1. Lottery Funding for School Construction
Kenneth Phelps, PhD
Architect / Lead School Planning Consultant

2. What counts as “Construction?”
Construction includes:
Land purchase
Additions
Renovations
New buildings – excluding furniture and furnishings, textbooks, and equipment unless built into the building
Design fees, etc.

3. Overview Funding – Local, State, Federal Focus on Education Lottery
Availability
Applications and Approval
Usage

4. Local, state, and federal sources
96%
Local funding accounts for approximately 96% of all capital outlay. In FY , out of a total expenditure of $659.1 million (not including debt service) local funds accounted for $633.2 million.

5. Local Funding- the major source
Determined by county commissioners.
Dependent on local economic and demographic conditions:
Tax base (the “wealth” of the county)
Tax rate (a “political” decision)
Allocation of funding among various competing needs.
The local Board of Education is tasked with identifying the amount of the Need, and bringing that data to the county commissioners. The ability to meet that need is based on several factors, including the “wealth” of the county. It is interesting – but beyond the scope of this discussion – to compare wealth of the county to the tax rate. There is no statistical correlation.

6. Variations in local funding
From data on the FBS website, we can tabulate local expenditures for capital facilities. Using the statistical tool known as the “95-5 Ratio,” we compare the 6th ranked expenditures to the 110th ranked expenditures, and find, on average over the past three fiscal years, a difference of over 1100 percent.

7. Local Bonds- summary Since 1995:
98 Bond Issues passed, with value of $11.29 Billion. (84.65% by value.)
21 Bond Issues were defeated, with value of $2.05 Billion. (15.35% by value.)

8. State Funding- previous
School Facilities Finance Act- 1987
Increased corporate income tax
Created the Pub Sch Bldg Cap Fund
Created the Critical School Facility Needs Fund
Public School Bond Act ($1.8 Billion)
Distributed $30 million to Small Counties
Distributed $1.770 billion on basis of…
ADM: 40%
High Growth: 25%
Ability to Pay: 35%

9. State Funding- current
The Public School Building Capital Fund
The “ADM Fund” (no new revenue)
Allocated $1,620,595 in
The Education Lottery (2006 – present)
Allocated $105,033,891 in
Appropriated by lump sum, not per cent
The “ADM Fund” drew revenue from the Corporate Income Tax thru the second quarter of FY The Education Lottery provides funding from 2006 to the present.

10. Federal Programs
The Federal government does not actually provide funding for public school construction. It authorizes school districts to seek funding at low or zero interest rates, under certain conditions. After a long period of inactivity, QZAB applications from Alleghany, Gates, Jackson and Wilson Counties were received, and approved by the Superintendent’s Bond Advisory Council in May 2017.

11. Education Lottery Funding in support of School Construction

13. … of the 35% for Education…
Fifty percent (50%) to reduce class size in early grades
Forty percent (40%) for construction
Ten percent (10%) for scholarships
Therefore, Construction was to be funded at 40% of 35% = 14% of total gross revenue.

15. Reduction in Appropriation for Construction

16. I have a computer program which will calculate the difference in allocations for construction, for each individual LEA, over the last three fiscal years, if anyone is interested.

17. Applications for Funding
Form on School Planning website
Fill-in all blanks
Obtain signatures of chairpersons of
Local School Board
County Commissioners
…indicating a ‘meeting of the minds” of both bodies.
Applications are reviewed at end of each month.

18. Review & Approval of Applications
Is funding requested for an approvable purpose?
Is sufficient funding available?
Is review of project drawings & specifications required? If so, has the review been completed satisfactorily?

19. Review of project drawings
Types of projects for which review is required.
Submittal of documents for review
Response to review
Certificate of Review

20. Disbursing of Funds, and Reporting
Generally, funds are transferred into the county Disbursing Account by 1st or 2nd working day of the following month.
County FO writes warrants to “Ultimate Payee” for approved purpose
County FO complies with reporting requirements of NC Treasurer
County or LEA submits project Final Report to DPI.

21. Usage of Lottery Funding: 2016-17

22. New Legislation
Public School Construction Grants ($30 Million from Lottery in )
($75 Million from Lottery in )
Intent to return to 40% by
Match $1 (local) : $3 State in Tier 1
Match $1 (local) : $1 State in Tier 2 [SB 257, Section 5.3(c) – (h)]

24. New Legislation (in com.)
Public School Building Bond Act (HB 866)
State Bond for $1.9 billion, to provide grants for public school facilities
Funding allocated on basis of…
ADM: 40%
Low Wealth: 30%
ADM Growth: 15%
Small County: 15%
Dollar-amount for each LEA is noted in Act

25. Informational Publication
Handbook for Finance Officers
Regarding
Funding of School Capital Project

26. School Planning Website

27. Questions?

28. Thank you for the opportunity to present this topic…
Kenneth Phelps School Planning Section, DPI Website: