Volume I, No. 15

February 26, 2009

State Allocation Board Update

By David Walrath -- dwalrath@m-w-h.com

Pooled Money Investment Board (PMIB)

The State Allocation Board (SAB) met on February 25, to continue discussing how to address the state’s credit crunch which has restricted the ability to provide fund releases for new construction and modernization projects.  The SAB considered establishing priorities for fund releases once funds become available from the PMIB.  The SAB attorney opined that the SAB did not have the authority to establish priorities.  Other speakers indicated that there were ways for the SAB to establish priorities while being consistent with the first-come, first-served apportionment structure of current law. 

SAB was interested in finding ways to establish priorities for school districts which would be in great financial crisis if they were unable to receive state funding to continue their projects.  The superintendents from Kings River Unified School District and Chawanakee Unified School District testified that their districts could go negative and need a state loan if state facility funding did not become available quickly. 

The SAB will be urging the PMIB (State Treasurer, State Controller, and Director of Department of Finance) to release funds for school facilities as soon as possible, and to provide a guarantee for a date certain of when funds can be made available for fund releases.  The request for a guarantee of a date certain was made by the SSDA advocate to allow hardship school districts the opportunity for Grant Anticipation Notes to bridge the time between when an apportionment is made and a fund release is guaranteed.

Labor Compliance Programs (LCPs)

The issue of LCPs was discussed by the SAB in relation to the potential transfer of remaining Proposition 47 funds for future new construction projects. Proposition 47 new construction funds require school districts to enter into LCPs.  The budget as enacted, however, provides that the Department of Industrial Relations will provide LCPs for almost all new construction and modernization projects.  SAB recognized the conflict between the Proposition 47 requirements and the new budget bill requirements.  They directed staff to return with recommendations regarding this issue.

Deferred Maintenance

SAB released the state Deferred Maintenance allocations to school districts which will be approximately 80% of the full state match requirement.  SAB also approved a number of Deferred Maintenance extreme hardship projects.  Because the extreme hardship approved but unfunded list is greater than $60 million and SAB had less than $25 million for these projects, there will remain a significant unfunded list.  At the request of the SSDA advocate, SAB agreed to direct OPSC staff to bring the 2009-10 deferred maintenance funding and extreme hardship project funding before the SAB as soon as possible in 2009-10 and preferably in July. Consequently, school districts could see two years worth of Deferred Maintenance funding within a six month period.