Bill Summary – FastDemocracy

H-1382.2
                           SUBSTITUTE HOUSE BILL 1044
     State of Washington         68th Legislature       2023 Regular Session
     By House Capital Budget (originally sponsored by Representatives
     McEntire, Graham, Couture, Sandlin, Walsh, Rude, Caldier, and Santos)
     READ FIRST TIME 02/22/23.
     AN ACT Relating to capital financial assistance to small school
 districts   with  demonstrated funding   challenges;  amending  RCW
 28A.525.159; adding a new section to chapter 28A.525 RCW; and
 creating a new section.
 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
     NEW SECTION.   Sec. 1.   The legislature intends to create a new
 grant program through which small, financially distressed school
 districts that generally do not participate in the current school
 construction assistance program will be able to get the necessary
 funds to modernize or rebuild their school buildings.
     NEW SECTION. Sec. 2. A new section is added to chapter 28A.525
 RCW to read as follows:
     (1) Supplementary modernization and new construction grants and
 planning grants for financially distressed school districts must be
 awarded and determined in accordance with this section.
     (2) Applicant eligibility criteria. Subject to subsection (4) of
 this section, only school districts that have a student headcount
 enrollment of 1,000 students or fewer are eligible for grants under
 this section.
     (3) Project eligibility criteria.
                                       p. 1                         SHB 1044
     (a) Projects funded under this section must meet the following
 conditions: (i) Projects must comprehensively modernize or replace
 instructional buildings that are at least 30 years old and that are
 recorded as poor or unsatisfactory condition by the office of the
 superintendent of public instruction; and (ii) projects must not
 exceed 110 percent of the statewide average cost per square foot for
 new construction or modernization, as applicable, and as estimated by
 the   advisory  committee   and  approved  by   the  office   of  the
 superintendent of public instruction.
     (b) To meet the project eligibility criteria for comprehensive
 modernization specified under (a) of this subsection, projects must
 correct critical physical deficiencies and essential safety concerns,
 including: (i) Seismic vulnerabilities; (ii) failing or broken
 building and site systems; (iii) deficiencies of infrastructure and
 components; (iv) barriers to program accessibility; (v) deteriorated
 exterior conditions; and (vi) deficiencies in interior classroom
 spaces. Project approaches may include modernizing, repairing,
 reconfiguring, or replacing existing buildings, constructing new
 buildings,   and    upgrading   deteriorated    and   outdated   site
 infrastructure.
     (c) School districts applying for a grant under this section must
 submit separate applications for each individual school.
     (4) Other eligibility criteria. School districts with incomplete
 or outdated building inventories, natural hazard assessments, and
 condition information as required by the office of the superintendent
 of public instruction are not eligible to apply for construction
 grants under this section but may apply for planning grants. Building
 inventory and condition information must be provided by an
 independent consultant certified by the office of the superintendent
 of public instruction. A seismic building assessment must be
 conducted by an engineer licensed as a structural engineer in
 Washington state.
     (5) Eligible use of grants. A grant awarded pursuant to this
 section may only be used for the following purposes: (a) The
 collection of the required information in subsection (4) of this
 section; (b) all predesign and design costs including value
 engineering and constructability review; and (c) all related costs
 associated with the project except school district administration
 costs as determined by the office of the superintendent of public
 instruction.
                                     p. 2                         SHB 1044
     (6) Required grant list.
     (a) The superintendent of public instruction must propose a list
 of prioritized planning and construction grants pursuant to this
 section for school districts meeting the eligibility requirements
 established in subsection (2) of this section to the governor by
 September 1st of even-numbered years, beginning on September 1, 2024.
 This list must include: (i) A description of the proposed project;
 (ii) the proposed planning grant amount, when applicable; (iii) the
 proposed construction grant amount, when applicable; (iv) the
 anticipated school construction assistance program amount; (v) the
 anticipated local share of project cost; (vi) the estimated total
 project cost; and (vii) the project score in total and by category.
     (b) The superintendent of public instruction and the governor may
 determine   the   level   of  funding   in   their   omnibus   capital
 appropriations act requests to support grants under this section, but
 their funding requests must follow the prioritized list prepared by
 the advisory committee unless new information determines that a
 specific project is no longer viable as proposed.
     (7) Planning grant requirements and prioritization. Subject to
 the availability of amounts appropriated for this specific purpose,
 the office of the superintendent of public instruction must assist
 eligible school districts that are interested in applying for a
 construction grant under this section by providing technical
 assistance and planning grants. School districts seeking planning
 grants under this section must provide a brief statement describing
 existing school conditions, building system and site deficiencies,
 current and five-year projected student headcount enrollment, student
 achievement measures, and financial constraints. If applications for
 planning   grants  exceed   funds  available,   the   office of   the
 superintendent of public instruction may prioritize planning grant
 requests with primary consideration given to school district
 financial capacity and facility conditions.
     (8) Construction grant requirements and prioritization.
     (a) School districts applying for a construction grant under this
 section must have received and completed a planning grant under
 subsection (7) of this section or have completed construction
 documents including drawings, specifications, total project cost
 estimates, contract and procurement requirements, and other materials
 required by the advisory committee, as part of the construction grant
 application process.
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     (b) Subject to the availability of amounts appropriated for this
 specific purpose, the advisory committee must prioritize applications
 from school districts based on the total number of points awarded
 under this subsection. The total number of points awarded to an
 application may not exceed 100 points and must be awarded according
 to the following criteria:
     (i) Remaining school district debt capacity. For the purposes of
 grant prioritization under this section, remaining school district
 debt capacity must be determined pursuant to RCW 39.36.020.
 Applications must be awarded no more than 45 points related to debt
 capacity under this subsection (8)(b)(i) and the number of points
 awarded related to remaining debt capacity must be calculated as
 follows:
     (A) Twenty-five points must be multiplied by the quotient of the
 applying school district's remaining debt capacity divided by the
 average remaining debt capacity of school districts statewide
 subtracted from .49, and then the result of the foregoing must be
 divided by .49 plus the applying school district's remaining debt
 capacity divided by the average remaining debt capacity of school
 districts statewide. A school district may not receive a score of
 less than zero under this subsection (8)(b)(i)(A).
                                                    Debt Capacity Scoring Percentage
              (.49 - School district's remaining debt capacity   ÷   Average remaining debt capacity of school districts
                                                                     statewide)
  25 Points   X ---
              (.49 + School district's remaining debt            ÷ Average remaining debt capacity of school districts
              capacity                                               statewide)
     (B) The advisory committee may award no more than 20 additional
 points to an application for a construction grant based on the
 severity of the applying school district's financial constraints.
 Applying school districts shall submit brief statements describing
 financial constraints as part of the construction grant application
 process.
     (ii) Facility condition. Applications must be awarded no more
 than 40 points related to facility conditions under this subsection
 (8)(b)(ii). The advisory committee, in consultation with the office
 of the superintendent of public instruction, shall create and apply a
 formula for awarding points under this subsection (8)(b)(ii) related
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 to   facility   condition.   This  formula   must   prioritize   grant
 applications from school districts with the most significant building
 deficiencies within the application pool. The office of the
 superintendent of public instruction shall provide facility condition
 data to the advisory committee related to each application.
     (iii) District enrollment. Applications shall be awarded no more
 than 15 points related to district enrollment under this subsection
 (8)(b)(iii) and the number of points awarded must be calculated as
 follows: 15 points must be multiplied by the quotient of the applying
 school district's headcount enrollment divided by the average school
 district headcount enrollment statewide subtracted from .32, and then
 the result of the foregoing must be divided by .32 plus the applying
 school district's headcount enrollment divided by the average school
 district headcount enrollment statewide. A school district may not
 receive a score of less than zero under this subsection (8)(b)(iii).
                                                    Enrollment Scoring Percentage
              (.32 - School district's enrollment             ÷   Average school district enrollment statewide)
  15 Points   X ---
              (.32 + School district's enrollment             ÷ Average school district enrollment statewide)
     (9) Eligibility and scoring criteria recommendations. The
 advisory committee may propose changes to the eligibility threshold
 and grant application scoring procedures to the legislature as they
 learn more about the characteristics of school districts that are
 unable to replace or modernize their aging school facilities.
     (10) Share of project costs. School districts receiving a grant
 under this section must provide a district share in accordance with
 the following requirements:
     (a) Except as provided for under (b) and (c) of this subsection,
 to receive a grant under this section a school district must provide,
 for each grant awarded, a district share of project cost equal to at
 least 50 percent of the district's remaining debt capacity pursuant
 to RCW 39.36.020.
     (b) To the extent that the district share requirement under (a)
 of this subsection would, at the time of application, require the
 estimated school district property tax rate increment associated with
 the grant to exceed a threshold of $1.75 per $1,000 of assessed
 property value, the office of the superintendent of public
                                                          p. 5                                                SHB 1044
 instruction must reduce the required district share to achieve an
 estimated property tax rate equal to this threshold.
     (c) A school district may use federal funding, other nonstate
 grant funding, and private donations to pay for its share under this
 subsection. When calculating a district's share requirement under (a)
 of this subsection, the superintendent of public instruction must
 reduce   the  district's   required  share   in   a  manner  directly
 proportionate to the amount of nonstate and nonschool district
 funding provided to support the state grant.
     (d) To determine the property tax rate threshold under (b) of
 this subsection, the office of the superintendent of public
 instruction must calculate the property tax rate increment associated
 with the grant based on the estimated annualized debt service costs
 for general obligation bonds issued with an average maturity of no
 less than 20 years and the interest rate for state of Washington
 general obligation bonds issued most closely to the date of
 application for the grant.
     (11) Coordination with the school construction assistance program
 and local cost share. To the extent that a school district awarded a
 grant under this section is also eligible for funding under the
 school construction assistance program provided by RCW 28A.525.162
 through 28A.525.180, the office of the superintendent of public
 instruction must coordinate grant funding between the programs and
 ensure that total state funding from a grant under this section and a
 school construction assistance program grant does not exceed total
 project costs minus the school district's share calculated under
 subsection (10) of this section. School districts that receive grants
 under this section may use the grant to fund the required local
 funding equal to or greater than the difference between the total
 approved project cost and the amount of state funding assistance
 computed provided by RCW 28A.525.162 through 28A.525.180. However,
 school districts coordinating grants provided in this section with
 school construction assistance program funding are required to
 contribute not less than the school district's required share as
 calculated under subsection (10) of this section.
     (12) Disbursement of grant funds and reporting requirements. The
 office of the superintendent of public instruction must award grants
 under this section to school districts. The grants must not be
 awarded until the recipient has identified available local and other
 resources sufficient to complete the approved project considering the
                                     p. 6                         SHB 1044
 amount of state grant funding. The grant must specify reporting
 requirements for the district and must include:
     (a) Updating all school inventory and condition data considered
 necessary by the office of the superintendent of public instruction;
     (b) Submitting a final project report as specified by the office
 of the superintendent of public instruction in consultation with the
 advisory committee and approved by the school facilities citizen
 advisory panel created under RCW 28A.525.025; and
     (c) Implementing and maintaining an asset preservation program
 for the facility receiving grant funding as required by the office of
 the superintendent of public instruction's asset preservation
 program.
     (13) For the purposes of this section, "advisory committee" means
 the advisory committee created under RCW 28A.525.159.
     Sec. 3. RCW 28A.525.159 and 2020 c 299 s 1 are each amended to
 read as follows:
     (1) School construction assistance program grants for small
 school districts and state-tribal education compact schools must be
 determined in accordance with this section.
     (2) Eligibility. School districts and state-tribal education
 compact schools with enrollments that are less than or equal to one
 thousand   students   are   eligible   for  small   school   district
 modernization grants. The advisory committee specified in subsection
 (4)(a) of this section may recommend amendments to the eligibility
 threshold as they learn more about the characteristics of school
 districts and state-tribal education compact schools that are unable
 to modernize their aging school facilities. Districts with incomplete
 information in the inventory and condition of schools data system are
 not eligible to apply for construction grants but may apply for
 planning grants.
     (3) The office of the superintendent of public instruction must
 assist eligible school districts and state-tribal education compact
 schools that are interested in applying for a small school district
 modernization grant under this section by providing technical
 assistance and planning grants within appropriations for this
 purpose. Districts and state-tribal education compact schools seeking
 planning grants must provide a brief statement of the school
 condition, its deficiencies, student enrollment, student achievement
 measures, and financial limitations of the district or state-tribal
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 education compact school. If applications for planning grants exceed
 funds available, the office of the superintendent of public
 instruction