Program Review and Investigations Committee




<MeetMDY1> July 12, 2007


The<MeetNo2> Program Review and Investigations Committee met on<Day> Thursday,<MeetMDY2> July 12, 2007, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Senator Ernie Harris, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Ernie Harris, Co-Chair; Representative Rick G. Nelson, Co-Chair; Senators Charlie Borders, Brett Guthrie, Vernie McGaha, R. J. Palmer II, Dan Seum, and Katie Stine; Representatives Sheldon E. Baugh, Dwight D. Butler, Leslie Combs, Ruth Ann Palumbo, Rick Rand, and Arnold Simpson.


Guests: Bernard Sandfoss, Chairman, and Dr. Robert Tarvin, Executive Director, School Facilities Construction Commission; Kevin Noland, Interim Commissioner, Dr. Larry Stinson, Associate Commissioner, and Mark Ryles, Director of Division of Facilities Management, Kentucky Department of Education.


LRC Staff:  Greg Hager, Committee Staff Administrator; Rick Graycarek; Jim Guinn; Christopher Hall; Margaret Hurst; Colleen Kennedy; Van Knowles; Perry Papka; Rkia Rhib; Tara Rose; Cindy Upton; and Karen Wirth, Committee Assistant.


Minutes of the June 14, 2007 meeting were approved, without objection, upon motion made by Sen. Stine and seconded by Rep. Rand.


Dr. Robert Tarvin explained to the committee that two groups were formed in 2006 to review planning and funding of school facilities: the School Facilities Task Force and the Urgent Needs Advisory Committee.


Dr. Tarvin said the recommendations of the task force include amending the definition of major renovation to include heating, air conditioning and ventilation (HVAC); roofing; or modifications made in accordance with the American Disabilities Act and Life Safety; a standardized method for evaluating buildings; and increasing the five-cent equivalent tax rate for facilities to ten cents.


Sen. Harris asked why the task force recommended that some major capital replacement be defined as maintenance.


Dr. Tarvin replied that replacing HVAC systems or roofs could be costly for a smaller district and this change would enable these costs to be eligible for restricted or building funds.


Sen. Stine asked if life safety issues include mold and asbestos.


Dr. Tarvin replied that they do.


Sen. Stine asked if growth districts should have been included in the task force's study.


Dr. Tarvin responded that the task force made a recommendation for what it called rapid growth districts.


Sen. McGaha asked if using stock building plans could maximize funding.


Dr. Tarvin responded that a subcommittee of the task force reported that stock plans do not yield as much savings as previously thought. He mentioned an instance of repeat plans being used, with savings of 1 to 1.5 percent.


Sen. Seum asked if all districts participated in the growth nickel.


Dr. Tarvin explained that districts qualify every year to levy the growth nickel. Each recent budget included language to allow districts to qualify that did not qualify before.


Sen. Seum asked whether levying the growth nickel is mandatory for qualifying districts.


Dr. Tarvin replied no, it is a local board decision that is subject to recall.


Sen. Seum asked for explanation of the recommendation that all districts be required to levy ten cents.


Dr. Tarvin said that this recommendation asks that the five cents mandated by law be increased to ten cents.


Sen. Seum asked if this would be mandating a ten cent tax increase.


Dr. Tarvin said it would be a five cent increase since five cents is already mandated.


Sen. Seum asked if school districts can require the additional five cents even if it is not mandated by law.


Dr. Tarvin said the district can, subject to recall, within the current budget language.  


Dr. Tarvin then discussed the Urgent Needs Advisory Committee, which made recommendations to the School Facilities Construction Commission. Facility projects were selected for targeted funding, equalization funding, or inflation increases for existing urgent need projects.


Sen. Borders expressed dissatisfaction with the point system the committee used in order to rate schools for facility improvements, including the use of CATS scores to determine need. He questioned whether the committee's recommendations address the needs across the Commonwealth effectively. He asked about the average age of category four and five buildings.


Dr. Tarvin answered that category four buildings were approximately 30 years old or more and category five buildings were approximately 40 years old or more.


Rep. Nelson asked about the three awards that were given outside the formula.


Dr. Tarvin told the committee the three districts that received funding were Webster County, Graves County, and Fort Thomas. Each district received no more than  $5 million. An additional $1.2 million was given to Boone County.


Rep. Nelson asked how much of the $75 million in funding went to category five schools.


Dr. Tarvin said the money went to category four and five buildings, but he did not have a breakdown.


Rep. Nelson asked if the Urgent Needs Advisory Committee took a vote to determine the districts receiving money that did not meet the criteria.


Dr. Tarvin replied yes.


Sen. Stine asked about the status of category five buildings that have been allocated funding but 6 districts have not acted on.


Dr. Tarvin said the committee decided that if districts were not using allocated funds, there would be no inflation increase.


Sen. McGaha asked about the ranking system and the points given for growth.


Dr. Tarvin explained that growth and CATS scores were among the factors in consideration for funding. Each member of the committee had 100 points to award to a combination of factors. Adding members' points determined how much value each factor was given in awarding funds.


Sen. McGaha asked if this ranking formula is ongoing.


Dr. Tarvin responded that this formula was used to award a specific type of funding in the current budget bill. Unless renewed or replaced, it would not be used again.


Kevin Noland and Larry Stinson summarized the report of the School Facilities Task Force.


Mr. Stinson summarized key recommendations from the report, which has been provided to members of Program Review. He said that as part of the facilities review process, Picus and Associates did an equity analysis of the school funding system. Recommendations from the analysis included increasing the SEEK Capital Outlay and adding a second equalized nickel.


Sen. Harris asked if all growth nickels are matched by the state.


Dr. Tarvin responded that the first nickel is equalized after the second nickel is adopted. Equalized means that the district is given 150% of the state tax average.


Rep. Nelson asked what the Kentucky Department of Education was going to do to help complete the consolidated high school in Harlan County.


Mr. Noland stated that the state auditor's office was looking into the consolidated school plan in Harlan County and he was awaiting the response. He also replied that it is his understanding that the school building will be able to open, the additional costs are for add-ons such as athletic facilities.


Mr. Ryles responded that due to fund availability, districts build schools in phases, completing the instructional building then the add-on facilities.


Sen. McGaha asked for soft costs to be defined.


Mr. Stinson replied that soft costs include design or site development and should be included in figuring unmet need.


Sen. McGaha asked what percentage of the total costs are soft costs.


Mr. Stinson said soft costs can be as much as 19%.


Sen. McGaha asked what ways we can save on soft costs.


Mr. Stinson replied that there are several plans that have been discussed including stock plans for buildings; however, the task force did not make this recommendation because it did not find the savings to be that great.


Mr. Ryles explained that building plans are repeated when feasible and this does provide savings to the district.


Sen. McGaha asked if there was any incentive for a district to use a repeat plan.


Mr. Ryles said that all districts must go through an approval process and repeat plans will be suggested. Also, when a district does multiple buildings at once, repeat plans can offer a bigger savings.


Sen. Stine asked about the Picus recommendation that dealt with merging the regular School Facilities Construction Commission program with the Urgent Needs Funding.


Mr. Stinson said it is suggesting that the School Facilities Construction Commission  could consider some additional weight factors in determining how dollars are distributed. A modification would have to be made to reflect an urgent need.


Rep. Combs asked why Harlan County received more urgent need money than other districts.


Dr. Tarvin replied that the committee relied on the project costs given to them and the need to complete the Harlan County project was much greater.


Rep. Palumbo asked about the recommendation to change Local Planning Committee meeting notices from 7 days to 24 hours.


Mr. Stinson replied that these were work session meetings only and not hearings or public forums.


Sen. Harris asked if there is a need to develop a category for rapid growth districts.


Mr. Stinson said it is very possible that could occur.


The meeting was adjourned at 12:10.