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Massachusetts Association of Regional Schools

Update March 6, 2009

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• An independent public Authority, created by Chapter 208 of the Acts of 2004, – composed of a 7 member board, chaired by State

Treasurer Tim Cahill, 4 professional educator/design-construction industry professionals appointed by Treasurer Cahill, ANF and ESE

• What we do: • Use our dedicated sales tax funds to pay down and

audit approximately $11 Billion for 1156 projects authorized under the former SBA program including financing the $5.5B, 423 project wait list;

• Effectively manage, plan and create a new financially sustainable school building construction and renovation grant program;

• Use the remaining resources, after paying down inherited debts from the former program, to equitably spread across the Commonwealth for school construction and renovation grants

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First 4 Years: Significant Progress Made

MSBA’s accomplishments to date:– Made over $6 Billion in payments to cities, towns, and regional school districts

• Under the former program, the state would have taken decades to make most of these payments

– Of the 428 projects on the Waiting List: • 407 Wait list projects have received a payment or have been completely paid off• 354 Wait list projects received a final Board Approved Audit• 53 Wait list projects are in various stages of audit• 9 Wait list projects still have not started• 12 Wait list projects were removed under the Grant Conversion Program

– Completed and Board Approved 727 audits of the 800 audit backlog inherited from the former program. The completed audits have:

• Saved the taxpayers of Massachusetts over $795 Million• Generated over $2.3 Billion in avoided local interest costs

– Completed first ever capital survey of 1,817 schools in the Commonwealth

– Completed most comprehensive revision of program regulations in 60 years

– Developed and implemented a “pay-as-you-build” Progress Payment System for projects. The new Progress Payment System:

• Provides municipalities with much needed cash flow as projects are built• Reduces the amount of debt a city, town or regional school district needs to issue

– Commenced the reformed grant program for school renovation and construction projects • In FY2008, the MSBA received and reviewed 423 Statements of Interest from 163 school districts and has

made over 400 visits to more than 140 school districts as part of the MSBA’s review and due diligence process

• In FY2009, the MSBA received 47 new Statements of Interest from 25 additional districts– Moved the first round of potential projects into the $2.5 Billion 5-year capital pipeline

STANDARD CONTRACTS AND PROCEDURES

The New Process for School Construction and Renovation

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1. Identify the Problem• Local community identifies deficiencies in school facilities through the

Statement of Interest (SOI) process2. Validate the Problem

• MSBA and local community work together to validate deficiencies identified• Requires the MSBA and the city, town or regional school district to agree on

the problem3. Evaluation of potential solutions

• MSBA and local community work in collaboration to identify potential solutions

• Solution must fit within the MSBA’s available funding, long-term capital plan and will be prioritized based on the priorities established in G.L. c.70B § 8

4. Confirm the solution• MSBA and local community agree on solution and appropriate course of

action5. Implement the agreed upon solution

• MSBA and local community continue collaboration through design and construction

The New ProcessThe MSBA’s enabling statute places tremendous emphasis on planning, due diligence and prioritization of scarce Authority resources. The statute and MSBA regulations also require

collaboration between local districts and the MSBA during all phases of the process.

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MSBA Process Flow Chart

Statement of Interest (SOI)

Initial ComplianceCertificate

(ICC)

Pre-study Review Meeting

Enrollment ProjectionValidation

Project Scope & Budget

Conference

Project Scope & Budget

Agreement

MSBA Board

Approval

Sign Project

Funding Agreement

Local Vote within 120

Days

Phase IIdentify the

Problem

Phase IIVerify the Problem

Phase IIICollaborate on Solution

Phase IVAgree Upon

Solution

Phase VImplement

Agreed Upon Solution

Process to Select OPM

Solicit Feasibility Designer/Planner

Feasibility Study

Designer Selection

Panel

MSBA Approves

OPM

Design & Design Review

Bidding Construction

Progress Payment

and Audit

Process

Change Order

Review Process

Final Building

Cx

Project Closeout

Community Community & MSBA

MSBA

District selects a

Priority SOI

MSBA Review of

SOI

Senior Study on Priority

SOI

Preferred Schematic

Design

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Phase I – Identify the Problem

Statement of Interest (SOI)• Clear, concise statement of the problem based on MSBA statutory priorities• Preparation does not require hiring consultants – low-cost entry into MSBA system• The MSBA will perform due diligence based on problems identified in the SOI• Need sufficient data in SOI for MSBA to understand deficiencies and their impact on

the educational program – Data/documentation from 3rd party and professional reports

– Specific dates of events/ issues/impacts on facility and educational program

• Links to local policies and budgets

Conclusion

• The District has identified a problem that could fit one or more of MSBA’s statutory priorities

• The District has considered its educational and budget alternatives and is prepared to move forward in collaboration with the MSBA in finding an appropriate solution

• MSBA performance of a Senior Study may be appropriate

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Phase II Due Diligence: Senior Study

• Efficient, cost effective diagnostic tool used to evaluate SOI

• Each study team composed of an MSBA staff member and two senior architects with extensive knowledge of building systems and educational programs

• Studies examine both facility condition and programmatic issues – Identify goals and concerns of the school district– Evaluate physical condition of the facility, including major building systems

(building envelope, HVAC, electrical distribution, interior finishes)– Assess overcrowding or capacity issues– Determine ability of the facility to support the required educational program– Assess design factors such as availability of natural light which make a school’s

environment conducive to learning– Examine site considerations– Evaluate school district’s routine and capital maintenance programs

• Results summarized in concise report format permitting review and comparison of numerous SOI

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Senior Study Assessment Criteria

• Building Condition– Building exhibits signs of moderate to severe deficiencies in multiple building

systems such as: roofing system, façade, windows and doors, heating and ventilation systems, and electrical distribution system.

– These deficiencies adversely impact the school facility’s ability to support the delivery of the educational program.

• Building Capacity– Building exhibits signs of moderate to severe overcrowding including excessive

class sizes, inadequate number of classrooms, high number of cafeteria seatings, and conversion of non-educational space to educational uses.

– These conditions adversely impact the school facility’s ability to support the delivery of the educational program.

• Educational Program– The ability to support the required educational program is adversely impacted by

building condition and/or capacity, including use of inadequate spaces for the delivery of educational programs.

• Structural Deficiency– Building has clearly documented structural deficiencies that pose an immediate

risk to health and safety of building occupants.

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• The MSBA has developed an Enrollment Forecasting tool that is available on-line and can be accessed via the MSBA website (www.MassSchoolBuildings.org).

• The Enrollment Forecasting tool is intended to standardize the compilation of enrollment projection data by using the same approach for projecting enrollment for all districts based on a professionally developed modified cohort survival methodology.

– Basic premise of the cohort survival method: the past is a reasonable predictor of the future– Year-to-year cohort survival ratios account for the net effects of factors such as in/out

migration, student retention rates, new home construction, etc.– Model allows districts to provide data on significant local changes that would impact historical

cohort survival ratios such as major employer moving in/out, opening/closing of private/charter schools, open space being developed, major changes in transportation infrastructure, etc.

• This system can be used by districts to generate draft enrollment projections at no cost.

• Districts will need to complete an Enrollment Questionnaire which asks for some very basic and limited data on current year enrollments, housing permits, and birth data.

• If a district intends to submit a Statement of Interest (SOI) and cite enrollment related priorities 2, 4 or 6, then the district must transmit their enrollment data to the MSBA via the Enrollment Forecasting tool.

On-line Enrollment Forecasting Tool

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Enrollment:Every Square Foot Costs Money to

Build • How large or small does the building need to

be? = Enrollment

• Enrollments are dropping across the state for a majority of districts

• New construction costs $70,000 to $115,000 per student• When projected enrollments do not materialize, that’s another

district’s roof, classroom addition, science lab not done

– Projected Enrollments need to be realistic– Some recently built schools are half empty, districts requesting to

close– Some districts cannot afford the cost of maintaining recently built

larger schools• MSBA will not authorize a project for further development until

enrollment is agreed upon with the District• MSBA had a task force of superintendents to develop our online

enrollment model, available for every district• MSBA will work with districts to accommodate local enrollment

idiosyncrasies….• …but will not engage in wishful thinking.

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Phase III: Collaborate on Solution Invitation to Conduct a Feasibility Study• Requires Board Approval

• District will need to hire OPM and Designer

• District must execute MSBA’s Standard Feasibility Study Agreement (“FSA”)

• FSA defines Scope, Budget and Schedule for the Study

• Goal of Study Phase:– to study a variety of potential solutions– agree upon a preferred solution that is educationally sound and

cost effective for District and the MSBA– generate schematic design, agreed upon scope, cost estimate,

and schedule

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Owner’s Project Manager (OPM)• OPM mandated for projects estimated to be > $1.5m

• MSBA may require OPM for projects estimated to be less than or equal to $1.5M

• By statute, OPM may be an Existing Employee of the District. MSBA expects existing employee to provide all of the services required by the standard contract.

• Locally conducted procurement process (open and competitive)

• Qualifications-based selection pursuant to MGL c. 149, s. 44A½

• District must use the MSBA’s Model RFS and the MSBA’s Standard Contract for procuring and contracting with the OPM.

Buildability reviews Coordinating parties and information Monitoring performance Assisting School District with decisions and procedures Alerting MSBA to possible schedule, cost, scope, or value changes Indemnification of Owner and MSBA Liability coverage requirements Compliance with Project Funding Agreement OPM’s services to continue through MSBA’s final audit

Phase III - Collaborate on Solution

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Phase III: Collaborate on Solution

Procurement of a Designer for the Feasibility Study• Procurement shall be open, competitive, qualifications-based • MSBA Designer Selection Panel (DSP) if project $5M or more• Selection by local process in accordance with Chapter 7 if project less than $5M• Scope, budget, and schedule as agreed to by District and MSBA • School District to be the primary source on all educational questions • Planner/architect likely core skill set, but other areas of expertise (depending on

type of project) may be: Environmental and Energy Cost estimating Technology Traffic Permitting Green Buildings

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Once the MSBA and the District agree upon the most cost effective and educationally sound option

identified in the Feasibility Study, the MSBA Board will vote to authorize the District to proceed with

developing the Preferred Schematic Design Option which shall include, but not be limited to:

• A detailed scope of the Proposed Project;• Architectural and site drawings;• A description of the major building

construction systems which are proposed for the Proposed Project;• A detailed budget cost estimate;• A projected cash-flow;• Permitting requirements;• A proposed project design and construction

schedule including consideration of phasing of the Proposed Project; and

• Sustainable design goals including minimization of environmental and transportation impacts and ways the Proposed Project can meet those goals and elements of construction or demolition waste that would be recyclable.

Preferred Schematic

Design

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Phase IV - Agree Upon Solution Project Scope and Budget Agreement Details Scope , Schedule & Budget:

• Detailed scope

• Project Schedule

• Preliminary schematic design

• Detailed budget for construction, engineering and support costs

• Timeline for project and for cash flow

• Memorializing understandings reached at Scope and Budget Conference

• Establish range of reimbursement percentage (contingent on incentive points)

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PROJECT SCOPE: Focus on Attractive, Utilitarian Design

• Variegated Rooflines that leak● Grand atria in the front entrances• Copper clad facades…

These elements cost money and do not educate children.

• Model School Program has provided us with examples of attractive design that have low change orders and still work years later

• MSBA wants lasting construction, but many cities and towns and MSBA are still paying for costly projects that didn’t last

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Phase IV - Agree Upon SolutionReimbursement Formula (40% – 80%)

Base Points• Base Rate 31%• Income Factor (per capita income, from DOR data)• EQV (Property Valuation per capita, from DOR data)• Poverty (% on free/reduced lunch, from DOE data)

– Incentive Points• Maintenance Points Policy (poor, average, excellent) 0 – 2 %• “School Facility Maintenance Trust” 1%• Alternatives to Construction 4%

» Of the 4%, can receive 1% for CM @ risk» Of the 4%, can receive up to 3% for newly formed Regional District

• Major Reconstruction, Renovation 0 - 5%• Energy Efficiency (Green School) 0 - 2%• Non-state fund raising

» For every 1% of project costs raised, may receive 0.5% • Model School Incentive up to 5% • Overlaying zoning district (40R, 40S) 1%• 40R with >100 units 2, 3 family, or 50% 2, 3 family ½ %• Innovative Community Use 3%

» Of the 3%, can receive up to 3% for newly formed Regional District

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Phase IV - Conclusion

Project Funding Agreement

• MSBA Board Approves proposed Scope and Budget Agreement

• Local vote within 120 days of MSBA Board Action

• MSBA and School District sign Project Funding Agreement (PFA) agreeing upon the project’s scope, budget, and schedule

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Phase V - Implement Agreed Upon Solution

Project Funding Agreement: MSBA Grant terms and Grant total fixed by • Scope• Budget• Schedule

Progress Payments• Monthly requests for reimbursement• Reports and supporting invoices• Prompt audit• Quick determination of ineligible costs• Identify and quickly resolve disagreements

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Phase V – Implement Agreed Upon Solution

Key Objectives

• Coordination of design and rigorous constructability and value engineering review

• Construction contractor’s performance conforms to the contract plans and specifications through resident inspection

• Early identification and resolution of issues during design and

construction will control costs and limit schedule delays

• Provide central point of coordination among project participants

• Provide school districts and MSBA with timely information necessary to insure adequate oversight of major investment in public schools

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MSBA Board Actions 2007/2008 SOI Process

Based on the MSBA diagnostic analysis and input from the Facilities Assessment Subcommittee, the Board has taken the following actions since November, 2007:

– Feasibility Invitation 41– Preferred Schematic Option 11– Repair Assessment 19– Model School 2– Project Scope Invitation 20– Planning 14– Regionalization Assessment 9– Regional Vocational/Technical HS 8– Hold 36

Total 160

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FY2009 Statement of Interest - Summary

The window for filing/refreshing a Statement of Interest (SOI) closed on December 19, 2008. The MSBA is reviewing all submissions for compliance with requirements and completeness.The numbers in the following chart may change as the MSBA continues its review process.

New SOI 47*FY2008 Refreshed SOI 183Pending Submissions 12Total FY2009 Submissions 242

* 6 Projects moved into Repair Category at 1/09 Board

FY2008 SOI NOT refreshed 101

STANDARD CONTRACTS AND PROCEDURES

Standard Contracts and Procedures

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Standard Contracts and Procedures

Standard contracts and procedures assist Districts by:

• Expediting consultant selection by providing standard Requests for Services (RFS) • Avoiding costly litigation• Providing a Model RFS and a contract which meets MSBA expectations and statute requirements

The standard contract provides:

• Standard expectations of responsibilities for a school project• Definition of roles and responsibilities of the project participants - OPM, Designer, Contractor,

Commissioning Consultant, Owner• Provides contract provisions addressing Owner's concerns and liabilities• Uniformity and predictability for the design and owner's project manager community• Properly define interface with MSBA and its procedures

Standard contracts available:• Owner’s Project Manager (OPM) Request for Services (RFS)• Owner’s Project Manager (OPM) Contract• Designer Request for Services (RFS)• Designer Contract

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STANDARD DESIGN CONTRACT• FORCES designer to “DESIGN TO BUDGET”• Reinforces the importance of updated cost estimates and project controls

- Standard expectation on deliverables in accordance with MSBA guidelines

OWNER’S PROJECT MANAGER CONTRACT● Clearly defines the key role as expected by the MSBA and the Owner for

communication, project controls and the substantive role required to properly administer the contract

● Defines communication role and responsibilities for both the Owner and the MSBA

● Includes independent cost estimates

BENEFITS: Save Time & Money - MSBA standard contracts facilitate

negotiation and contract execution MSBA Standard Contracts protect the best interest of the

DISTRICT, unlike industry contracts which protect the interest of the vendors

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Regional School IssuesMSBA required to work with Eligible Applicant

– For Regional School Districts, Eligible Applicant is the Regional District School Committee

Why does MSBA work with Eligible Applicants?– Regional School District establishes district-wide:

– Educational Program– Budget– Coordination of services

– Potential Solutions may not involve town-owned buildings– Potential Solutions to facility issues require a coordinated approach– MSBA required to seek most educationally sound and cost effective

solutions, some of which may be a no-build solutions, re-use of existing facilities, grade reorganization, optimization of current educational spaces, all of which require a district-wide approach

– Regional Educational Program should be driving factor for SOI/school improvements

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Proposed Federal Stimulus

• Pressure to spend on “shovel ready” within next 6 months• Governor given wide flexibility on use/allocations of Federal Stimulus Funds• School Projects could be accelerated under “Model/Accelerated Design” methods

or bulk repair program • Letter from Treasurer Cahill to Governor Patrick, Speaker DeLeo, Senate President

Murray urging 2 things:• Use of federal stimulus funds to support local share of projects in pipeline • Use of federal stimulus funds for a Vocational Ed “New Deal” for

improvements to these buildings

Several New Types of Bonds – awaiting US Treasury rules/regulations – Build America Taxable Bonds– Build America Tax Credit Bonds– Qualified School Construction Bonds– Recovery Zone Economic Development Bonds– Recovery Zone Private Activity Bonds– Clean Renewable Energy Bonds– Qualified Energy Conservation Bonds

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Dedicated Sales Tax and Budget

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MSBA has a finite budget

1 Cent of Sales Tax

Prior Grants

$5.1B

Waiting List

$5.5B

New Program

$500M per year???

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Historical Commonwealth Sales Tax GrowthTrend Analysis

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Fiscal Year

% In

cre

as

e/D

ec

rea

se

fro

m P

rev

iou

s F

isc

al Y

ea

r

Historic growth trend (avg. 6%-7%)

Recent growth trend (avg. less than 2%)

Recent Sales Tax Growth Trend

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Total MSBA Budget Capacity is Reliant on Sales Tax Growth

Sales Tax Growth

Assumption

Estimated Total Amount of Grants Funded in the next 30

years

0% 5,600,000,000

1% 8,100,000,000

2% 10,500,000,000

3% 13,800,000,000

4% 21,200,000,000

The former SBA program committed $20B over the last 20 years to school construction.This slide shows that at 0% sales tax growth only $5.6B will be available for new projects until 2025….

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How will MSBA Succeed in meeting pipeline needs?

• Never promise what we can’t afford to pay for• Work with cities, towns and regional school districts to create educationally sound

and fiscally responsible school facilities • Think creatively for solutions. Past examples of innovations that have generated

savings, created efficiencies and have helped the MSBA and cities, towns and regional school districts reach goals on school facilities.

• ProPay system - gets reimbursement cash to cities and towns within 15 days of audit review• Audit program – has generated approximately $800M in savings• Low Interest Loan Program – will provide approximately $150M in 2% loans to Waiting List

communities to get projects completed and has the added benefit of saving local communities over $90M in avoided interest costs

• Grant Conversion Program – will provide approximately $125M in relief to Waiting List communities to get projects completed

• Model Schools Program - Innovative new program that is educationally sound, cost effective, saves time in design development and gets shovel in the ground sooner which saves both the local district and the MSBA money

– Saved approximately $26M in Norwood. – Use of Model School Program ideals has saved approximately $50M in Wellesley

• Regulations Revisions to focus on Core Academic Spaces – remove focus on “grand” spaces, spectator amenities and other spaces that do not have direct relation to educating students or are not in regular use throughout the school day by a majority of the student population.

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Norwood High School

Current Norwood

High School

New Norwood

High School Design

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30

25

Abington

20 AuburnAdams-

Cheshire

BostonAshburnham- Westminster

Chelsea (R) Attleboro (R) Andover

Florida (R) Douglas Carver

Gardner Dracut Danvers

15 Holbrook Fairhaven Dedham

Hopedale (R) Granby Easthampton Acton (R)

HudsonHamilton-

Wenham (R)Fitchburg (R) Bedford

Medway (R) Hopkinton Grafton Blue Hills (R)

NarragansettLeominster

(R)

Hampden-Wilbraham

(MS)

Berlin-Boylston

Concord

10 Needham (R) Longmeadow Methuen BillericaEast

Longmeadow

North AdamsMarblehead

GloverNashoba Brookline Lakeville (R)

Oxford (R) Maynard Natick Burlington Leiciester (R)

Randolph (R) Peabody (R) Norfolk Carlisle Medford (R)

Rockport (R) Quincy PlymouthEssex Agri

TechMilford (R)

5 Sandwich (R) Sharon RochesterFoxborough

(R)Avon (R) North Reading

UxbridgeSouth Shore

(R)Shrewsbury Littleton (R) Belmont Duxbury (R) Beverly

Northborough (R)

Whittier Reg. VoTech (R)

Southbridge SturbridgeMarshfield

(R)Braintree (R) Hanover Hingham Sherborn (R)

WinchesterSouthwick-

TollandTewksbury

(MS)Rockland Hadley (R)

Norwood (MS)

Manchester Essex

Tyngsborough (R)

Chelmsford

Winthrop (R) Sutton Woburn Wayland Middleton WellesleyMarblehead

VS (R)West

Bridgewater (R)Shawsheen

(R)

21 20 18 11 4 5 4 14 2Status of Project

Capital Pipeline Status at Previous Board Meetings

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Local Clearance OPM Selection Designer Selection

Feasbility Study -

Schematic

Nu

mb

er

of

Pro

jec

ts a

t e

ac

h P

oin

t in

th

e P

roc

es

s

Total Projects

CompleteProject Scope & Budget

Design Development

Construction Audit

Capital Pipeline Status

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• Maintenance

• Science Labs

• Technology

• Vocational Technical High Schools

• Regionalization

• Owner’s Project Managers

• Construction Contract Documents

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Goal: to advise the MSBA on:• identifying barriers to regionalization and potential

solutions to those barriers• identifying cost savings and other efficiencies that occur

when districts regionalize• Identifying incentives that would encourage the

formation of regional school districts

Regionalization Task Force

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Accomplishments to date:• The MSBA has provided a forum for all stakeholders and

the discussions have generated many ideas• The Task Force identified barriers to formation• The MSBA adopted generous incentive to Regionalize

– Up to 6 reimbursement points for districts that form new regional school districts

• The MSBA has been providing technical assistance to districts in the Regional Assessment category

Regionalization Task Force

40 Broad Street , Suite 500 Boston , MA 02109

Phone: 617-720-4466Fax: 617-720-5260

Questions?

Brian McLaughlinBrian.McLaughlin@massschoolbuildings.org

http://www.massschoolbuildings.org

Timothy P. Cahill Katherine P. CravenChairman, State Treasurer Executive Director