NCSBA Bill Tracking NCS NCSBA.ORG 1 3/8/19 Legi Legislation - - PDF document

3/8/19 1

NCSBA Bill Tracking

NCS NCSBA.ORG

3/8/19 2

Legi Legislation Legi Legislation

3/8/19 3

Legi Legislation Legi Legislation

3/8/19 4

Legi Legislation Legi Legislation

3/8/19 5

Legi Legislation Offici cials

3/8/19 6

Offici cials Offici cials

3/8/19 7

Offici cials Gr Gras assroot

• ots

3/8/19 8

Gr Gras assroot

• ots

Gr Gras assroot

• ots

3/8/19 9

Gr Gras assroot

• ots

Gr Gras assroot

• ots

3/8/19 10

Gr Gras assroot

• ots

Gr Gras assroot

• ots

3/8/19 11

Gr Gras assroot

• ots

Rebekah Howard

rhoward@ncsba.org (919) 747-6688

3/8/19 12

23

SCHOOL CONSTRUCTION FUNDING

BOND VS. PAY-AS-YOU-GO

NCSBA Legislative Agenda

School Construction/Capital

Allow North Carolinians to

§ vote on a significant statewide school bond and

§ establish more local option sales taxes to help LEAs address the multi-billion-dollar backlog of school construction needs.

24

3/8/19 13

What is the issue?

In April 2016, the DPI School Facility Needs Survey identified $8.1 billion in school capital needs across the state over the next 5 years. Facility Needs by Economic Tier (Tier 1: most economically distressed):

• 40 Tier 1 counties = $1.8

billion

• 40 Tier 2 counties = $2.8

billion

• 20 Tier 3 counties = $3.5

billion

25

2019 County Economic Tiers

26

3/8/19 14

Under-Reporting of Need

MGT of America Consulting, LLC selected 9 county LEAs for comprehensive facility evaluations, per a 2016 legislatively mandated study (S.L. 2016-94).

§These LEAs under-reported their school facility needs: §MGT estimated $630.2 million in school facility needs in the 9 LEAs. §In the 2016 DPI Facility Needs Survey, these 9 LEAs reported only $287.8 million in school capital needs.

27

Under-Reporting of Need

Guilford County Schools also hired MGT of America Consulting to do an assessment of its facilities.

§MGT reported on January 9, 2019 that Guilford County would need to spend $1.2 billion to improve all of its school buildings to new or like new status. §The 2016 DPI Facility Needs Survey reported Guilford County’s need as $759.4 million.

28

3/8/19 15

K-3 Class Size Requirements

§In response to a 2017 NCSBA Survey, 89 LEAs reported a need for 959 additional classrooms because of K-3 class size legislation. §While not participating in the survey, the press reported Wake needs 559 classrooms, Mecklenburg needs 200 classroom trailers, and Durham needs 63 classrooms, due to K-3 class size changes.

29

Local Funding Capacity

MGT Study finding:

“Given the current available allocation processes, the funds available from the state, county, and local level are limited. Considering these limiting factors, it is unlikely that there will be an adequate capital funding stream to support the demand districts have to provide 21st Century schools to every student in North Carolina.”

30

3/8/19 16

Local Bond Efforts

46 county bond issues approved $8.2 billion since 2005 ($2.9 Billion since 2016). 6 counties approved $1.2 billion school bond issues in 2018:

§ Alamance § Gaston § Johnston § Moore § Transylvania § Wake

31

Local Tax Efforts

32

County Purpose Tax revenue (1)

May 2018 1/4 Cent Sales Tax Referenda

Gaston Repay $250 million 2018 school bond $5,541,951 Jones Fund school technology and capital needs $116,319 Lincoln Fund staffing and instructional resources, upgrade technology, maintain safe learning environment ,and provide leadership development $2,007,511 Pasquotank Fund school capital needs and offset the costs of lowering school class size $1,175,360 Rutherford Fund critical public education facility needs $1,540,627

November 2018 1/4 Cent Sales Tax Referenda

Moore Fund debt service on bonds passed in May 2018 $3,119,905 Stanly Fund initiatives related to public education $1,525,601 Swain Fund school infrastructure needs $364,665

(1) North Carolina Center for County Research/N.C. Department of Revenue

3/8/19 17

Previous Statewide Bond Issues

$50 million

1949

$50 million

1953

$100 million

1963

$300 million

1973

$1.8 billion

1996

33

State Capital and Infrastructure Fund (SCIF)

Effective July 1, 2019

§Receives 4% of the net State tax revenue §Receives 1/4 of the unreserved fund balance §Receives money appropriated for capital projects and interest generated by the fund §In FY 2019-20 the fund is anticipated to receive $952.55 million §From this amount it must first pay debt service, then remaining funds can be use for new capital projects and repairs and renovations.

34

3/8/19 18

Senate Bill 5

§This bill increases the amount of earmarked net tax revenue from 4% to 4.5%. §Includes public school districts and community colleges in the list of fund recipients §Dedicates 1/3 of the funds to public school construction for 9 years §Effective Date is July 1, 2019

35

SB 5 Public School Allotment

Fiscal Year 1/3 of SCIF Annual Revenue

2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 Total $129,626,254 $140,516,736 $155,721,776 $175,464,542 $201,736,098 $258,240,325 $299,192,111 $323,791,950 $351,390,882 $2,035,680,674

36

3/8/19 19

Senate Bill 5 – Pros

§Provides funding for school construction §Begins in FY 2019-20 §Funds new construction and repairs and renovations §Does not require a vote of the people §Does not require debt service costs §Includes School Safety projects in R an R

37

Senate Bill 5 – Cons

Funding not guaranteed –

§Economic downturn can reduce funding stream – estimates built

• n 3% annual growth

§General Assembly “intends” to appropriate 1/3 of the fund to public schools each year §FY 2019-20 has $184 million in earmarked projects – bill doesn’t specify if these projects come from their dedicated allotment or “off the top” – K-12 might get only $68.3 million in the first year §Projects are chosen by the Department of Public Instruction

38

3/8/19 20

Senate Bill 5 – Cons

§No set amounts for LEAs §Without knowing the amount of funds received or when funds will be awarded, LEAs will have hard time planning facilities §LEA not class size compliant must first use capital funds to attain compliance before it can apply for other projects §Increased use of recurring funds for SCIF will reduce availability for teacher pay, school safety personnel, and other operating needs §Commitment of funds to K-12 construction is for nine years, but increased percentage of tax revenues does not expire

39

Chart of SCIF additional .5%

Fiscal Year .5% of G.F. Revenue

2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 Total $115,487,000 $118,951,610 $122,520,158 $126,195,763 $129,981,636 $133,881,085 $137,897,518 $142,034,443 $146,295,476 $1,173,244,689

40

3/8/19 21

41

Senate Bill 5 House Bill 241 Description

State Capital and Infrastructure Fund expanded to include K-12 and community colleges; increase revenue earmarked to fund General obligation bond for K-12, UNC, and community colleges

Requires Vote of the People

No Yes

Overall Fund Amount

Estimated $2 billion over 9 years - Funds not guaranteed; subject to economic conditions $1.9 billion - $1.5 billion for K-12; estimated issuance over 6 years; funds guaranteed

Start Date

July 1, 2019 If approved March 2020, then first bond issuance could be Fall 2020

General Fund Cost

Reduces budget availability by increasing the earmark of General Fund revenues from 4% to 4.5%; removes $1.2 billion from GF

• perating budget over next 9 years

Total debt service for a $1.9 billion bond is $809.4 million of which $639 million is for K-12 portion of the bond As current Connect NC bond is paid off, debt service for the new bond can be paid from the current appropriated amount

LEA Allocation

Amount determined by Department

• f Public Instruction upon application

by a local school administrative unit Each LEA receives amount specified in bill – State Board of Education distributes funds on basis of plans submitted by local school administrative unit and board of county commissioners

Pay-As-You-Go (SB5) vs. Bond (HB241)

42

Senate Bill 5 House Bill 241 Match Requirement

No No if LEA receives Low-Wealth or Adjustment Factor funds; yes, if LEA receives only ADM or ADM Growth funds

Project Type

New construction and Repairs & Renovations (R&R) New construction, renovation, technology infrastructure, building security measures, equipment for repurposed building, and land

Project Funding

Will fully fund a project, but funding will be released only for the amount that will be spent in a fiscal year Funding will be allocated when plan for expenditures is approved

Funding Priority

Priority to applicants demonstrating the greatest need; additional priority given to those that have not received a grant from the Needs-Based Public School Capital Fund in the past five years Allocation by counties’ low-wealth status, average school enrollment, and school enrollment growth; $10 million minimum per county

K-3 Class Size Compliance

If LEA is not class size compliant, capital funds are restricted to capital expenditures to make LEA compliant with class size requirements No restriction

School Safety Enhancements

Eligible for R&R funding Eligible for capital funds

Pay-As-You-Go (SB5) vs. Bond (HB241)

3/8/19 22

Debt Affordability Study

State Treasurer issued report on February 1, 2019 Findings:

§Treasurer set aside over half of debt capacity for the repayment of unfunded liabilities in the state retirement system. §The remaining State General Fund debt capacity is approximately $207 million per year for next 10 years. §Up to $1.365 billion in debt could be issued in 2019, but for the next 9 years only $50 to $60 million in additional debt could be issued each year.

43

Generic Bond

§Funds Guaranteed §Funds Allotted per LEA §Speaker Moore said bond grants should be weighted by counties’ §Low wealth status, §Total population, §Average school enrollment, and §Enrollment growth.

44

3/8/19 23

Generic Bond

§Speaker Moore said priority should be given to counties that have §Limited ability to generate tax revenue, §High debt to tax ratios, and §Critical school construction needs. §Speaker Moore thinks funds should be spent similar to Needs-Based Public School Fund. §Current debt service funding level can cover new bond expense.

45

Projected Debt Service

• 100,000,000

200,000,000 300,000,000 400,000,000 500,000,000 600,000,000 700,000,000 800,000,000 900,000,000 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 Existing Debt Service School Bond at 1.9 Billion

46

3/8/19 24

NC School Bond Advocacy Coalition

§NC Association of County Commissioners §NC School Boards Association §NC Association of School Administrators §NC Association of Educators §NC Parent Teacher Association §Public School Forum of NC §American Institute of Architects NC §Carolinas Association of General Contractors

47

NC School Bond Advocacy Coalition

§NC Justice Center §Wake Education Partnership §American Council of Engineering Companies/NC §American Society of Landscape Architects/NC §Professional Educators of NC §Low Wealth Schools Consortium

48

3/8/19 25

Education Lottery

§NC Education Lottery established in 2006 with promise that 40% of proceeds would go to school construction needs. §Portion of lottery proceeds going to the Public School Building Capital Fund was 16.9% in FY 2016-17 ($100 million). §72.5% of the $500 million in lottery capital funds spent by counties since 2013 used for debt service.

49

Historical Percentage of Lottery Proceed Appropriations to School Capital

50

131.0 140.0 162.3 179.1 108.1 100.0 100.0 100.0 100.0 100.0 100.0 40.2% 40.0% 39.3% 42.7% 23.4% 21.9% 21.1% 20.8% 17.1% 18.9% 16.9%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200

FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17

$ in millions School Capital Appropriation - ELF % of Lottery Proceed Appropriations

3/8/19 26

Education Lottery

In 2017, the General Assembly pledged to return to 40% of lottery funding for school capital needs by the 2028-29 fiscal year. Created Needs-Based School Capital Fund

§State Superintendent decides grant awards §Tier I counties only 2017-18(max. grant is $15 M) §Tier II counties added in 2018-19 (max. grant is $10 M) §$30M in 2017-18 / $140.5M in 2018-19 §IN ADDITION TO regular $100M lottery allocation

51

Lottery School Capital Appropriation Projections

(2.5% Net Proceed Growth – Under Current Law)

52

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 30.0 75.0 75.0 83.2 100.5 118.2 136.3 154.9 173.9 193.4 213.4 233.9 19.2% 25.7% 26.0% 26.6% 28.3% 30.1% 31.8% 33.5% 35.1% 36.7% 38.2% 39.7% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

$0 $50 $100 $150 $200 $250 $300 $350 $400

FY 2017- 18 FY 2018- 19 FY 2019- 20 FY 2020- 21 FY 2021- 22 FY 2022- 23 FY 2023- 24 FY 2024- 25 FY 2025- 26 FY 2026- 27 FY 2027- 28 FY 2028- 29

$ IN MILLIONS Public School Capital Needs-Based Capital % of Total Lottery Proceed Appropriations

3/8/19 27

School Calendar Flexibility

CITY DISTRICTS

Asheboro Hickory Newton-Conover *Clinton Roanoke Rapids Weldon *Whiteville Lexington Thomasville Mooresville Chapel Hill-Carrboro

• Mt. Airy

Elkin

*sponsor intended to include – will fix when bill goes to committee

§ House Bills § Senate Bills § House/Senate Bills

Counties Covered by 2019 Local Calendar Flexibility Bills

3/8/19 28

School Calendar Flexibility Resolutions Received by NCSBA

Alleghany Anson Ashe Avery Beaufort Burke (joint) Cabarrus (joint) Caldwell Camden (joint) Catawba Chapel Hill-Carrboro City Chatham Cherokee Clay Cleveland Clinton City Columbus Craven Cumberland Currituck Davidson Davie Duplin Durham Edenton Chowan Elizabeth City- Pasquotank Elkin City Franklin Gaston Gates Harnett Haywood Henderson Hertford Hickory City Hoke Jackson Johnston Lexington City Lee Lincoln Macon Martin McDowell Moore Mooresville City Mount Airy City Nash-Rocky Mount Onslow Orange Pamlico Perquimans Person Pitt Polk Randolph Roanoke Rapids City Rockingham Rutherford Sampson Stanly Swain Transylvania Tyrrell Washington Watauga Wilkes Wilson Yancy

Resolutions Adopted by School Boards

Alleghany Ashe Beaufort Burke (joint) Cabarrus (joint) Caldwell Camden (joint) Catawba Chatham Chowan Davie Franklin Gates Haywood Hertford Martin McDowell Onslow Orange Perquimans Person Polk Stanly Tyrrell Washington Watauga Wilkes Wilson

Resolutions Adopted by County Commissioners

Lexington City Council North West Personnel Administrators of NC

Resolutions Adopted by Other Groups

House Bill 76: School Safety Omnibus

3/8/19 29

House Bill 76 Summary

§Establish that school safety requirements apply to all public schools, and allow non-public schools to participate. §Clarify the powers and duties of the Center for Safer Schools. §Require threat assessment teams be established at each public school and codify the duties of the threat assessment teams. §Require local boards of education to require peer-to-peer support programs at all schools with grades six and higher. §Require county boards of education to develop county state of emergency plans for all public school units in the county. §Define the term "school resource officer" and require training for SROs. §Require annual vulnerability assessments for each public school building.

Filed Bills on NCSBA’S 2019-20 Legislative Agenda

3/8/19 30

59

School Grades

H 0145 15-Point Scale For School Performance Grades H 0200 Education Report Changes.-AB H 0249 School Annual Report Card H 0266 School Annual Report Card S 0117 Modify School Performance Scores & Grades S 0176 School Annual Report Card H 0251 State Bd. of Ed./Education Changes.-AB S 0038 Class Size Reporting/Principal

K-3 Class Size

S 0170 Expand Principal Bonus Multiplier Eligibility.-AB

Principal Pay

H 0248 Restore Longevity for Teachers S 0028 Restore Master's Pay for Certain Teachers

Teacher Pay

H 0241 Education Bond Act of 2019

School Construction/Capital

H 0074 2019 School Safety Grants Program H 0076 School Safety Omnibus

School Safety/School Resource Officers

H 0251 State Bd. of Ed./Education Changes.-AB S 0152 Restore LEA Sales Tax Refund

Sales Tax Refund

60

H 0012 School Calendar Flexibility/Alamance County H 0013 School Calendar Flexibility/Certain Systems H 0023 School Calendar Flexibility/Certain Systems H 0025 School Calendar Flexibility/Moore County H 0026 School Calendar Flexibility/Johnston County H 0027 School Calendar Flexibility/Certain Systems H 0034 School Calendar Flex./Certain School Systems H 0038 School Calendar Flex/Certain School Systems H 0042 School Calendar Flex/Caldwell County H 0045 School Calendar Flex./Forsyth County H 0047 School Calendar Flex/Charlotte-Mecklenburg H 0048 School Calendar Flex/Certain School Systems H 0058 School Calendar Flex/Granville & Person H 0071 Permit Lincoln Co Schools & Com College Align H 0078 Academic Alignment/Certain School Systems H 0083 School Calendar Flex/Certain School Systems H 0088 School Calendar Flex/Certain School Systems H 0093 School Calendar Flex/Martin County H 0094 School Calendar Flexibility/Lenoir County H 0095 School Calendar Flex/Certain School Systems H 0101 School Calendar Flex/Certain School Systems H 0109 School Calendar Flexibility/Iredell County H 0116 School Calendar Flex/Certain School Systems H 0137 School Calendar Flexibility/Cumberland County H 0142 School Calendar Flexibility/Pitt County H 0148 School Calendar Flexibility/Hoke County H 0149 School Calendar Flexibility/Scotland County H 0163 School Calendar Flex/Certain School Systems

School Calendar (Local)

3/8/19 31

61

H 0175 School Calendar Flexibility/Certain Systems H 0183 School Calendar Flexibility/Wake County H 0192 School Calendar Flexibility/Guilford County H 0207 School Calendar Flex/Weather/Certain Counties H 0210 School Calendar Flex/Orange Co. Boards of Ed H 0261 School Calendar Flex/Roanoke Rapids/Halifax S 0017 School Calendar Flexibility/Certain Systems S 0037 School Calendar Flex/Certain School Systems S 0048 Permit Align School/Comm. College Calendar S 0072 School Calendar Flex/Charlotte-Mecklenburg S 0091 Permit Lincoln Co Schools & Com College Align S 0093 School Calendar Flexibility/Wake County S 0096 School Calendar Flexibility/Cleveland County S 0097 School Calendar Flexibility/Chatham County S 0098 School Calendar Flex/Certain School Systems S 0115 School Calendar Flexibility/Guilford County S 0121 School Calendar Flexibility/Person County S 0122 School Calendar Flexibility/Granville County S 0171 School Calendar Flexibility/Cumberland County H 0079 Academic Alignment/Boards of Education & CC H 0117 School Calendar Flexibility Pilot Program H 0194 Allow Coordination of School & CC Calendars H 0232 Increase School Calendar Flexibility

School Calendar (Local) School Calendar (Statewide)

Leanne Winner

lwinner@ncsba.org (919) 747-6686