six-month eligibility reviews, project eligibility is locked in and does not require re-justification for Apportionment.

The first opportunity for the Board to consider granting Unfunded Approvals is on Wednesday, March 25.  OPSC staff expressed concern about the insufficient time they had to prepare the items to present to the board.  Kathleen Moore, serving as the SAB designee for Superintendent Jack O’Connell, asked that staff make every attempt to present applications to the Board on March 25th because districts have been waiting for some relief in the process since mid-December.