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Frequently Asked Questions - Master Capital Plan Outreach

Why are you performing this outreach?

The 2014-15 Master Capital Plan was presented to the Board of Education on June 17, 2014. Upon reviewing the plan and a potential capital funding strategy, the Board tasked staff with performing an extensive community outreach effort. Throughout July and August the team met with a handful of stakeholder groups and gathered feedback. Using this feedback, outreach materials were refined and are currently being presented.

The purpose of this effort is to inform and educate stakeholders on the District’s capital needs. In addition, DCSD is seeking feedback on our current capital planning process, needs and funding strategy. DCSD will be meeting with over 100 community groups throughout the 2014-15 school year.

What is the current value of DCSD capital assets?

DCSD currently has over $1.5 billion of capital assets that it is responsible for. This includes 47 elementary schools, 9 middle schools, 9 high schools, 13 charter schools, 2 magnet schools, 1 alternative high school, 1 night school, 1 online school, 64 preschool sessions, and over 300 buses and 100 support vehicles. The District has over 6.6M square feet of buildings and the equivalent of over 150 acres of roofs.

Additionally we also operate a large student computing infrastructure​​ ​to ensure 21st century learning tools are easily accessible to our students and teachers. We operate over 560 servers and the DCSD network spans 840 square miles servicing 92 facilities. There are over 500 network switches in the network servicing ​over 3,650 wireless access points​ allowing our students to connect to the Internet ​seamlessly from anywhere in our buildings. Our phone systems provide 6,880 phones and we currently support over 20,000 phone numbers. We have purchased over 44,000 student computing devices for our school and staff and replace roughly 20% every year to ensure our students are utilizing relevant technology in their classrooms.

What are the long term growth projections for the District?

Over the next 25 years it is projected that the District will nearly double in size to serve almost 120,000 students. By 2040, we anticipate having 18 high schools and associated feeder systems. This will require the construction of approximately 7 new K-12 feeder systems, and would include an additional 42 elementary schools, 7 middle schools, and 7 high schools. In today’s dollars, each new high school alone costs approximately $60-$80M to build. The total cost for all of these new schools, in today’s dollars, is over $1.5 billion.

What are the current (5 year) capital needs?

Current capital needs stand at approximately $275M and grow by $35M each year. Included in the $275M are $25M in needs which could close a school or negatively impact the learning environment if any major system were to fail.

What happened to create a $275M need?

It has been 8 years since voters in the Douglas County School District have passed a Bond. Since that time the District has been able to use some alternative funds for capital improvements but a large portion of the Districts capital needs have simply gone unmet. In addition, a large portion of the District’s facilities were built more than 15 years ago and are in need of repair. These repair costs accrue over time as our buildings age.

What industry standards have been used to assess the $275M need?

DCSD determines capital need via two primary methods; life cycle assessments and a facility condition index.

Life Cycle Assessment
Expected life cycle is a term used to describe the average life of systems and components of a building based on regular and preventative maintenance. All building systems and components have a predefined (by manufacturer and industry standards) life expectancy associated with them. For example, a specific piece of equipment may be designed to operate at full design load for a total of 5,000 hours and/or 15,000 start/stop cycles. DCSD performs facility life cycle assessments and modeling in order to identify future replacement and maintenance costs. This assessment typically consists of three key components:

Building and Site Inventory: All components are assessed, inventoried and logged in a data base.
Component Life Cycle: These are standards which are set by the manufacturer and the industry and are applied to the inventory to establish an expected life cycle for each building and site component.
Reporting: These serve as the basis for updates to the Master Capital Plan.

Facility Condition Index (FCI)
The Facility Condition Index (FCI) provides a simple measurement of a facility’s condition. It represents the ratio of the cost to correct a facility’s deficiencies to the current replacement value of the facility. For example, if a building’s replacement value is $1,000,000 and the cost of correcting its existing deficiencies is $100,000, the building’s FCI is $100,000 divided by $1,000,000; that is 0.10 or 10 percent. When the FCI is higher, the condition of the facility will be worse.

Along with the FCI, Douglas County School District also utilizes an Extended Facility Condition Index (EFCI) and a Facility Needs Index (FNI). The Extended Facility Condition Index represents the ratio of the cost to correct a facility’s deficiencies and the projected cost of future renewals to the current replacement value of the facility. The Facility Needs Index is an extension of the EFCI that also takes into account costs associated with upgrades related to modernization and regulatory compliance. In other words, the FCI measures “catch-up”, the EFCI measures “keep-up” costs, and the FNI measures “get ahead” costs.

Life cycle assessments and facility condition indices are both considered to be industry standards and are used widely used by government agencies, private corporations, higher education institutions, and local school districts throughout the nation. The following is a list of just a few of the entities who endorse and publish information on these facility management methods:

IFMA - International Facility Management Association

IFMA is the world's largest and most widely recognized international association for facility management professionals

APPA – Association of Higher Education Facilities Officials

APPA is a leading organization for higher education planning, construction and maintenance.

NASFA – National Association of State Facilities Administrators

NAFSA is a professional organization whose mission is fostering communication and providing leadership in the development and implementation of state facility administration practices.

American School and University (Magazine)

An information source for education facilities and business professionals — serving the nation's K-12 and higher-education administrators responsible for the planning, design, construction, retrofit, operations, maintenance and management of education facilities.

NCEF – National Clearinghouse for Educational Facilities

The NCF is a vast database of nearly 20,000 journal articles, books, studies and online publications on school facilities, design, planning, construction, maintenance, and funding. The clearinghouse is a program of the National Institute of Building Sciences, an organization authorized by Congress to serve as an authoritative source of solutions for the built environment.

What funding sources are available to address current facility maintenance and the building of schools in the future?

The most common funding source used to address facility needs and new construction is General Obligation Bonds.  New bonds must be approved by a vote of the people and DCSD has not had a bond passed since 2006.  The last remaining bond dollars from previous authorizations were fully exhausted in June 2013.  Additionally, school districts can issue Certificates of Participation for smaller projects (DCSD currently pays $4M in lease payments on these certificates each year) or partner with charter schools to build new schools at the charter partner’s expense.  Alternatively, the District can divert operating dollars to pay for capital needs.  If DCSD were to address all of the $275M identified needs in just one year, this would require spending approximately 60% of the District’s operating budget on those needs.  If DCSD were to address the $275M of needs over 5 years, the District would need to spend approximately 12% of its operating budget annually for these capital expenditures.

What is the difference between a Bond and a Mill Levy?

Both a bond and mill levy can only be passed with a vote of the people. A bond can only be used for capital needs. This includes current critical maintenance and new construction. A mill levy, on the other hand, is used for operational purposes such as hiring new employees, providing compensation increases, and/or funding new initiatives.

What is the Negative Factor?

The Negative Factor is a tool used by the State Legislature to reduce their financial obligation to K12. During the Great Recession, the Legislature did not have sufficient tax revenue to fully fund all programs. In order to balance the budget with regard to K12, the Legislature created the Negative Factor which reduced the State’s contribution to K12 education. For example, if the State contribution to K12 was calculated at $4 billion and the State could only afford $3 billion, the Negative Factor would be $1 billion. This $1 billion is the “cut” to K12 on an annual basis. The Negative Factor fluctuates on an annual basis based on the State’s ability to fund K12. Currently, the Negative Factor stands at approximately $900 million. Over the past 5 years, DCSD’s cumulative share of the Negative Factor has been just over $300 million. In other words, if DCSD were fully funded as contemplated by the School Finance Act, DCSD would have had $300 million of additional revenue to spend over the last 5 years.

What is the impact to my tax bill if a new bond is passed?

With a conservative forecast of the growth of home values, an opportunity exists to pass a new $200M bond that would hold taxes flat for homeowners in Douglas County for the next 4 years and then tax bills would begin to decline again without a subsequent bond passage. The District would be able to issue new debt that corresponds with the retirement of old debt so that homeowners’ tax bills will stay flat. In order to do this, the average homeowner of Douglas County would be asked to forego a savings of $3/month that would occur if no new bond were passed. If a new bond is passed, the homeowner would not see an increase over their current tax bill.

What is the tax rate that the District currently levies?

For the 2014 calendar year, the District currently levies 48.277 mills. This is broken out in the following manner:

25.440 for the Colorado School Finance Act
7.151 for voter approved Mill Levy Overrides
15.342 to service existing debt from previous bond issuance
.344 for Abatement

Every year the District resets its mill rate based on current debt obligations and total Assessed Value in the district.

If tax dollars are staying flat in this scenario / possible funding strategy, does this mean that the tax rate will drop?

Yes. The District believes it can manage the tax bill (on a dollar basis) to stay flat over the next four years. That means that as the value of property increases the tax rate will drop in order to generate the same amount of tax revenue.

I thought Property Taxes funded schools - with all of the construction going on in Douglas County, why is funding so low?

The Colorado School Finance Act allocates dollars based on a formula of Local Property Taxes + State Share = Total Funding. Currently, Local Property Taxes make up about 1/3 of DCSD’s funding while the other 2/3 comes from the State of Colorado. All of your local school district property taxes that you pay stay here in Douglas County. The State funds its portion from the State General Fund which is mainly funded through income taxes and sales taxes. Further complicating the issue is that as Local Property Tax receipts increase, the State simply reduces their contribution to the district through the formula. For example, if a school district was funded $5 Local and $5 State for a total funding level of $10 and next year the local property taxes generate $6, the state will reduce their share to $4 to maintain the $10 total funding level. This is why all of the residential and commercial property development in the County does not provide additional funding to the District – it simply reduces the burden on the state.

Why are you the lowest funded school district on the Front Range given the affluence of Douglas County?

The Colorado School Finance Act allocates additional dollars (“weights”) to Districts that have high percentages of English Language Learners and children that are deemed “At Risk” given their families’ economic circumstances. Given the demographic makeup of Douglas County and its relative affluence compared to other areas of Colorado, DCSD does not receive much of this weighted funding and thus is the lowest funded District in the area.

Is the District currently exploring a Mill Levy Override for additional operating dollars? Similarly, has the Board of Education approved a Bond question for an upcoming election?

No. Currently, the District is not exploring a Mill Levy Override nor a General Obligation Bond question on the ballot. The District is seeking to engage citizens regarding its capital needs and provide a possible funding scenario to meet those needs. The District is gathering public input from these meetings to provide feedback to the Board of Education based on this outreach effort.

What prohibits school districts from using bond funding for operational needs?

TABOR requires that any general obligation indebtedness be approved by the electors of the district. Statute requires that any approved indebtedness be expended only for capital expenditures. Below is the reference from Colorado statute:

§ 22-42-102. Bonded indebtedness - elections

(1) No debt by loan in any form shall be contracted by any school district for the purposes specified in paragraph (a)of subsection (2) of this section, unless the proposition to create the debt has first been submitted to and approved by the eligible electors of the district.

(2)(a) The board of education of any school district, at any regular biennial school election or at a special election called for the purpose, shall submit to the eligible electors of the district the question of contracting a bonded indebtedness for one or more of the following purposes:

(I) For acquiring or purchasing buildings or grounds;

(II) For enlarging, improving, remodeling, repairing, or making additions to any school building;

(III) For constructing or erecting school buildings;

(IV)For equipping or furnishing any school building, but only in conjunction with a construction project for a new building or for an addition to an existing building or in conjunction with a project for substantial remodeling, improvement, or repair of an existing building;

(V) For improving school grounds;

(VI) For funding floating indebtedness;

(VII) For acquiring, constructing, or improving any capital asset that the district is authorized by law to own;

(VIII) For supporting charter school capital construction as defined in section 22-30.5-403(4) or the land and facilities needs of a charter school as defined in section 22-30.5-403(3), without title or ownership of charter school capital assets being held by the school district or ownership or use restrictions placed on the charter school by the school district.

How does this affect me? Why should I be concerned?

We all benefit from quality public schools. Research has long shown the immense social and economic benefits of a quality public education. Access to a high quality primary and secondary education has been linked to everything from low crime rates to decreased public health care costs to increases in tax revenue. Research has also shown that public schools indisputably influence residential property values and there is a clear consensus among researchers that education enhances productivity can help make localities more economically competitive. Finally, emerging evidence suggests that the quality, size and shape of school facilities themselves can have an effect not only on student learning but on economic development as well.

Where can I learn more about the District's capital needs?

Every year the Long Range Planning Committee, which consists of 22 members of the Douglas County community, develop a comprehensive Master Capital Plan. Information about the Long Range Planning Committee and the Master Capital Plan can be found at https://www.dcsdk12.org/sites/default/files/operations/MasterCapitalPlan....

How can I provide feedback to the District?

The District welcomes any and all feedback regarding its current capital needs. Please go to the Douglas County School District’s web site and go to the bottom of the home page. Please click on the “District Feedback” link. The link is https://www.dcsdk12.org/master-capital-plan-community-outreach#overlay-c...