A building expense

Building and renovating schools can be costly, but how much can the state continue to pour into helping local communities cover the expense?

That was the question raised in “Improving New Hampshire’s School Building Aid Program,” a report released last month by the New Hampshire Center for Public Policy Studies. The report includes challenges to the state school building aid program, explains recent legislative changes on funding and suggests options for the future.

“In recent years, the program’s cost has increased at a rate far exceeding the rest of the state budget, raising concerns about how to maintain this service to local school districts,” reads the report.

Between 2000 and the current fiscal year, state appropriations for School Building Aid increased by 140 percent, from $19 million to $46 million. That commitment grows to $52 million next year. The state has already committed to spending nearly $540 million over the next 30 years on previously approved school construction projects, according to the report.

“That long-term obligation complicates attempts at ‘quick fixes’ of the School Building Aid program, such as extending the moratorium on new projects that the Legislature approved last year,” reads the executive summary.

That moratorium, which went into effect June 30, prompted school officials in Nashua and other communities to fast-track projects to get them in under the deadline. Superintendent Mark Conrad said the district will qualify for 30 percent reimbursement on $7 million worth of bonded projects, which will pay for heating and air conditioning system improvements at Fairgrounds and Ledge Street schools, as well as roof replacement and other improvements at Elm Street School.

To see the larger-scale impact of what school building aid has meant to the city, one only has to look to the city’s two new high schools. It was a $143 million project, likely the largest capital project in New Hampshire history, which paid for the renovation of Nashua High School South and the construction of Nashua High School North.

The state agreed to pick up 30 percent of the principal cost of the project, which was bonded, through the School Building Aid program. It has been large high school projects such as this and others in communities that have driven costs, the report found. Including Nashua, there have been 11 major high school construction projects totaling $544 million that were eligible for state aid. That includes projects in Bedford ($52 million) and Windham ($51 million).
Changes suggested

It comes as no surprise to Conrad that there are concerns about the increasing costs of the building aid program.

“There was so much construction happening in the ’50s and ’60s,” Conrad said. “Along with the population growth, it’s not a surprise to see a need for continuing to build.”

Conrad said that during his time in Maine, there was a fixed amount of money set aside for new projects, which differs from New Hampshire’s much broader application process.

“In New Hampshire, if the application meets the clear requirements for instructional and infrastructure needs, it’s approved,” Conrad said.

Expenses covered by School Building Aid include construction costs – such as the total cost of labor and materials – site development, cost of purchasing new buildings, land purchase – including land for buildings – parking lots and playing field, planning and design costs, construction equipment and furniture and fixtures.

One of the ways the state changed its funding of building aid contributions was to bond out $131 million in payments from 2009-11 instead of simply drawing the money from the general fund.

“While that decision was made in response to fiscal pressures from the recession, bonding future School Building Aid payments will add to the state’s debt burden in coming years,” reads the report.

It’s the type of system Conrad referenced in Maine that the report suggests could help to address the state’s fiscal problem. One of the changes suggested by the report is to cap annual state grants to districts, as opposed to allowing the demand to determine funding.

Among the other changes suggested were:• Establishing a priority list for new construction projects deemed eligible for state reimbursement. A district’s placement on that list would be determined by the condition of existing facilities and financial need. Projects that don’t receive funding in a given year will be placed on a wait list.• Rewriting the aid formula to lower the base reimbursement rate from 30 percent and increase the maximum rate from the current 60 percent.• Assigning a dedicated revenue source to pay down the existing obligation for already-approved construction.• Commissioning an inventory of the state’s school facilities – including descriptions of the age and condition of buildings, building systems, and school sites – and establishing a mechanism for regular updates of that inventory.To view the report in its entirety, visit nhpolicy.org/reports/sba_final.pdf – MICHAEL BRINDLEY/THE TELEGRAPH