Special Examination Report No. 14-14

January 2015

Georgia Department of Audits and Accounts
Performance Audit Division
Greg S. Griffin, State Auditor Leslie McGuire, Director

Why we did this review
This special examination of capital funding for local school systems was conducted at the request of the Senate Appropriations Committee. The Committee requested that we review the current process for funding school facilities and vocational equipment.
Based on the Committee's request, we reviewed the types of projects that receive state bond funds, the process for awarding funding, the cost estimation process, the impact of the current process on school systems' access to state funds, and practices other state governments use to award capital funding to school systems.

Capital Funding for Local School Systems
Requested information on state bond funding for school facilities and vocational equipment
What we found The state issues general obligation bonds to help fund educational facilities for local school systems. Projects qualifying for state bond funds include building new schools, adding new classroom space to existing facilities, replacing roofs and HVAC systems, and purchasing new equipment for vocational labs.

About Capital Funding
The Georgia Constitution permits the state to issue bonds for educational facilities and equipment for local school systems. The bond funds are authorized by the General Assembly at the request of local school systems through the Department of Education.
State bond funding for school facilities is allocated through a multi-step process to local school systems. The allocation process annually provides credits to each school system. These credits may be used in the year acquired or accumulated over multiple years. Local school systems exchange these credits on a dollar-for-dollar basis for bond funds.
State funds for vocational equipment are awarded through an annual grant process.

Between fiscal years 2005 and 2014, bond authorizations for local school systems' facilities totaled $2.2 billion and averaged $224.7 million per year. Between fiscal years 2005 and 2014, bond authorizations for vocational equipment purchases totaled $94.5 million and averaged $9.5 million per year.
The state helped fund a total of 238 facility projects between fiscal years 2010 and 2012. The Georgia Department of Education (DOE) categorizes these projects as new facilities (58), additions (33), renovations (45), and modifications (102).
The current funding structure emphasizes local decision making about which facility projects to fund. Local school systems prioritize projects within their local facilities plan and request state bond funds to help fund their projects when they have sufficient local revenue to meet requirements for a local match.
State law and DOE policies and procedures limit the state share of facility project costs. For example, state law excludes certain costs and requires a local match. DOE policies and procedures limit square footage and reimbursement rates and exclude certain costs. The costs for projects that exceed the amount the state will

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fund are the responsibility of the local school system.
Local school systems are required to pay 8% to 20% of project costs that are eligible to be reimbursed by the state (required local match). In addition, local school systems must also fund all project costs that do not meet reimbursement requirements, such as additional square footage, construction costs above DOE's reimbursement rates, and excluded costs (land purchase, site preparation, etc.). When total project costs were considered, we found that state bond funds effectively covered an average of 40% of total project costs for the 224 completed projects funded between fiscal years 2010 and 2012. The remaining 60% was funded by the local school systems. The state share of project costs varies by project type (new facilities, additions, renovations, and modifications). The state paid the highest share of total project cost for modifications (51%) and the lowest share for additions (25%).
The state limits its share of vocational equipment by reimbursing a set amount for each type of vocational lab with the Construction-Related Equipment (CRE) grant. Equipment for new labs is funded at 100% of the maximum funding level; equipment for renovated labs is funded at an average of 76% of the amount available for new labs.
We identified three factors that impact the timing of capital outlay and vocational equipment purchases: the capacity to generate sufficient local revenue, the time required to accumulate sufficient entitlement, and restrictions on using accumulated entitlement. Two of these factors, local revenue and sufficient accumulation, are recognized as negatively impacting the ability of school systems to address facility needs in a timely manner, and the state has developed funding options that may partially address these factors. Despite funding options for low wealth systems, we visited one school system with deteriorating conditions in need of immediate attention. The school system staff stated that a lack of local funds prevented the system from accessing state bond funds needed to address the problems with its facilities.
The most significant factor that limits local school systems' ability to access state bond funds for vocational equipment is the requirement that the equipment be utilized for a new or renovated lab. If a school system does not build a new vocational lab or renovate an existing lab, it will be unable to access state bond funds for vocational equipment. DOE staff indicated this requirement lowers state costs and creates incentives for school systems to renovate labs. During fiscal years 2005 through 2014, 50 (27%) of the 180 school systems in the state received no CRE grant funding. We reviewed state-funded facility projects for these 50 systems during this time period, and DOE's records showed that most were small systems with no eligible projects.
What we recommend This report is intended primarily to provide answers to questions posed by the Senate Appropriations Committee. However, we have identified matters for consideration, which are noted throughout the report. A listing of all matters for consideration can be found in Appendix A.
Summary of Responses: A draft copy of the report was provided to the Department of Education, the five school systems selected for case studies, and the Georgia State Financing and Investment Commission. The Department of Education did not have any major concerns or disagreements with the report and provided planned improvements for some of the matters for consideration. Generally, the school systems agreed with our conclusions and recommendations. The Clay County school system declined to respond, and the Georgia State Financing and Investment Commission had no comments. Responses to specific issues are included at the end of each section.

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Table of Contents

Purpose of the Special Examination

1

Background

1

State Constitution and Statutory Requirements

1

Funding System

2

Financial Information

3

Requested Information

5

What types of projects receive state bond funding?

5

Describe the process for awarding general obligation bond funds to school systems

for capital outlay and vocational equipment.

7

Discuss the project cost estimation process and controls regarding cost containment.

Determine the percentage of project costs paid for with state funds.

14

How does the current financing process impact the timing of capital outlay and

vocational equipment purchases? What factors, including size and wealth, impact

school systems' access to state funds?

17

What practices do other states use to award construction and equipment financing? 26

Appendix A: Matters for Consideration

28

Appendix B: Objectives, Scope, and Methodology

30

Appendix C: State Bond Funding for Local School Facilities

34

Appendix D: State Bond Funding for Local School Facilities Per FTE

35

Appendix E: State Bond Funding for Vocational Equipment

36

Appendix F: Vocational Lab Types and State Funding Levels

37

Appendix G: Individual School System Data

38

Appendix H: Reimbursement Rates by Facility Project Type

42

Capital Funding for Local School Systems

ii

Capital Funding for Local School Systems

1

Purpose of the Special Examination
This review of capital funding for local schools was conducted at the request of the Senate Appropriations Committee. Based on the Senate Appropriations Committee's request, we addressed the following questions:
1. What types of projects receive state bond funding? 2. Describe the process for awarding general obligation bond funds to school
systems for capital outlay and vocational equipment. 3. Discuss the project cost estimation process and controls regarding cost
containment. Determine the percentage of project costs paid for with state funds. 4. How does the current financing process impact the timing of capital outlay and vocational equipment purchases? What factors, including size and wealth, impact school systems' access to state funds? 5. What practices do other states use to award construction and equipment financing?
A description of the objectives, scope, and methodology used in this review is included in Appendix B. A draft of the report was provided to the Department of Education, the school systems selected for case studies, and the Georgia State Financing and Investment Commission for their review, and pertinent responses were incorporated into the report.
Background
State Constitution and Statutory Requirements Article VII, Section IV of Georgia's Constitution permits the state to incur general obligation debt through the issuance of general obligation (GO) bonds to finance its capital outlay requirements. The use of GO bonds includes providing educational facilities for local school systems. O.C.G.A. 20-2-260 establishes eligible school capital outlay projects. Projects qualifying for state bond funds include items such as building new schools, adding new classroom space to existing facilities, replacing roofs and HVAC systems, and purchasing new equipment for vocational labs.
The state's policy regarding local school facilities is articulated in statute. O.C.G.A. 20-2-260(a) states: It is declared to be the policy of the State of Georgia to assure that every public school student shall be housed in a facility which is structurally sound and well maintained and which has adequate space and equipment to meet each student's instructional needs as those needs are defined and required by this article.
The state Constitution and statute provide the requirements for the issuance of GO bonds. According to O.C.G.A. 50-17-23, GO bond debt may not be incurred until the General Assembly enacts legislation stating its purpose, either in general or specific terms. During the legislative session, the General Assembly authorizes the issuance of GO bonds. The General Assembly must specify the maximum principal amount of the debt and appropriate an amount that will cover the highest annual debt service requirements for that issue. Annual debt service payments are equal to the total principal and interest coming due in each fiscal year. The state Constitution limits

Capital Funding for Local School Systems

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the amount of general obligation debt the state can incur by limiting aggregate annual debt service payments to 10% or less of the state's total treasury receipts for the preceding fiscal year. The state's debt management plan targets 7% for the percentage of debt service to prior year receipts. The General Assembly may cancel any previously authorized debt prior to issuance.
The state Constitution limits the term of GO bonds to a maximum of 25 years for educational facilities. In order to match the useful life of a project with the debt issuance, the General Assembly typically approves GO bonds with a 20-year maturity for major construction and rehabilitation projects or with a 5-year maturity for equipment needs.

Funding System
According to state law, the Department of Education (DOE) and the Georgia State Financing and Investment Commission (GSFIC) share responsibility for administering state bond funding to the state's 180 local school systems. DOE establishes the policies and regulations that determine how state funding is allocated in accordance with state law. GSFIC sells authorized bonds and disburses the funds after school systems' reimbursement requests are approved by DOE.
Georgia State Financing and Investment Commission
After the General Assembly authorizes GO bonds in the annual Appropriations Act, GSFIC's Financing and Investment Division consults with DOE regarding project readiness. Based on DOE input and in order to comply with requirements for tax exempt bonds,1 GSFIC combines funding for projects with similar timeframes into a GO bond package.2 Due to various stages of project readiness, there are typically several GO bond issuances planned for the fiscal year. Typically, the state "issues," or sells, bond packages in the market two to four times per year. A GO bond issuance may include both GO bond funding authorized for the current fiscal year and from prior fiscal years. GO bonds from prior fiscal years may be included since these GO bond funds were not requested by the agency during the fiscal year for which they were authorized. According to O.C.G.A. 50-17-27, GSFIC is responsible for holding proceeds from GO bond sales and disbursing them according to the original purpose stated in the GO bond's authorization.
For both school facility projects and vocational equipment purchases, school systems provide project documentation and invoices to DOE. DOE approves the expenses and forwards the request for funds to GSFIC, which must also approve the reimbursement. For facility projects, GSFIC reimburses the school systems directly. For vocational equipment, GSFIC provides funds to DOE, which then reimburses individual school systems.
Department of Education
Two divisions at DOE administer state bond funds to local school systems. The Facilities Services Division administers funding for school facilities, while the Career,

1 Tax requirements are discussed in detail in the Performance Audit Division's 2012 special examination, 11-41 General Obligation Bonds, which may be found on our website at www.audits.ga.gov/rsaAudits/download/14334.
2 The package may include bonds for both education purposes and other state purposes.

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Technical and Agricultural Education (CTAE) Division administers funding for vocational equipment.
School Facilities DOE's Facilities Services Division assists local school systems in developing local facilities plans and acquiring the funds required to implement their plans. The Division also reviews and approves proposed building sites and all architectural and engineering drawings and specifications on construction projects for educational facilities. The Division ensures compliance with state standards and requirements, whether the project receives state funding or is funded solely with local funds.
To participate in Georgia's capital outlay program, O.C.G.A. 20-2-260 requires that each school system develop a local facilities plan (LFP). The LFP must be approved by both the local board of education and the State Board of Education (SBOE). The LFP outlines the school system's anticipated facility needs over a five-year period, and the system updates the LFP annually. Projects may include a new facility or an addition to a current facility, as well as renovations and modifications of existing facilities. The LFP includes cost estimates from an architect or other design professional for each project. Projects in the LFP are prioritized by the local school system.
The Facilities Services Division manages the allocation, known as the entitlement system, of state bond funds to local school systems. The entitlement system annually provides credits to each school system. Entitlement credits may be used in the year acquired or accumulated over multiple years. Local school systems exchange entitlement credits on a dollar-for-dollar basis for bond funds. A detailed description of the entitlement system is provided on pages 7-10.
Vocational Equipment DOE's CTAE Division oversees career education programs at the state's middle and high schools, including state bond funding for vocational equipment. The CTAE Division administers the state's Construction-Related Equipment (CRE) grant, which provides state bond funds to local school systems to purchase vocational equipment for vocational labs. Systems may apply for the grant when building a new lab or renovating an existing lab. The grant amounts are determined by the type of lab and whether it is a new or renovated lab. Renovated labs receive a lower amount than new labs.

Financial Information
Exhibit 1 shows annual bond authorizations by the General Assembly for local school systems' facilities. Between fiscal years 2005 and 2014, bond authorizations for facilities totaled $2.2 billion and averaged $224.7 million per year. Appendix C and Appendix D show the distribution of state bond funds to local school systems for facility projects during fiscal years 2005 through 2014.

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Exhibit 1 Bond Authorizations for Local School Facilities1
Fiscal Years 2005-2014

Authorization (in millions)

1 The graph reflects final bond authorization amounts for local school facilities after redirects and deauthorizations that occurred in subsequent years. 2 The amended FY 2008 budget included $108 million in Regular funding and $93 million in Growth funding that was moved up from FY 2009. Without this funding change, the FY 2008 authorization would have totaled $424 million, and the FY 2009 authorization would have totaled $273 million. Source: Appropriation Acts and Tracking Documents
Exhibit 2 shows annual bond authorizations for vocational equipment. Between fiscal years 2005 and 2014, bond authorizations for vocational equipment totaled $94.5 million and averaged $9.5 million per year.3 Appendix E shows the distribution of state bond funds to local school systems for vocational equipment during fiscal years 2005 through 2014.
Exhibit 2 Bond Authorizations for Vocational Equipment1 Fiscal Years 2005-2014

Authorization (in millions)

1 The graph reflects final bond authorization amounts for vocational equipment after redirects and deauthorizations that occurred in subsequent years. Source: Appropriation Acts and Tracking Documents
3 In fiscal year 2011, 40 school systems received a total of $550,858 to improve labs to meet industry certification standards. These funds are included in totals listed here but, as one-time funding, were not included in our analysis of the vocational equipment funding program.

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Requested Information

What types of projects receive state bond funding?
As discussed below, local school systems receive state bond funding for facility projects and vocational equipment purchases.
Facilities O.C.G.A. 20-2-260 establishes eligible capital outlay projects for schools, which include new building construction, building expansions and renovations, and the purchase of initial and additional equipment. DOE categorizes these projects as new facilities, additions, renovations, and modifications. As shown in Exhibit 3, the state funded a total of 238 projects between fiscal years 2010 and 2012.
Exhibit 3 State-Funded Projects by Primary Project Type Fiscal Years 2010-2012

45 58

33 102

New Facility: New facilities are the construction of new schools.

Renovation: Renovations include items such as new paint, carpet, lights, wiring, and windows.

Addition: Additions include both new buildings at an existing school and additions to existing buildings.
Source: DOE records

Modification: Modifications include the replacement of building components, such as roofs and HVAC systems. They may also include changes to provide an alternate instruction type, such as changing a science lab to a vocational lab.

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Vocational Equipment
Construction-Related Equipment (CRE) grants fund vocational equipment purchases for new or renovated labs. The vocational equipment purchased with CRE grant funds varies based on the type of lab. Appendix F lists the 38 vocational lab types and the state funding levels for each. The actual equipment purchased is determined by the local school system.

DOE does not track the vocational equipment purchased in a format that allows for analysis of purchases over a significant period of time. However, we did review vocational equipment invoices submitted by selected school systems to identify the types of equipment purchased. Examples of reimbursed vocational equipment purchases during fiscal years 2011 to 2013 are shown in Exhibit 4.

Exhibit 4 Vocational Equipment Examples Fiscal Years 2011-2013

Audio/Visual

Healthcare

Culinary Arts

Camera Tripod Monitor Computer Printer Production set
Source: DOE Records

Stethoscope Wheelchair
Scale Backboard Skeleton Anatomical
model

Oven Fryer Dishwasher Sink Work table
Food processor

Matters For Consideration
1) To allow for a comprehensive evaluation of the funding process, DOE should consider collecting information in a manner that can be aggregated and analyzed. For example, DOE uses spreadsheets to track each facility project, and staff could not provide aggregated information. As a result, DOE was unable to provide a list of funded facility projects. Project data for fiscal years 2005 to 2014 is contained in approximately 1,000 spreadsheets. Due to the resources needed to manually compile project data, our analysis was limited to three years of project data and case studies of five school systems. In addition, some data is not captured in the project spreadsheets. For example, we were unable to determine the total state funds spent on each project type. Useful management data to aggregate and analyze would include project type, funding type, state funding, and total project cost.
DOE's Response: "The Capital Outlay Program System (COPS) software, which is currently under development, is expected to be complete by July 2015. Once completed, COPS will be able to provide useful management data."

Capital Funding for Local School Systems

7

Describe the process for awarding general obligation bond funds to school systems for capital outlay and vocational equipment.
State bond funds for capital outlay and vocational equipment are awarded through two distinct processes, both managed by DOE. State funding for school facilities (capital outlay) is allocated through a multi-step process that determines the amount of bond funds a local school system may request in a specific year. State funds for vocational equipment are awarded through an annual grant process.

Facilities
As shown in Exhibit 5, the state funding process for local school facilities can be broken down into three phases: the creation of the local facilities plan, the allocation of entitlement based on systems' facility needs, and the application for project funding.

Exhibit 5 Three Phases of Facilities Funding Process

Local Facilities Plan Process

Entitlement Process

Project Application
Process

Local Facilities Plans
O.C.G.A. 20-2-260 outlines the state's funding process for facilities. To qualify for state funds, each local school system must comprehensively evaluate its facilities and student population projections every five years. As shown in Exhibit 6, the evaluation identifies facility needs and associated project costs, which are incorporated into a local facilities plan (LFP) and submitted to DOE. The five-year periods are staggered so that a similar number of systems complete an LFP each year. The LFP has three components:
An architect or design professional evaluates a local school system's existing facilities to identify required repairs or updates and provides cost estimates.
Local school systems assess student population projections, the system's instructional needs (e.g., adding a new vocational subject area), and the required repairs and updates for existing facilities to create an LFP. The LFP includes a prioritized list of projects with cost estimates to address the system's needs for new and/or renovated facilities over the next five years.
A survey team from other school systems reviews the LFP and may make recommendations for changes. The local board of education considers the team's recommended changes and finalizes the LFP. The SBOE then reviews and approves both the LFP and the survey.
While the school system identifies and prioritizes its facility needs during the LFP process, DOE sets parameters that determine the maximum amount of funding the state would provide for an eligible project (referred to as eligible need). Costs above eligible need are referred to as local need and are the responsibility of the local school system. As of July 1, 2014, statewide eligible need totaled $2.5 billion, and statewide local need totaled $5.96 billion.

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Exhibit 6 Local Facilities Plan Process

Architect, school system, and survey team
evaluate facilities

System creates local facilities plan (LFP)
The LFP includes facility needs and project costs

LFP
Local need $ Eligible need $

Source: O.C.G.A. 20-2-260 and interviews with DOE staff

Local Need: Costs the school
system is fully responsible for
Eligible Need: Costs eligible for
state funding

Using DOE guidelines, the LFP for each school system includes a breakdown of project costs into eligible need and local need. The LFP provides DOE with each local system's total eligible need, which is used to calculate each local school system's entitlement. LFPs are updated annually by the school systems to consider any changes in full-time equivalent (FTE) student counts or project needs. Also, any completed projects, including those funded with local revenue, are removed from the LFP.

Entitlement
The entitlement system provides credits to each school system based on its eligible need. As shown in Exhibit 7, DOE annually compiles the LFPs from all 180 school systems, determines each system's total eligible need, and calculates total eligible need statewide. DOE then calculates each system's eligible need as a percentage of the total eligible need statewide. This percentage is later used to calculate the system's portion of the approved entitlement level.

Exhibit 7 Entitlement Process

DOE compiles eligible need
from 180 LFPs

DOE calculates total statewide eligible need

DOE calculates each system's percentage of total statewide eligible need

DOE submits entitlement
level options to General Assembly

SBOE sets entitlement level based on Appropriations
Act

DOE uses systems' percentages to allocate set entitlement level

Source: O.C.G.A. 20-2-260 and interviews with DOE staff
According to O.C.G.A. 20-2-260, DOE must evaluate current eligible need statewide and present potential levels of entitlement to the Governor and the General Assembly for deliberation. The State Board of Education is required to set an entitlement level at or below the maximum of $300 million, consistent with the Appropriations Act. DOE allocates entitlement based on each system's percentage of total eligible need statewide. For example, if a school system's eligible need is 1% (equivalent to $31.5 million in fiscal year 2015) of the total statewide eligible need,

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the school system would receive 1% ($3 million in fiscal year 2015) of the available entitlement.

The ranges of earned entitlement, accumulated entitlement, eligible need, and most recent state-funded project are noted on page 21. In addition, Appendix G contains a list of each school system's entitlement earnings, eligible need, and most recent statefunded project.

Funding Programs
The entitlement process is the basis for allocating state bond funding to local school systems. Exhibit 8 shows the funding types used for facility projects funded in fiscal years 2010 through 2012.

Exhibit 8

Facility Project Funding Types Fiscal Years 2010-2012

State Funding2

$14 million (2%)

$187 million (32%)

$143 million

13

(25%)

43

Number of

Projects1

31

181

Regular: Eligibility A system may utilize earned entitlement towards eligible need in any project in its LFP. Local Match 8 to 20% of eligible need

$232 million (40%)
Low Wealth:3 Eligibility Systems with low tax wealth and a property tax of at least 12 mills, must follow general DOE specifications. Local Match Capped at 8% of eligible need and further reduced by 1% for each mill levied over 12. OR Capped at 5 years of SPLOST4 revenue, with state paying remaining total project cost.

Regular Advance: Eligibility A system's highest priority project requires five years or more of entitlement earnings. The state advances entitlement for the project, and the system uses future entitlement to repay the advance. Local Match 8 to 20% of eligible need

Growth (Discontinued in FY 2014): Eligibility Systems with an annual FTE increase of at least 1.5% and 65 students. Funding could only be used for new classroom space (i.e., new facilities and additions). Local Match 8 to 20% of eligible need

1There were 238 projects funded in fiscal years 2010-2012. Twenty-nine (12%) of the projects utilized more than
one funding type, which were generally Regular and Growth, so the total shown is greater than 238. 2State funding for 14 open projects was estimated using application data. 3System Low Wealth and Project-specific Low Wealth are discussed on pages 17-19. Project-specific Low
Wealth took effect in fiscal year 2014. 4SPLOST is the Special Purpose Local Option Sales Tax . If voters approve a SPLOST by referendum, the local
board of education can use the funds for capital outlay projects.
Source: O.C.G.A. 20-2-260 and DOE project management records

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Growth funding was discontinued in fiscal year 2014 by House Bill 760. Prior to fiscal year 2014, Growth entitlement was set at a maximum of $100 million. When the Growth program ended, the funding was incorporated into Regular entitlement, increasing Regular entitlement from $200 million to $300 million. According to state law, school systems' entitlement cannot be reduced by any changes to the law or the method of allocating entitlement. As a result, systems retained their accumulated Growth entitlement and are allowed to utilize the entitlement for any eligible need.

Application and Bond Authorization
Entitlement credits may be used in the year acquired or accumulated over multiple years. Local school systems exchange entitlement credits on a dollar-for-dollar basis for bond funds. As shown in Exhibit 9, local school systems submit applications for project funding to DOE's Facilities Services Division. The project must be listed in the system's LFP, and the required local funding must be available and committed to the project.

Exhibit 9 Project Application Process

System selects projects from
LFP

System submits application to
DOE

DOE approves applications and totals funding requests

DOE includes capital outlay funding in its budget request

General Assembly authorizes bond sales for capital outlay in
Appropriations Act

Source: O.C.G.A. 20-2-260 and interviews with DOE staff

After DOE staff approve an application, the state's portion of the project cost is added to DOE's budget request for bond funding. DOE submits its budget request to the Governor's Office of Planning and Budget by September 1, and the bond funds are requested through the normal budget process. The General Assembly considers the request during the legislative session and authorizes the bond funding. The Appropriations Act generally does not specify the systems that will receive funds, but authorizations are typically allocated by funding type (e.g., Regular, Low Wealth, etc.). The Appropriations Act is passed by the General Assembly and signed by the Governor.

After the General Assembly authorizes GO bonds in the annual Appropriations Act, GSFIC consults with DOE regarding project readiness to estimate systems' upcoming funding needs. GSFIC includes an amount in its bond sale sufficient to pay for those needs.

State funding is provided on a reimbursement basis after the local school system submits a request. The system expends its own funds on the project and submits invoices and other documentation to DOE for approval. DOE Facilities Services staff review and approve the request and forward the amount requested to GSFIC's Financing and Investment Division. GSFIC then pays the school system directly using bond proceeds.

Vocational Equipment
Construction-Related Equipment (CRE) grants provide state bond funds to local school systems for vocational equipment purchases. During fiscal years 2005 to 2014,

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local school systems received approximately $77.5 million in CRE grants. To receive CRE grant funding, the school system must build a new vocational lab facility or renovate an existing lab space. The construction or renovation of the lab space must be completed prior to equipment purchases.
Local school systems submit applications for vocational equipment funding to DOE by May 15, approximately 13 months prior to the beginning of the fiscal year for which the funds are requested. The CRE grant is not a competitive grant; if a school system qualifies for the program, its request is added to DOE's budget request for bond funding. DOE submits its budget request to the Governor's Office of Planning and Budget by September 1, and the bond funds are requested through the normal budget process. The General Assembly considers the request and authorizes the bond funding during the legislative session in the spring.
DOE regulations require all CRE-funded purchases be made between July 1 and June 30 of the authorized fiscal year. Reimbursement requests must be made within 90 days of the equipment purchase, and all reimbursement requests must be submitted within one month after the end of the fiscal year.
CRE grants are provided on a reimbursement basis. A local school system expends its funds on an equipment purchase and submits invoices to DOE for approval. Once approved, the request is forwarded to GSFIC's Financing and Investment Division. GSFIC then approves the submitted requests and provides funds to DOE which, in turn, reimburses the school systems.
Other Funding Options
In addition to state bond funding, there are other funds available that may be used to purchase vocational equipment. The three primary sources are discussed below.
Perkins and Perkins Plus The federal Perkins Act provides funding to local school systems to improve vocational education. All systems with vocational programs receive Perkins funds, which are distributed by formula. In addition, Perkins Plus grants are available to rural school systems that have at least 20% of their student population enrolled in vocational programs. Perkins requirements limit the amount of funds that can be spent on equipment, and program changes will likely decrease the funds available for equipment in the future. In fiscal year 2014, school systems in Georgia spent approximately $4.9 million (an average of $27,290 per system) in Perkins and Perkins Plus funds on vocational equipment.
College and Career Academy Grants The Technical College System of Georgia provides limited funds for school systems to establish new College and Career Academies (CCAs). CCAs are specialized charter schools that assist high school students in identifying career pathways and transitioning into postsecondary education. CCA grants generally include $3 million dollars for construction and/or renovation and approximately $150,000 for startup costs. In most cases, the local school systems use the ConstructionRelated Equipment grant to equip CCA vocational labs. Since the program's inception in fiscal year 2008, 29 systems have received CCA grants, and approximately three applicants are funded per fiscal year.

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Bond Deauthorization
Due to a variety of circumstances, school systems may not use all requested bond funds. For example, a system may cancel a project or spend less than planned. Because the funds are not tied to specific systems or projects in the Appropriations Act, DOE may transfer the unused funds to another project.4 DOE staff indicated that the unused funds may be used to reduce future budget requests for bond funds.
Alternately, the General Assembly may choose to deauthorize bonds prior to the bond issuance. The state Constitution requires the General Assembly to appropriate annual debt service upon bond authorization. These funds are reserved in the General Fund until the bond is issued, at which time the debt service funds are transferred to the General Obligation Debt Sinking Fund. If the General Assembly deauthorizes a bond or a portion of a bond prior to issuance, the appropriation intended for debt service becomes available for other purposes.
Exhibit 10 shows bond funding and deauthorizations for fiscal years 2005 through 2014, as of August 2014. The General Assembly deauthorized a total of $75 million from the budgets for fiscal years 2008 through 2012. These deauthorizations represent 3.1% of total bond authorizations for facilities and vocational equipment during this 10-year period. For facility projects, any unused state funds are credited back to the system's accumulated entitlement balance to be used in future years. As a result, deauthorizations represent a difference in the timing of the funding and have the same fiscal impact over the long term as reducing current year bond authorizations.
Exhibit 10 Bond Funding and Deauthorizations1 Fiscal Years 2005-2014
$700

$600

Authorization (in millions)

$500

$400

$300

$200

$100

$0

Sold 1As of August 2014.

Unsold

Deauthorized

Source: Appropriation Acts and GSFIC Records

Sold/Unspent

4 Bond authorizations for educational facilities are generally not tied to specific school systems in the Appropriations Act. Funding types may be noted in light-faced text or in the tracking document, but these are not legally binding.

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Matters For Consideration
1. DOE should consider improving controls to prevent and detect errors in the entitlement calculation process. We noted errors related to these calculations. For example, Stewart County's entitlement history showed a discrepancy of $1,513,000 above the $1,119,057 it had actually earned in accumulated entitlement. DOE staff indicated the error occurred during a manual adjustment after a project cancellation.
2. DOE should consider adopting written policies and procedures related to the capital funding process to ensure consistency. For example, DOE altered its method for calculating Project-specific Low Wealth reimbursement rates from the initial method, but neither method is specified in written procedures. We also noted instances where current staff are unable to explain actions taken by prior staff. Improved policies and procedures would improve the continuity of the funding process.
DOE's Response: The "COPS [software system] will automate the entitlement calculation process, which will strengthen the controls over the process. We expect COPS to be used for the fiscal year 2017 entitlement calculations." DOE also stated, "[w]hile written guidelines exist to govern the capital funding process, a procedures manual will be created to establish how these guidelines will be implemented."

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Discuss the project cost estimation process and controls regarding cost containment. Determine the percentage of project costs paid for with state funds.
The state limits its share of facility project costs through state law and DOE policies and procedures that limit square footage and reimbursement rates, exclude certain costs, and require a local match. The project costs that exceed the amount the state will fund are the responsibility of the local school system. The state limits its share of vocational equipment by reimbursing a set amount for each type of vocational lab.

Facilities
State law and DOE guidelines establish a maximum state funding level that limits the state share of facility project costs. The state's share of project costs is limited by the following cost controls:
Square footage DOE sets minimum square footage requirements for school facilities based on student counts. These square footage requirements represent the amount of space that the state will fund for new construction.
Reimbursement rates DOE sets maximum reimbursement rates, which vary by project type. For example, a local school system will receive $80 per square foot when building a new elementary school, even if actual construction costs are higher. Appendix H shows reimbursement rates for the four project types.
Excluded costs Certain expenses are not eligible for state funding. State law excludes facilities such as central and area administrative offices, as well as facilities used primarily for athletics, including swimming pools, tracks, and stadiums. DOE policies and procedures exclude pre-construction costs such as land purchase and site preparation.
Required local match According to state law, the local school system is required to pay 8% to 20% of a project's eligible need (the amount eligible for reimbursement). The local match formula considers the local property tax digest and sales tax collections. For fiscal year 2015, systems' required local match averaged 16%.
State Percentage of Facility Project Costs
As stated above, local school systems are required to pay 8% to 20% of project costs that are eligible to be reimbursed by the state. In addition, local school systems must fund all project costs that do not meet reimbursement requirements (referred to as local need), such as additional square footage, construction costs above DOE's reimbursement rates, and excluded costs (land, site preparation, etc.). According to our analysis of DOE's records, when total project costs were considered, state bond funds effectively covered 40% of total project costs on average for the 224 completed projects funded between fiscal years 2010 and 2012. The remaining 60% was funded by the local school systems. Exhibit 11 shows the cost distribution between the state and the school systems, as well as how the state share varies by project type. The state paid the highest share of total project cost for modifications and the lowest share for additions.

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Exhibit 11 Local Systems Pay 60% of Project Costs Fiscal Years 2010-2012

State Share

8%3

Eligible Project Costs

Percent 40%2 of Project 52%
Costs1

State Share Local Match

Local Costs

Modification New Facility Renovation Addition

1The state and local shares shown are based on average project cost shares for 224 completed projects funded in fiscal years 2010-2012. The state's overall share (total state funding as a percentage of total project costs) was 31%. The difference between average project cost share and total cost share is attributable to the difference in state share by project type and the high prevalence of modification projects. 2The state share is likely overestimated because school systems may not submit expenses to DOE that are not eligible for reimbursement (e.g., land purchase, athletic facilities). Additionally, these calculations do not consider facility projects funded entirely with local funds. 3The average required local match was approximately 16% of eligible project costs in fiscal year 2015. Because eligible project costs represent 48% of total project costs, the required local match is approximately 8% of total project costs.
Source: DOE records

Vocational Equipment
DOE guidelines establish cost controls for vocational equipment purchased with Construction-Related Equipment (CRE) grants.
Funding Level
CRE grants for vocational equipment purchases are limited to new or renovated vocational labs. The CRE grant is limited to vocational equipment and may not be used for construction costs. The primary cost control for CRE grants is that DOE sets a maximum state funding level depending on the type of lab for which equipment is being purchased. In addition, renovated labs receive a reduced reimbursement rate. Equipment for new labs is funded at 100% of the maximum funding level; equipment for renovated labs is funded at an average of 76% of the amount available for new labs. Appendix F lists each lab type with the state funding level for equipment.
CRE grants are limited to equipment that costs at least $100 and has a life span of at least five years, which corresponds to the bond's repayment period. CRE grants may not be expended for items considered to be supplies, such as printer ink, batteries, or calculators.
State Percentage of Vocational Equipment Costs
DOE staff indicated that CRE grants are intended to cover the large, basic lab equipment needed for instruction. Additionally, DOE does not track the full cost for equipping vocational labs, so we were unable to calculate the state share for a significant number of projects. We did review purchase documentation at three school systems for five projects funded between fiscal years 2009 and 2014. The state share of the cost to equip these labs ranged from 50% to 100%. School system staff in Brantley County indicated that local revenue is limited, so they try to limit

Capital Funding for Local School Systems

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equipment purchases to the state funding amount. The availability of local revenue will impact a system's reliance on state funding.

Matters for Consideration
1. DOE should consider developing a regular schedule and methodology for reviewing allowable square footage and cost per square foot. DOE currently does not conduct an annual review of these schedules as required by state law. DOE staff indicated that cost per square foot was last reviewed in 2012, but staff did not know when allowable square footage was last reviewed. Additionally, staff at two school systems we visited indicated that the minimum classroom square footage requirements set by DOE do not reflect the current teaching environment.
2. DOE should consider evaluating the overall state share of facility project costs regularly to determine if the state is funding the intended portion of costs.
3. DOE may wish to consider developing a reimbursement schedule for vocational equipment in renovated labs that considers the life span of the equipment and the amount of time since state funding was last provided. DOE's reimbursement rates for renovated labs assume some of the equipment from the prior lab is usable, but the rates do not consider the actual age of the used equipment in the lab. If it has been a significant amount of time since the equipment has been replaced, the reduced rate may not sufficiently fund equipment needs.
4. DOE should consider tracking the full cost for equipping vocational labs. Staff indicated that the funding levels are intended to cover the costs for a lab's basic, large equipment, but without actually tracking the total cost, DOE is unable to determine the state's share.
DOE's Response: DOE indicated that it "will develop a regular schedule and methodology for reviewing allowable square footage and cost per square foot." Regarding vocational equipment, the CTAE "Division will consider developing a reimbursement schedule for vocational equipment in renovated labs that considers the life span of the equipment and the amount of time since state funding was last provided. The CTAE Division plans to develop a suggested vocational equipment list and update the list annually. Additionally, CTAE plans to create sample lab designs. These designs will be done with the input of business and industry stakeholders. The lab funding levels will be reviewed annually to ensure that the funding levels are sufficient."

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How does the current financing process impact the timing of capital outlay and vocational equipment purchases? What factors, including size and wealth, impact school systems' access to state funds?

We identified three factors that impact the timing of capital outlay and vocational equipment purchases: the capacity to generate sufficient local revenue, the time required to accumulate sufficient entitlement, and restrictions on using accumulated entitlement. Two of these factors, local revenue and sufficient accumulation, are recognized as negatively impacting the ability of school systems to address facility needs in a timely manner, and the state has developed funding options that may partially address these factors.

Facilities
The impact on the timing of accessing state funds due to local revenue, entitlement accumulation, and restrictions on using accumulated entitlement is discussed below.
Local Revenue's Impact on Timing and Access to State Funds
If a local school system is unable to raise sufficient local revenue to fund project costs not funded by the state, the local school system will be unable to access state funds. As discussed on pages 14-15, systems are responsible for 60% of project cost, on average. O.C.G.A. 20-2-262 outlines two funding options, System Low Wealth and Project-specific Low Wealth, which are intended to assist in addressing the issue of insufficient local revenue by increasing the state share of project costs. As shown in Exhibit 12, 54 (30%) of the 180 school systems are eligible for either one or both of these funding options.

Exhibit 12 54 Systems are Eligible for Low Wealth Funding, Fiscal Year 2015

Chickamauga CHATTOO GA

System Project-Specific System and Project-Specific

PAULDING Carrollton
PI KE

NEWTON JAS PER JO NE S

WILKES LINCOLN TA LIA FERR O
WARREN HANCOCK

TALBO T

CRAWFORD

TAYLOR

MARIO N

STE WART

SCHLEY

TWI GGS
PULASKI W ILCO X

JO HNS ON

JE NKI NS

TREUTLEN

CANDLER

W HE ELER

TATTNALL

TERRELL RANDOLP H

CLAY

CALHOUN

BAKE R MILLER

GRADY

TURNE R

IRWIN

BERRIEN COOK

ATKI NS ON

LANI ER

CLINCH

ECHOLS

LONG
PI ERCE BRANTLEY
CHARLTON

Source: DOE records

Capital Funding for Local School Systems

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As shown in Exhibit 12, systems may be eligible for System Low Wealth and/or Project-specific Low Wealth, and the eligibility category affects the amount of state funding provided. Additionally, to qualify for Low Wealth funding, systems must levy a property tax of at least 12 mills.

System A local school system in the bottom 25% of both sales tax collections per full-time equivalent (FTE) student and property tax wealth per FTE qualifies for System Low Wealth funding. As shown in Exhibit 13, this funding option reduces the local system's share of costs eligible for reimbursement, but it does not reduce the costs that are the responsibility of the local school system. These costs include additional square footage, construction costs above DOE's reimbursement rates, and excluded costs (land, site preparation, etc.).

Exhibit 13 System Low Wealth Funding Reduces the Required Local Match1

16% of
eligible
project cost2

8% of
eligible
project cost 3

Regular
60%
Funding

System

Low

56%

Wealth

Funding

1 Calculations shown here are to illustrate the differences between financing options and are not meant to represent a particular facility project or school system. 2 The local match in this graphic represents the average FY 2015 required local match. The match is a percentage of eligible project cost. 3 For System Low Wealth funding, the required local match is capped at 8%. The match may be further reduced by 1% for each mill levied over 12. If a 20 mill tax is levied, the required match is reduced to zero.
Source: DOE records and DOAA calculations
Project-specific Project-specific Low Wealth funding was introduced by House Bill 760, which was passed in fiscal year 2012. A local school system in the bottom 25% of SPLOST collections qualifies for Project-specific Low Wealth funding for its highest priority project. As shown in Exhibit 14, this funding option reduces the system's share of project costs by increasing the state's reimbursement rate and capping the required local match at five years of SPLOST collections. The actual state share of project costs will vary based on SPLOST collections and project cost. The additional state funds are repaid through future entitlement earnings. Excluded costs (e.g., land purchase) and additional square footage are still the responsibility of the school system.

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Exhibit 14 Project-specific Low Wealth Funding Increases State Share1

5 Years of SPLOST

16% of eligible project cost 2

Regular Funding

Project-
specific Low
Wealth Funding3

Local Match
Local Costs
Eligible Project Costs

1 Calculations shown here are to illustrate the differences between financing options and are not meant to represent a particular facility project or school system. Actual state and local share percentages depend on the total cost of the project and the amount of local SPLOST collections. 2 The local match in this graphic represents the average FY 2015 required local match. The match is a percentage of eligible project cost. 3 Two Project-specific Low Wealth projects have been approved but neither has been completed.
Source: DOE records and DOAA calculations
Despite these provisions for low wealth systems, there are still systems that are unable to generate a sufficient amount of local revenue to maintain adequate facilities. The state's current funding process is not designed to assess the condition of local school facilities statewide and prioritize state funding based on the most critical needs.
Because of the focus on local prioritization, DOE does not collect information on the condition of school facilities. As a result, we were unable to evaluate the condition of facilities statewide. During our review, we visited five school systems, where we interviewed staff and toured school facilities. Overall, we did not notice egregious conditions. However, as discussed below and shown in Exhibit 15, we noted readily identifiable conditions in Stewart County.
Stewart County Condition of Facilities
On a site visit, the Stewart County Board of Education staff described plumbing, sewage, electrical, and HVAC problems that have affected the functionality of the elementary school and the combined middle/high school. Staff stated that cracks in school walls resulted from foundation issues, and leaks in school roofs have led to water damage. The elementary school currently places buckets in several rooms to catch rainwater falling through the roof. At the combined middle/high school, the moisture from roof leaks has led to the growth of mold in un-air-conditioned spaces. We also observed a propane tank located next to the playground and near the building at the elementary school. Staff indicated that the tank's piping has corroded, causing gas leaks and a potentially hazardous situation.
The school system has not been able to complete any capital projects in more than 10 years. Stewart County Board of Education staff indicated that local revenue has not been sufficient to pay for a project's required local match, which is currently 19% of eligible need, or the additional local cost above eligible need. The school system submitted a fiscal year 2012 application for renovations, modifications, and an addition to the existing elementary school. At that time, the school system planned to close the middle/high school and operate one facility at the current elementary school to decrease maintenance costs. To pay for the local portion of project costs, the system needed voters to approve a bond referendum. However, the bond referendum failed, and the system had to withdraw its application. Stewart County is eligible for Project-specific Low Wealth funding, but staff was unaware of the details of this funding option, which would only be available for one facility. As of fiscal year 2015, the Stewart County school system had $1,119,057 in accumulated entitlement. Also, the system showed $1,839,678 in total eligible need in its Local Facilities Plan (LFP).

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Exhibit 15 Stewart County School Facility Issues

Mold and water damage from roof leaks at middle/high school

Water damage from roof leaks at elementary school
Wall cracks from foundation issues at middle/high school and elementary school
Source: Photographs taken by audit team

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Entitlement Accumulation
As shown in Exhibit 16, entitlement earnings vary significantly by school system. Depending on a variety of factors, a local school system may not have earned sufficient entitlement to fund all projects in its LFP. In fiscal year 2015, each school system earned approximately 9.5% of its eligible project costs in entitlement. At this level, it would take an average of nine years for a school system to accumulate the necessary entitlement to receive full state funding for all of its projects.5 In order to address this factor, the state has developed the Regular Advance funding option.

Exhibit 16 Eligible Need and Entitlement Earnings

Fiscal Year 2014 FTE:

206

3,547

X

169,152

Eligible Need in Local Facilities Plan:

$427,627 $9,204,605 X

$40,726 $876,629

Fiscal Year 2015 Earned Entitlement:

X

$190,242,639 $18,118,353

Accumulated Entitlement:
Most Recent Approved State-funded Project:
Minimum

$0 $1,332,954 X
2001

Median X

Maximum

$102,047,808

2012 X

2015

1 Eligible need includes Regular Advance projects in repayment and annual updates due to changes in FTE counts . 2 FY 2015 earned entitlement is the actual earned entitlement at the $300 million level prior to reductions for approved project applications . 3 Accumulated entitlement includes FY 2015 entitlement earnings and any reductions for approved project applications. Source: DOE records
5 This calculation takes into account the required local match, which is deducted from eligible project costs upon project application.

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Regular Advance funding allows systems to access entitlement for a large project before it is earned. A system qualifies if its highest priority project would utilize five years or more of entitlement earnings. The state advances entitlement for the project, and the system uses future entitlement to repay the advance. The system cannot use entitlement for other projects until the advance is repaid. Because the funding is limited to a single project, systems without a large, high-priority project will be unable to qualify. Currently, ten systems are utilizing Regular Advance funding for an ongoing project, and another eight systems are eligible to use Regular Advance funding for their highest priority projects.
A significant factor we identified in accessing accumulated entitlement is the availability of local revenues. Since, on average, local school systems fund 60% of projects that use state bond funds, if school systems do not have sufficient local funds, they are unable to access their accumulated entitlement.
Restrictions on Accessing Entitlement
Local school systems are unable to utilize state funding for new classroom space if DOE guidelines determine that the current space is sufficient for the system's student population.
While we did not identify each school system that is unable to utilize state funding for new classroom space, one school system, Gwinnett County, we visited is in this situation. At the beginning of fiscal year 2015, the Gwinnett County school system had accumulated $102 million in entitlement, which represents 13% of total accumulated entitlement statewide. Gwinnett last received state funding for an addition in 2011 and last received state funding for a new school in 2010.
Gwinnett County Board of Education staff indicated that the system has a significant need for new classroom space, but it is currently unable to use state funding for this purpose because, according to DOE guidelines, it does not show an eligible need for new classroom space overall. The Gwinnett County school system built twelve new facilities and five additions in fiscal years 2010 through 2015 with local funds, and three new facilities and two additions are scheduled to be constructed at local expense by fiscal year 2017. As shown in Exhibit 17, the system also uses portable buildings to provide additional classroom space. During the 20142015 school year, the system is using portable buildings to house 619 classrooms.
Exhibit 17 Portable Buildings Used in Gwinnett County

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23

According to Gwinnett school system staff, the system had previously projected significant growth in the northern portion of the county and built new schools to accommodate new students in that area. However, growth patterns shifted, and schools in the western part of the county (bordering DeKalb County) are experiencing the most significant growth and need for additional classroom space. Due to the shift in growth, schools in western Gwinnett County have a shortage of classroom space, but schools in northern Gwinnett County have available classroom space. However, the system does not show a need for new classroom space systemwide, so it does not qualify for state funding. In contrast to Georgia's system, Maryland does not consider classroom space in the overall school system when planning for new schools. Only adjacent schools to a proposed site are reviewed for available classroom space.

Vocational Equipment
The requirements of the CRE grant limit local school systems' ability to access state bond funds for vocational equipment. The most significant factor is the requirement that the equipment be utilized for a new or renovated lab.
If a school system does not build a new vocational lab or renovate an existing lab, it will be unable to access state bond funds for vocational equipment. DOE staff indicated this requirement lowers state costs and incentivizes school systems to renovate labs. During fiscal years 2005 through 2014, 50 (27%) of the 180 school systems in the state received no CRE grant funding. These systems are shown in Exhibit 18. We reviewed state-funded facility projects for these 50 systems during this time period, and DOE's records showed that most were small systems with no eligible projects. Appendix E shows the overall distribution of CRE grant funding across school systems during fiscal years 2005 through 2014.

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Exhibit 18 50 Systems Received No State Bond Funds for Vocational Equipment Fiscal Years 2005-2014

FANNIN

UNION

Trion Rome

GORD ON

PICKENS

BART OW

HARALSON

PAULDI NG

COB B

WHITE LUMPKIN

FORSY TH

HAL L
Gainesville JACKS ON

ELBERT

OCONEE

OGLETHORPE

Carrollton FAYETTE
COWETA
MERIWETHER

BUTTS

TALIAFERRO WARREN

HANCOCK

GLASCOCK

RICHMOND

HARRIS

TALBOT

MUSCOG EE

TAYLOR

SCHLEY

MACON

STEWART

WILKINSON TWIGGS
HOUST ON

JOHNSON EMANUEL

WILCOX

WHEELER

Vidalia

EVANS

TATTNALL

BRYAN

RANDOLPH

CLAY

CALHOUN

EARLY

Thomasville

WAYNE

ATKINSON

PIERCE
WAR E

Valdosta

CLINCH

ECHOLS

CHARLTON

GLY NN

Source: DOE records

Other grant requirements may also impact access and timing. These include the requirement that CRE grants be utilized in the year for which the funding was authorized. DOE regulations require all purchases be made between July 1 and June 30 of the authorized fiscal year. Any unused funds are forfeited.6 In addition, the school system must certify that the construction portion of the project is completed and the lab is ready for occupancy prior to purchasing any equipment. The timing requirements of the grant may hinder school systems' ability to fully utilize this funding source.

6 DOE indicated that unused CRE grant funds are used to partially offset the following year's budget request for CRE funds.

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Matters for Consideration
1. DOE should review the communication regarding the Project-specific Low Wealth funding program to ensure eligible systems have sufficient information regarding this funding source. During site visits to two eligible systems (Clay and Stewart counties), the system staff stated they were either unaware of the Project-specific Low Wealth funding program or lacked sufficient information to make a decision to use the funding option, which was introduced with the passage of House Bill 760 in 2012. DOE does provide limited information regarding eligibility annually when communicating entitlement amounts. (The communication is limited to a Yes or No regarding eligibility for Low Wealth Funding.)
2. To address shifting demographics, DOE should consider altering its guidelines to allow for state funding of new classroom space when available classroom space is a significant distance from a proposed site.
3. To address any current and future substandard facilities, the General Assembly may wish to consider adding facility condition as a factor in the funding process. This addition would allow state funds to address substandard facilities in a timely manner but may require developing a different funding allocation method.
4. DOE may wish to consider altering the CRE grant program to allow school systems to receive state funding for vocational equipment without a related facility project.
Stewart County School System's Response: "The report reflects the condition of the school district's facilities. [The Superintendent is] presently working with the Stewart County School Board and the Georgia Department of Education to develop a plan to provide facilities that are more conducive for learning. The students in Stewart County deserve to have facilities that provide a safe, healthy, and technology rich environment."
DOE's Response: DOE "staff will continue to communicate information on the project-specific low wealth funding program to eligible school systems by: having area field consultants conduct faceto-face meetings with local school system staff; and, encouraging local school system staff to attend the annual Georgia Chapter of the Council of Educational Facilities Planners International (GaCEFPI) meeting, where information on capital outlay funding is disseminated."
Additionally, DOE "recognizes that there are local school systems that need vocational equipment but do not have a qualified facility project (a new lab or a renovated lab), which is a requirement to qualify for the vocational equipment bond funds. As a result, these local school systems do not qualify for vocational equipment state bonds. Funding these systems would be a state budget policy decision."

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What practices do other states use to award construction and equipment financing?
As discussed below, we reviewed practices in five other states to identify different processes used to fund facilities and vocational equipment. To select states for analysis, we used existing industry studies, with consideration of the states' bond rating, geographic location, and approximate state funding per student.

Facilities
To fund facility projects, North Carolina and Tennessee use dedicated revenue streams, while Maryland utilizes GO bonds. Alabama utilizes both funding sources. Each uses different methods to allocate funds between school systems. Virginia does not provide state funds for facility projects.
Alabama An annual statewide property tax of 3 mills is paid to the Public School Fund (PSF), and all 135 school systems receive a portion for facility projects or debt service payments. On occasion, the state legislature also approves a GO bond issuance for facility construction. The allocation of funds from PSF or GO bonds is based on the number of full-time students and local ability to pay.
Maryland The state legislature annually issues GO bonds to finance facility projects and provides a minimum state share of 50% per project. Part of each GO bond issuance is paid to the Aging Schools Program (ASP). ASP funds are available for smaller projects at aging facilities. Generally, a local match is not required to access ASP funds.
North Carolina The legislature annually appropriates $100 million in state lottery proceeds for capital outlay. Distribution among school systems is dependent upon the number of full-time students and does not account for facility needs or system wealth. School systems can use the lottery funds for land purchase, facility construction, or debt service payments. The State Treasurer retains all funds until a local school system requests them for a specific project, with the approval of the Department of Public Instruction.
Tennessee The Basic Education Program (BEP) is a funding formula through which education dollars are generated and distributed to school systems. The formula is driven by average daily membership and includes 45 different components, including facility construction. A per-unit cost for facility construction is woven into the formula. The per-unit cost accounts for changes to industry square footage data and local classroom capacity. School systems can use all BEP money at their own discretion and can choose to not spend any on facility projects.
Virginia The state does not provide funding for facility projects. All facility construction is done at local expense.

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Vocational Equipment
We identified a variety of practices used to fund vocational equipment.7
Alabama In 2012, Alabama approved a $50 million GO bond issuance to fund vocational equipment and professional development at its school systems. The majority of the funding ($30 million) was distributed to all school systems based on the number of vocational programs offered. Districts competitively applied to receive a share of the remaining $20 million, which was only available to open new vocational pathways. Additionally, the legislature annually provides $5 million for equipment and supplies, with system funding allotments determined by the number of vocational teachers.
Maryland Local school systems generally purchase equipment with federal Perkins funds. However, on a non-regular basis, the legislature appropriates funding for specific vocational programs that have industry demand for employment. The legislature recently approved funding for bio-medical and pre-engineering programs. These grants are distributed to local school systems through a competitive application process, which requires the school system to show readiness for the equipment and a documented need for improvement to their program.
North Carolina Programs are funded through federal Perkins funds and an annual flat grant approved by the legislature. The grant total is determined through a formula and dependent upon the number of students in the district. The state allocated approximately $20 million for vocational programs in the 2014-2015 school year. These funds can be used for lab equipment and supplies, in addition to personnel and professional development.
Tennessee The state determines a per-unit cost for both equipment and supplies using statewide data. Actual statewide equipment expenditures over the previous three years, adjusted for inflation, are divided by the total number of vocational students. Each school system receives its portion, dependent on vocational enrollment, through the BEP formula. The funds are not required to be spent on vocational equipment or supplies.

7 We reviewed the same five states, but we were unable to contact the vocational program staff in Virginia.

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Appendix A: Matters for Consideration

What types of projects receive state bond funding? (p. 6)
1. To allow for a comprehensive evaluation of the funding process, DOE should consider collecting information in a manner that can be aggregated and analyzed. For example, DOE uses spreadsheets to track each facility project, and staff could not provide aggregated information. As a result, DOE was unable to provide a list of funded facility projects. Project data for fiscal years 2005 to 2014 is contained in approximately 1,000 spreadsheets. Due to the resources needed to manually compile project data, our analysis was limited to three years of project data and case studies of five school systems. In addition, some data is not captured in the project spreadsheets. For example, we were unable to determine the total state funds spent on each project type. Useful management data to aggregate and analyze would include project type, funding type, state funding, and total project cost.
Describe the process for awarding general obligation bond funds to school systems for capital outlay and vocational equipment. (p. 13)
2. DOE should consider improving controls to prevent and detect errors in the entitlement calculation process. We noted errors related to these calculations. For example, Stewart County's entitlement history showed a discrepancy of $1,513,000 above the $1,119,057 it had actually earned in accumulated entitlement. DOE staff indicated the error occurred during a manual adjustment after a project cancellation.
3. DOE should consider adopting written policies and procedures related to the capital funding process to ensure consistency. For example, DOE altered its method for calculating Project-specific Low Wealth reimbursement rates from the initial method, but neither method is specified in written procedures. We also noted instances where current staff are unable to explain actions taken by prior staff. Improved policies and procedures would improve the continuity of the funding process.
Discuss the project cost estimation process and controls regarding cost containment. Determine the percentage of project costs paid for with state funds. (p. 16)
4. DOE should consider developing a regular schedule and methodology for reviewing allowable square footage and cost per square foot. DOE currently does not conduct an annual review of these schedules as required by state law. DOE staff indicated that cost per square foot was last reviewed in 2012, but staff did not know when allowable square footage was last reviewed. Additionally, staff at two school systems we visited indicated that the minimum classroom square footage requirements set by DOE do not reflect the current teaching environment.
5. DOE should consider evaluating the overall state share of facility project costs regularly to determine if the state is funding the intended portion of costs.
6. DOE may wish to consider developing a reimbursement schedule for vocational equipment in renovated labs that considers the life span of the equipment and the amount of time since state funding was last provided. DOE's reimbursement rates for renovated labs assume some of the equipment from the prior lab is usable, but the rates do not consider the actual age of the used equipment in the lab. If it has been a significant amount of time since the equipment has been replaced, the reduced rate may not sufficiently fund equipment needs.
7. DOE should consider tracking the full cost for equipping vocational labs. Staff indicated that the funding levels are intended to cover the costs for a lab's basic, large equipment, but without actually tracking the total cost, DOE is unable to determine the state's share.
How does the current financing process impact the timing of capital outlay and vocational equipment purchases? What factors, including size and wealth, impact school systems' access to state funds? (p. 25)
8. DOE should review the communication regarding the Project-specific Low Wealth funding program to ensure eligible systems have sufficient information regarding this funding source. During site visits to two eligible systems (Clay and Stewart counties), the system staff stated they were either unaware of the Project-specific Low Wealth funding program or lacked sufficient information to make a decision to use the funding option, which was introduced with the passage of House Bill 760 in 2012. DOE does provide limited information regarding eligibility annually when communicating entitlement amounts. (The communication is limited to a Yes or No regarding eligibility for Low Wealth Funding.)

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29

9. To address shifting demographics, DOE should consider altering its guidelines to allow for state funding of new classroom space when available classroom space is a significant distance from a proposed site.
10. To address any current and future substandard facilities, the General Assembly may wish to consider adding facility condition as a factor in the funding process. This addition would allow state funds to address substandard facilities in a timely manner but may require developing a different funding allocation method.
11. DOE may wish to consider altering the CRE grant program to allow school systems to receive state funding for vocational equipment without a related facility project.

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Appendix B: Objectives, Scope, and Methodology
Objectives This review of capital funding for local school facilities and vocational equipment was conducted at the request of the Senate Appropriations Committee. Based on the Senate Appropriations Committee's request, we addressed the following questions:
1. What types of projects receive state bond funding?
2. Describe the process for awarding general obligation bond funds to school systems for capital outlay and vocational equipment.
3. Discuss the cost estimation process and controls regarding cost containment. Determine the percentage of project costs paid for with state funds.
4. How does the current financing process impact the timing of capital outlay and vocational equipment purchases? What factors, including size and wealth, impact school systems' access to state funds?
5. What practices do other states use to award construction and equipment financing?
Scope This special examination generally covered activity related to the bond funding program that occurred from fiscal year 2010 to fiscal year 2012, with consideration of earlier or later periods when relevant. Information used in this report was obtained by reviewing relevant laws, rules, and regulations; analyzing data provided by the Georgia Department of Education (DOE) and the Georgia State Financing and Investment Commission (GSFIC); and reviewing existing studies and prior audit work. We also interviewed agency officials and staff from DOE, GSFIC, and the Technical College System of Georgia, as well as facilities and vocational staff in other states.
We also conducted case studies of five local school systems. To select the case studies, we used DOE's records to identify the most recent state-funded facility project. We also reviewed systems' annual earned entitlement for fiscal years 2013 through 2015, outstanding accumulated entitlement, and Low Wealth eligibility. We identified potential issues through this review and selected school systems exhibiting characteristics indicative of these issues. These characteristics included high accumulated entitlement, low annual earned entitlement, no recent projects, Low Wealth projects, and Regular Advance funded projects in repayment. For the selected case studies, we interviewed staff, reviewed entitlement documentation, reviewed cost documentation for completed facility projects and vocational equipment purchases, and toured local schools.
Methodology To determine the types of projects that receive state bond funding we interviewed DOE staff in the Facilities Services Division and the Career, Technical, and Agriculture Education Division.
For facility projects, we reviewed state law and examined DOE guidelines to determine how DOE categorizes project types. Additionally, DOE staff provided

Capital Funding for Local School Systems

31

project management spreadsheets for all 180 school systems. As discussed on page 6 of this report, DOE utilizes individual spreadsheets for each project and does not aggregate the project information for all systems in a single database. We were unable to automatically aggregate the data due to differences between the files. As a result, we limited our analysis to facility projects approved from fiscal year 2010 through fiscal year 2012. We manually compiled information from the spreadsheets to identify the number of projects by project type and funding type. Although the project data was subject to various sources of error, we believe it represents a credible estimate given the limitations of the data.
To determine the types of vocational equipment eligible for state bond funding, we used DOE's Invoice Application database, which school systems use to submit reimbursement requests. DOE does not track vocational equipment purchases in a format that allows for analysis over a significant period of time, so we reviewed recent reimbursement requests in PDFs submitted through the Invoice Application. We used these requests to identify examples of equipment funded with state bonds.
It should be noted that additional, one-time bond funds authorized by the General Assembly were not included in our analyses of the facilities or vocational equipment funding programs.
To describe the process for awarding general obligation bond funds to school systems for facilities and vocational equipment, we interviewed staff members at DOE and GSFIC with knowledge of general obligation (GO) bond funding and entitlement. We reviewed state law and DOE regulations and guidelines to understand the funding process for both facility projects and vocational equipment. To identify bond authorization amounts for facilities and vocational equipment, we reviewed Appropriations Acts for fiscal years 2005 to 2014.
To identify approved entitlement levels for facility projects, we reviewed Appropriations Acts and associated tracking sheets for fiscal years 2005 to 2014, as well as State Board of Education meeting minutes from fiscal years 2011 to 2014. However, we determined that there is generally no official communication of the approved entitlement level to DOE Facilities Services. We obtained earned entitlement data by school system for fiscal years 2004 through 2016 from DOE and compared it to entitlement data from DOE's planning database, as well as entitlement documentation provided to nine local school systems. We identified multiple errors and inconsistencies in the data and determined it was unreliable for the purposes of our analyses. As a result, our entitlement analysis was generally limited to fiscal years 2014 through 2016 due to errors noted in earlier years. Deficiencies in data management are discussed on pages 6 and 13 of this report.
To identify additional funding available for vocational equipment, we interviewed DOE staff and staff at the Technical College System of Georgia (TCSG). We obtained expenditure data for fiscal years 2006 through 2014 from DOE, showing Perkins and Perkins Plus funds spent on equipment and total Perkins and Perkins Plus funds by school system. We interviewed TCSG staff regarding the requirements to establish College and Career Academies and the funding available for vocational equipment.
To discuss the cost estimation process and controls regarding cost containment and to determine the percentage of project costs paid for with state funds we

Capital Funding for Local School Systems

32

interviewed DOE staff about allowable project costs and factors limiting state funds. We also reviewed DOE regulations and guidelines regarding both facility projects and vocational equipment.
For facility projects, we reviewed state law to identify general cost parameters and reviewed DOE guidelines to identify specific reimbursement amounts. We also reviewed cost information in a sample of local facilities plans. We compiled data from DOE's project spreadsheets for projects approved in fiscal years 2010 through 2012 to estimate state share, based on the total amount of state funds paid for each project. While we concluded that the information was sufficiently reliable for the purposes of our review, we did note a limitation in total project cost that affected our estimate. We reviewed documentation during site visits at three8 local school systems and identified additional project costs not reported to DOE. We compared the total cost of the project based on local school system records to cost information in DOE spreadsheets and determined that the state share was likely overestimated in DOE's records.
For the required local match component of project costs, DOE staff provided their calculations for each school system for fiscal year 2015. We used this data to determine the average required local match. Using the average state share and the average local match, we calculated the average percentage of project costs attributable to the local match and the local need.
For vocational equipment, we reviewed DOE guidelines to determine lab construction requirements, minimum cost requirements, and reimbursable limits. Because DOE does not track the full cost for equipping vocational labs, we selected five projects at three9 school systems during the case studies and determined the state share of costs for each project. The projects were not randomly chosen using DOE's Invoice Application database and included the most recent ConstructionRelated Equipment grant received by each school system. The local school systems provided documentation of additional equipment costs not reimbursed by DOE. Using documentation from the Invoice Application and the school systems, we calculated the state share of the total cost to equip each lab.
To determine how the current financing process impacts the timing of capital outlay and vocational equipment purchases, we reviewed state law and DOE regulations and guidelines, and we interviewed DOE staff about the financing process. We also interviewed local school system staff and toured local schools during site visits to identify factors that impact access to state funds.
To determine the state funds received for facility projects, we obtained data from GSFIC showing payments made in fiscal years 2005 through 2014 and calculated the totals by school system. We also downloaded full-time equivalent (FTE) student counts from DOE's website, which are reported by the school systems twice a year. We evaluated the impact of system size and wealth on the total state funding and the state funding per FTE received during this time period.

8 The remaining two local school systems visited for the case studies did not have a state-funded facility project during fiscal years 2005 through 2014.
9 The remaining two local school systems visited for the case studies did not receive Construction Related Equipment grants during fiscal years 2005 through 2014.

Capital Funding for Local School Systems

33

To calculate state funds received for vocational purchases, we downloaded a listing of all approved reimbursement requests for fiscal years 2005 through 2014 through DOE's Invoice Application database. We used this information to determine the totals by school system. We also interviewed local school system staff during site visits to identify barriers to accessing state funds for vocational equipment.
To determine what practices other states use to award construction and equipment financing to local school systems, we used existing industry studies to select five states for analysis, with consideration of Triple AAA bond rating, geographic location, and approximate state funding per student. We reviewed the agency website and other information available online for each state. We interviewed both facilities and vocational education personnel in Alabama, Maryland, North Carolina, and Tennessee. We were unable to contact the vocational program staff in Virginia, so we only interviewed facilities personnel in that state.
This special examination was not conducted in accordance with generally accepted government auditing standards (GAGAS) given the timeframe in which the report was needed. However, it was conducted in accordance with Performance Audit Division policies and procedures for non-GAGAS engagements. These policies and procedures require that we plan and perform the engagement to obtain sufficient, appropriate evidence to provide a reasonable basis for the information reported and that data limitations be identified for the reader.
It should be noted the State Auditor is a member of the Georgia State Financing and Investment Commission. The Performance Audit Division answered the questions posed by the Committee and followed its standard policies and procedures, which address how a special examination is to be conducted.

Capital Funding for Local School Systems

34

Appendix C: State Bond Funding for Local School Facilities Fiscal Years 2005-2014

DADE

CATOOSA Dalton

FANNIN

Chickamauga WHITFIELD WALKER

MURRAY

GILMER

Trion

GORDON

UNION

TOWNS

RABUN

LUMPKIN

WHITE

HABERSHAMSTEPHENS

$0 Less than $5 million $5-10 million

CHATTOOGA FLOYD
Rome
POLK HARALSON
Bremen

Calhoun

PICKENS

BARTOW Cartersville

CHEROKEE

Marietta

PAULDING

COBB

DOUGLAS Atlanta

DAWSON

HALL

BANKS FRANKLIN

HART

FORSYTH Gainesville Commerce
JACKSON

MADISON

Buford

Jefferson

GWINNETT

BARROW

CLARKE

ELBERT

DEKALB Decatur

WALTON Social Circle

OCONEE OGLETHORPE

WILKES

LINCOLN

$10-15 million $15-20 million More than $20 million

ROCKDALE

CARROLL Carrollton

FULTON CLAYTON

NEWTON

MORGAN

GREENE TALIAFERRO

MCDUFFIE COLUMBIA

HEARD

COWETA

FAYETTE

HENRY

SPALDING

BUTTS

JASPER

PUTNAM

WARREN

HANCOCK

GLASCOCK

RICHMOND

TROUP

MERIWETHER

PIKE

LAMAR MONROE

JONES

BALDWIN

WASHINGTON

JEFFERSON

BURKE

HARRIS

UPSON TALBOT

CRAWFORD

BIBB

WILKINSON TWIGGS

JOHNSON

JENKINS

SCREVEN

CHATTAHOOCHEE

MUSCOGEE

TAYLOR

PEACH

MARION

MACON

HOUSTON BLECKLEY

Dublin LAURENS

EMANUEL

TREUTLEN

CANDLER

BULLOCH

EFFINGHAM

MONTGOMERY

SCHLEY

STEWART

WEBSTER

SUMTER

QUITMAN

TERRELL

RANDOLPH

LEE

DOOLY

PULASKI

DODGE

WHEELER

CRISP

WILCOX

TELFAIR

TURNER

BEN HILL

JEFF DAVIS

Vidalia TOOMBS

EVANS

TATTNALL

BRYAN

APPLING

LONG

LIBERTY

CHATHAM

CLAY

CALHOUN

DOUGHERTY

EARLY MILLER

BAKER

MITCHELL

Pelham

WORTH

TIFT

IRWIN

COLQUITT

BERRIEN COOK

COFFEE ATKINSON

SEMINOLE DECATUR

GRADY

THOMAS Thomasville

LANIER

BROOKS

Valdosta

CLINCH

LOWNDES

ECHOLS

BACON

WAYNE

PIERCE

WARE

BRANTLEY

MCINTOSH GLYNN

CHARLTON

CAMDEN

Source: GSFIC records

Capital Funding for Local School Systems

35

Appendix D: State Bond Funding for Local School Facilities Per FTE Fiscal Years 2005-2014

DADE

CATOOSA Dalton

MURRAY Chickamauga WHITFIELD

WALKER

FANNIN GILMER

Trion

GORDON

UNION

TOWNS

RABUN

LUMPKIN

WHITE

HABERSHAMSTEPHENS

CHATTOOGA FLOYD

Calhoun BARTOW

PICKENS

DAWSON

HALL

FRANKLIN BANKS

HART

Rome
POLK HARALSON
Bremen

Cartersville

CHEROKEE

FORSYTH Gainesville Commerce

JACKSON MADISON

ELBERT

Buford

Jefferson

Marietta

PAULDING

COBB

GWINNETT

BARROW

DEKALB

WALTON

CLARKE OCONEE

OGLETHORPE WILKES

DOUGLAS Atlanta

Decatur

Social Circle

LINCOLN

$0 Less than $1,000 $1,001-$2,000 $2,001-$3,000 $3,001-$4,000 More than $4,000

ROCKDALE

CARROLL Carrollton

FULTON CLAYTON

NEWTON

MORGAN

GREENE TALIAFERRO

MCDUFFIE COLUMBIA

HEARD

COWETA

FAYETTE

HENRY

SPALDING

BUTTS

JASPER

PUTNAM

WARREN

HANCOCK

GLASCOCK

RICHMOND

TROUP

MERIWETHER

PIKE

LAMAR MONROE

JONES

BALDWIN

WASHINGTON

JEFFERSON

BURKE

HARRIS

UPSON

TALBOT

CRAWFORD

BIBB

WILKINSON TWIGGS

JOHNSON

JENKINS

SCREVEN

MUSCOGEE CHATTAHOOCHEE

MARION

TAYLOR

SCHLEY

MACON

STEWART

WEBSTER

SUMTER

QUITMAN

TERRELL

RANDOLPH

LEE

PEACH HOUSTON BLECKLEY

Dublin LAURENS

EMANUEL

TREUTLEN

CANDLER

BULLOCH

EFFINGHAM

MONTGOMERY

DOOLY

PULASKI

DODGE

WHEELER

CRISP

WILCOX

TELFAIR

TURNER

BEN HILL

JEFF DAVIS

Vidalia

EVANS

TOOMBS

TATTNALL

BRYAN

APPLING

LONG

LIBERTY

CHATHAM

CLAY

CALHOUN

DOUGHERTY

EARLY MILLER

BAKER MITCHELL Pelham

WORTH

TIFT

IRWIN

COFFEE

COLQUITT

BERRIEN COOK

ATKINSON

SEMINOLE DECATUR

GRADY

THOMAS Thomasville

BROOKS

LANIER Valdosta

CLINCH

LOWNDES

ECHOLS

BACON

WAYNE

PIERCE

WARE

BRANTLEY

MCINTOSH GLYNN

CHARLTON

CAMDEN

Source: GSFIC records

Capital Funding for Local School Systems

36

Appendix E: State Bond Funding for Vocational Equipment Fiscal Years 2005-2014

DADE

CATOOSA Dalton

FANNIN

UNION

TOWNS

RABUN

MURRAY Chickamauga WHITFIELD

HABERSHAM

WALKER

GILMER

WHITE

Trion

GORDON

LUMPKIN

STEPHENS

CHATTOOGA

Calhoun

FLOYD Rome

BARTOW Cartersville

PICKENS CHEROKEE

DAWSON

HALL

FRANKLIN BANKS

FORSYTH Gainesville Commerce

HART

JACKSON

MADISON

ELBERT

Buford

Jefferson

POLK
HARALSON Bremen

Marietta

PAULDING

COBB

DOUGLAS Atlanta

GWINNETT

BARROW

DEKALB Decatur

WALTON Social Circle

CLARKE OGLETHORPE
OCONEE

WILKES

LINCOLN

$0 Less than $500,000 $500,001-$1,000,000 $1,000,001-$1,500,000 More than $1,500,000

ROCKDALE

CARROLL Carrollton

FULTON CLAYTON

NEWTON

MORGAN

GREENE TALIAFERRO

MCDUFFIE COLUMBIA

HEARD

COWETA

FAYETTE

HENRY

SPALDING

BUTTS

JASPER

PUTNAM

WARREN

HANCOCK

GLASCOCK

RICHMOND

TROUP

MERIWETHER

PIKE

LAMAR MONROE

JONES

BALDWIN

WASHINGTON

JEFFERSON

BURKE

HARRIS

UPSON

TALBOT

CRAWFORD

BIBB

WILKINSON TWIGGS

JOHNSON

JENKINS

SCREVEN

MUSCOGEE

TAYLOR

PEACH

Dublin

EMANUEL

CHATTAHOOCHEE MONTGOMERY

MARION

MACON

HOUSTON BLECKLEY

LAURENS

TREUTLEN

CANDLER

BULLOCH

EFFINGHAM

SCHLEY

STEWART

WEBSTER

SUMTER

QUITMAN

TERRELL

RANDOLPH

LEE

DOOLY

PULASKI

DODGE

WHEELER

CRISP

WILCOX

TELFAIR

TURNER

BEN HILL

JEFF DAVIS

Vidalia

EVANS

TOOMBS

TATTNALL

BRYAN

APPLING

LONG

LIBERTY

CHATHAM

CLAY

CALHOUN

DOUGHERTY

EARLY MILLER

BAKER

MITCHELL

Pelham

WORTH

TIFT

IRWIN

COLQUITT

BERRIEN COOK

COFFEE ATKINSON

BACON

WAYNE

PIERCE

WARE

BRANTLEY

MCINTOSH GLYNN

SEMINOLE DECATUR

GRADY

THOMAS Thomasville

BROOKS

LANIER Valdosta

CLINCH

LOWNDES

ECHOLS

CHARLTON

CAMDEN

Source: DOE records

Capital Funding for Local School Systems

37

Appendix F: Vocational Lab Types and State Funding Levels

Lab Type

New

Agriculture, Forestry, and Natural Resources

Agriculture Mechanics Lab

$90,000

Agriculture Multi-Use Lab

$90,000

Plant Science/Horticulture Lab

$78,000

Food Processing Lab

$120,000

Middle School Agriculture Lab Architecture and Construction

$48,000

Construction Lab

$84,000

HVACR Lab

$90,000

Architectural Drawing and Design Lab

$108,000

Metals Lab

$90,000

Arts, Audio/Video Technology, and Communications

Audio/Video Technology and Film

$120,000

Graphics Design Lab

$48,000

Graphics Communication Lab Business Management and Administration

$120,000

Business Management Multi-Use Lab

$48,000

Middle School Business Education Lab Education and Training

$36,000

Early Childhood Education Lab Energy

$36,000

Energy Lab Finance

$108,000

Business Management Multi-Use Lab Information Technology

$48,000

Information Technology Lab Health Science

$48,000

Health Science Multi-Use Lab

$54,000

Middle School Health Science Lab Hospitality and Tourism

$30,000

Marketing Multi-Use Lab

$24,000

Culinary Arts Lab Human Services

$90,000

Family/Consumer Science Multi-Use Lab

$36,000

Middle School Family/Consumer Science Lab

$30,000

Cosmetology Lab

$24,000

Barbering Lab

$18,000

Law, Public Safety, Corrections, and Security

Public Safety Lab Marketing

$18,000

Marketing Multi-Use Lab Manufacturing

$24,000

Manufacturing Lab

$108,000

Mechatronics Lab

$175,000

Science, Technology, Engineering, and Math (STEM)

Engineering Technology Multi-Use Lab

$108,000

Middle School Technology Lab

$48,000

Engineering, Drawing, and Design Lab

$108,000

Transportation, Distribution, and Logistics

Aviation Maintenance Lab

$90,000

Flight Operations Lab

$90,000

Automotive Services Lab

$102,000

Collision Repair Lab

$90,000

Distribution and Logistics

$108,000

Source:DOE

Renovated
$67,500 $67,500 $58,500 $90,000 $36,000
$63,000 $67,500 $81,000 $67,500
$90,000 $36,000 $90,000
$36,000 $27,000
$27,000
$81,000
$36,000
$36,000
$40,500 $22,500
$18,000 $67,500
$27,000 $22,500 $18,000 $12,000
$13,500
$18,000
$81,000 $140,000
$81,000 $36,000 $81,000
$78,000 $78,000 $90,000 $67,500 $81,000

Capital Funding for Local School Systems

38

Appendix G: Individual School System Data

Local School System County School Systems Appling County Schools Atkinson County Schools Bacon County Schools Baker County Schools Baldwin County Schools Banks County Schools Barrow County Schools Bartow County Schools Ben Hill County Schools Berrien County Schools Bibb County Schools Bleckley County Schools Brantley County Schools Brooks County Schools Bryan County Schools Bulloch County Schools Burke County Schools Butts County Schools Calhoun County Schools Camden County Schools Candler County Schools Carroll County Schools Catoosa County Schools Charlton County Schools Chatham County Schools Chattahoochee County Schools Chattooga County Schools Cherokee County Schools Clarke County Schools Clay County Schools Clayton County Schools Clinch County Schools Cobb County Schools Coffee County Schools Colquitt County Schools Columbia County Schools Cook County Schools Coweta County Schools Crawford County Schools Crisp County Schools Dade County Schools Dawson County Schools Decatur County Schools DeKalb County Schools

FY14 Student FTE

Eligible Need in Local Facilities
Plan 1

FY 2015 Earned Entitlement 2

3,641 1,749 2,078
318 5,783 2,864 13,205 14,167 3,303 3,187 24,075 2,429 3,561 2,206 8,276 10,005 4,411 3,469
674 9,114 2,164 14,613 10,848 1,662 37,307
926 2,830 39,714 12,775
343 52,163
1,405 109,881
7,776 9,628 24,900 3,342 22,436 1,811 4,278 2,231 3,533 5,433 99,255

$5,956,876

$567,322

$1,620,660

$154,349

$13,287,824

$1,265,508

$1,456,575

$138,721

$3,402,639

$324,061

$2,219,386

$211,370

$36,354,945

$3,462,377

$19,960,980

$1,901,046

$9,613,361

$915,559

$10,240,146

$975,252

$31,674,755

$3,016,644

$10,108,746

$962,738

$8,477,570

$807,388

$4,834,111

$460,392

$18,383,705

$1,750,830

$18,591,800

$1,770,648

$9,197,123

$875,917

$3,965,399

$377,657

$1,895,027

$180,479

$26,757,384

$2,548,323

$17,750,058

$1,690,482

$25,448,366

$2,423,655

$9,212,087

$877,342

$6,182,894

$588,847

$124,597,460

$11,866,429

$1,689,408

$160,896

$22,055,107

$2,100,487

$63,441,809

$6,042,079

$21,655,851

$2,062,463

$427,627

$40,726

$32,181,804

$3,064,935

$2,710,322

$258,126

$183,678,749

$17,493,221

$30,272,119

$2,883,060

$29,929,085

$2,850,390

$68,784,407

$6,550,898

$15,043,513

$1,432,716

$50,685,028

$4,827,147

$4,647,059

$442,577

$15,694,844

$1,494,748

$4,522,475

$430,712

$6,854,136

$652,775

$31,503,755

$3,000,359

$190,242,639

$18,118,353

(continued on next page)

Accumulated Entitlement 3

Most Recent Approved Statefunded Project

$1,705,478 $157,680 $0 $0 $612,173
$2,574,025 $19,486,279
$6,127,556 $653,977 $0
$2,149,789 $0
$2,480,972 $0 $0
$6,828,678 $2,757,435
$0 $504,387 $8,355,117
$0 $3,493,424 $1,596,115
$9,982 $16,829,083
$731,642 $0
$9,954,700 $2,691,977
$257,898 $3,736,564 $1,087,963 $51,935,066 $1,703,045
$0 $19,025,504
$703,311 $10,086,869
$559,245 $3,744,615
$184,479 $5,306,978 $1,409,324 $35,979,408

2004 2015 2012 2009 2009 2013 2015 2012 2007 2008 2015 2010 2010 2015 2015 2009 2013 2015 2012 2003 2012 2015 2015 2010 2015 2010 2015 2015 2015 2001 2015 2009 2015 2011 2013 2014 2008 2015 2015 2010 2015 2007 2007 2015

Capital Funding for Local School Systems

39

Local School System Dodge County Schools Dooly County Schools Dougherty County Schools Douglas County Schools Early County Schools Echols County Schools Effingham County Schools Elbert County Schools Emanuel County Schools Evans County Schools Fannin County Schools Fayette County Schools Floyd County Schools Forsyth County Schools Franklin County Schools Fulton County Schools Gilmer County Schools Glascock County Schools Glynn County Schools Gordon County Schools Grady County Schools Greene County Schools Gwinnett County Schools Habersham County Schools Hall County Schools Hancock County Schools Haralson County Schools Harris County Schools Hart County Schools Heard County Schools Henry County Schools Houston County Schools Irwin County Schools Jackson County Schools Jasper County Schools Jeff Davis County Schools Jefferson County Schools Jenkins County Schools Johnson County Schools Jones County Schools Lamar County Schools Lanier County Schools Laurens County Schools Lee County Schools Liberty County Schools Lincoln County Schools

FY14 Student FTE
3,299 1,433 15,551 25,623 2,212
811 11,546
3,080 4,370 1,856 2,954 20,191 10,256 40,785 3,643 94,921 4,276
626 12,781
6,768 4,655 2,280 169,152 6,907 26,911
997 3,600 5,210 3,517 2,029 40,818 27,913 1,800 7,296 2,314 3,085 2,819 1,339 1,160 5,493 2,629 1,802 6,532 6,353 10,147 1,204

Eligible Need in Local Facilities
Plan 1

FY 2015 Earned Entitlement 2

$5,946,447

$566,328

$3,068,823

$292,269

$19,394,301

$1,847,077

$62,304,070

$5,933,723

$3,797,670

$361,683

$5,463,063

$520,292

$17,283,641

$1,646,062

$3,430,907

$326,753

$4,077,480

$388,332

$7,207,053

$686,386

$2,530,830

$241,032

$35,854,574

$3,414,723

$13,284,910

$1,265,230

$54,682,274

$5,207,837

$9,479,698

$902,829

$129,700,813

$12,352,463

$9,393,131

$894,584

$693,573

$66,055

$58,258,465

$5,548,427

$7,584,734

$722,356

$7,976,144

$759,633

$1,609,919

$153,326

$146,087,401

$13,913,091

$10,023,255

$954,596

$57,778,876

$5,502,752

$2,682,250

$255,452

$4,515,517

$430,049

$11,142,684

$1,061,208

$7,672,634

$730,727

$7,173,808

$683,220

$37,180,990

$3,541,048

$31,752,001

$3,024,001

$3,519,365

$335,178

$11,292,864

$1,075,511

$8,924,918

$849,993

$11,536,328

$1,098,698

$7,992,819

$761,221

$17,769,892

$1,692,371

$2,515,850

$239,605

$9,161,704

$872,544

$6,440,775

$613,407

$3,249,660

$309,492

$24,211,294

$2,305,838

$17,633,501

$1,679,382

$21,619,495

$2,059,000

$8,942,926

$851,708

(continued on next page)

Most Recent

Accumulated Approved StateEntitlement 3 funded Project

$1,271,516

2012

$1,155,091

2002

$2,147,671

2015

$6,960,874

2015

$487,402

2010

$0

2009

$11,225,149

2015

$534,882

2014

$923,607

2015

$0

2012

$0

2015

$37,152,892

2015

$899,918

2015

$49,763,027

2015

$0

2013

$3,787,171

2015

$4,409,165

2015

$293,945

2009

$1,563,866

2012

$2,835,938

2010

$1,605,471

2007

$1,258,402

2001

$102,047,808

2015

$3,652,265

2010

$13,440,720

2014

$1,314,249

2009

$2,635,521

2015

$4,745,278

2008

$4,040,115

2009

$0

2009

$29,106,613

2015

$12,415,124

2014

$1,351,658

2011

$14,535,017

2006

$2,233,653

2015

$29,220

2009

$0

2013

$0

2015

$600,382

2009

$2,633,615

2015

$2,564,172

2015

$245,729

2010

$0

2015

$7,035,101

2013

$6,772,420

2015

$0

2009

Capital Funding for Local School Systems

40

Local School System Long County Schools Lowndes County Schools Lumpkin County Schools Macon County Schools Madison County Schools Marion County Schools McDuffie County Schools McIntosh County Schools Meriwether County Schools Miller County Schools Mitchell County Schools Monroe County Schools Montgomery County Schools Morgan County Schools Murray County Schools Muscogee County Schools Newton County Schools Oconee County Schools Oglethorpe County Schools Paulding County Schools Peach County Schools Pickens County Schools Pierce County Schools Pike County Schools Polk County Schools Pulaski County Schools Putnam County Schools Quitman County Schools Rabun County Schools Randolph County Schools Richmond County Schools Rockdale County Schools Schley County Schools Screven County Schools Seminole County Schools Spalding County Schools Stephens County Schools Stewart County Schools Sumter County Schools Talbot County Schools Taliaferro County Schools Tattnall County Schools Taylor County Schools Telfair County Schools Terrell County Schools

FY14 Student FTE
3,132 10,466
3,750 1,627 4,773 1,386 4,310 1,659 3,109 1,086 2,418 4,018 1,429 3,287 7,656 32,007 19,476 6,803 2,249 28,434 3,736 4,335 3,709 3,408 7,682 1,399 2,785
323 2,237 1,110 31,749 16,136 1,368 2,360 1,667 10,538 4,020
538 4,878
523 206 3,684 1,512 1,722 1,489

Eligible Need in Local Facilities
Plan 1

FY 2015 Earned Entitlement 2

$23,365,736

$2,225,309

$20,105,246

$1,914,786

$5,419,464

$516,140

$8,216,589

$782,533

$23,721,785

$2,259,218

$11,265,816

$1,072,935

$9,734,150

$927,062

$8,484,875

$808,084

$4,784,178

$455,636

$12,555,344

$1,195,747

$3,875,175

$369,064

$7,865,142

$749,061

$6,937,368

$660,702

$6,356,831

$605,413

$12,829,964

$1,221,902

$30,269,411

$2,882,802

$52,481,590

$4,998,249

$11,513,741

$1,096,547

$3,213,360

$306,034

$23,994,574

$2,285,198

$6,380,351

$607,653

$8,074,068

$768,959

$6,542,366

$623,083

$10,820,908

$1,030,563

$13,005,461

$1,238,616

$2,398,436

$228,423

$22,744,047

$2,166,101

$2,538,459

$241,758

$3,734,446

$355,662

$3,282,339

$312,604

$49,888,625

$4,751,299

$19,971,111

$1,902,011

$3,492,188

$332,589

$3,732,559

$355,482

$3,223,290

$306,980

$12,746,245

$1,213,929

$19,220,027

$1,830,479

$1,839,678

$175,207

$4,827,039

$459,718

$11,175,972

$1,064,379

$600,682

$57,208

$8,432,818

$803,126

$3,045,231

$290,022

$2,060,311

$196,220

$16,556,963

$1,576,854

(continued on next page)

Accumulated Entitlement 3

Most Recent Approved Statefunded Project

$2,092,862

2011

$3,005,616

2010

$4,266,182

2009

$2,909,814

2001

$0

2013

$0

2010

$1,995,811

2015

$0

2015

$243,526

2012

$0

2007

$1,005,852

2009

$2,225,529

2015

$3,148,766

2008

$3,794,256

2013

$2,622,607

2010

$6,842,093

2011

$0

2012

$9,401,179

2015

$712,252

2010

$94,508

2015

$2,245,132

2008

$3,482,054

2015

$1,123,327

2014

$3,476,261

2015

$3,345,752

2008

$1,094,820

2010

$1,926,396

2008

$0

2009

$0

2012

$1,128,576

2015

$1,410,810

2015

$13,259,734

2015

$2,276,965

2009

$940,623

2013

$1,157,408

2006

$0

2012

$0

2009

$1,119,057

2001

$2,048,596

2014

$0

2015

$196,651

2001

$3,017,539

2014

$243,681

2010

$873,262

2015

$0

2014

Capital Funding for Local School Systems

41

Local School System

FY14 Student FTE

Eligible Need in Local Facilities
Plan 1

FY 2015 Earned Entitlement 2

Accumulated Entitlement 3

Most Recent Approved Statefunded Project

Thomas County Schools

5,550

$4,020,430

$382,898

$793,597

2009

Tift County Schools

7,861

$13,057,430

$1,243,565

$2,972,127

2014

Toombs County Schools

3,054

$8,717,486

$830,237

$0

2011

Towns County School

1,068

$1,174,812

$111,887

$716,204

2007

Treutlen County Schools

1,190

$16,838,750

$1,603,691

$0

2010

Troup County Schools

12,641

$31,784,052

$3,027,054

$7,368,221

2015

Turner County Schools

1,478

$4,114,665

$391,873

$1,695,289

2014

Twiggs County Schools

905

$3,637,465

$346,425

$319,731

2015

Union County Schools

2,678

$5,450,005

$519,048

$0

2015

Upson County Schools

4,346

$4,705,655

$448,158

$3,020,566

2013

Walker County Schools

9,150

$20,807,358

$1,981,654

$3,063,500

2013

Walton County Schools

13,685

$12,448,864

$1,185,607

$1,185,607

2014

Ware County Schools

6,029

$13,751,079

$1,309,627

$6,724,208

2008

Warren County Schools

677

$3,101,145

$295,347

$545,721

2012

Washington County Schools

3,100

$8,564,747

$815,690

$0

2014

Wayne County Schools

5,412

$19,121,894

$1,821,133

$2,461,802

2012

Webster County Schools

414

$1,651,594

$157,295

$431,648

2001

Wheeler County Schools

1,039

$2,771,212

$263,925

$19,175

2011

White County Schools

3,846

$11,284,951

$1,074,758

$0

2011

Whitfield County Schools

13,265

$16,025,027

$1,526,194

$4,230,054

2015

Wilcox County Schools

1,220

$7,216,954

$687,329

$4,351,835

2011

Wilkes County Schools

1,655

$2,734,720

$260,450

$265,909

2015

Wilkinson County Schools

1,573

$15,836,437

$1,508,233

$203,869

2012

Worth County Schools

3,390

$5,064,417

$482,326

$1,235,349

2009

City School Systems

Atlanta City Schools

49,987

$67,469,272

$6,425,647

$20,735,873

2010

Bremen City Schools

2,145

$4,907,325

$467,364

$1,291,071

2015

Buford City Schools

3,963

$9,712,095

$924,962

$7,420,396

2004

Calhoun City Schools

3,861

$18,408,558

$1,753,197

$0

2012

Carrollton City Schools

4,809

$13,366,112

$1,272,964

$6,046,582

2015

Cartersville City Schools

4,183

$8,962,178

$853,541

$3,592,320

2015

Chickamauga City Schools

1,390

$3,630,260

$345,739

$737,870

2014

Commerce City Schools

1,489

$1,682,319

$160,221

$549,262

2003

Dalton City Schools

7,699

$10,211,872

$972,560

$7,498,557

2015

Decatur City Schools

4,163

$5,576,359

$531,082

$3,008,497

2014

Dublin City Schools

2,620

$3,804,248

$362,309

$801,258

2007

Gainesville City Schools

7,671

$11,476,221

$1,092,974

$7,413,840

2013

Jefferson City Schools

3,059

$4,425,488

$421,475

$5,078,950

2012

Marietta City Schools

8,830

$21,833,206

$2,079,354

$8,155,116

2010

Pelham City Schools

1,502

$8,879,081

$845,627

$189,873

2008

Rome City Schools

6,020

$11,961,075

$1,139,150

$773,760

2015

Social Circle City Schools

1,683

$10,538,937

$1,003,709

$3,126,913

2013

Thomasville City Schools

3,039

$10,455,977

$995,808

$2,252,851

2014

Trion City Schools

1,396

$2,667,648

$254,062

$1,450,421

2001

Valdosta City Schools

7,937

$23,484,236

$2,236,595

$0

2014

Vidalia City Schools

2,643

$4,288,324

$408,412

$0

2015

1 Eligible need includes Regular Advance projects in repayment and annual updates due to changes in FTE counts.

2 FY 2015 earned entitlement is the actual earned entitlement at the $300 million level prior to reductions for approved project applications.

3 Accumulated entitlement as of July 1, 2014 includes FY 2015 actual earnings and reductions for approved project applications.

Source: DOE records

Capital Funding for Local School Systems

42

Appendix H: Reimbursement Rates by Facility Project Type1

New Facility

Elementary Schools Middle Schools High Schools Additions

$80/sq ft $82/sq ft $84/sq ft

Elementary Schools

Classrooms, Media, Labs

$80/sq ft

Physical Education

$57/sq ft

Middle Schools

Classrooms, Media, Labs

$80/sq ft

Physical Education

$61/sq ft

High Schools

Classrooms, Media, Labs

$80/sq ft

Physical Education

$65/sq ft

Support Areas Renovations Facilities occupied for 20 or more years Modifications3

$73 to $129/sq ft $14,000/earned IU2

Roofs 20 or more years old

$6 to $8/sq ft

HVAC systems 10 or more years old

$7 to $9/sq ft

Kitchen equipment 15 or more years old

$15,000 to $30,000/ piece

Canopies

$16/sq ft

Other facility modifications

Varies

1In addition to these amounts, projects receive up to 6% of eligible costs for

architect fees and receive up to 5% in contingencies for new facilities and

additions and up to 15% in contingencies for renovations and modifications.

2Earned Instructional Units (IUs) are based on the school's student count.

3Reimbursement rates for roofs and HVAC depend on the type used. Rates for kitchen equipment vary based on the type of equipment and the size of the facility's student population. Funding is also available for modifications to classrooms, media space, etc. as needed, but total funding for renovations and modifications may not exceed reimbursement rates for new construction.

Source: DOE regulations

Capital Funding for Local School Systems

43

The Performance Audit Division was established in 1971 to conduct in-depth reviews of state-funded programs. Our reviews determine if programs are meeting goals and objectives; measure program results and effectiveness; identify alternate methods to meet goals; evaluate efficiency of resource allocation; assess compliance with laws and regulations; and provide credible management information to decision-makers. For more information, contact
us at (404)657-5220 or visit our website at www.audits.ga.gov.