2014 EEOST Capital Fund

Presentation to the EEC BoardApril 8, 2014

Housing Bond Bill: A Bit of History Children’s Investment Fund (CIF) first presented the possibility of a capital

bond request of $45 million for early care and education and out-of-school time facilities to the EEC Fiscal Committee on 12/3/12.

During that presentation Mav Pardee from CIF noted that the results of a statewide survey conducted in 2010-2011 showed:

Substandard space is the norm• Lack of resources in program budgets• Competing demands: teacher pay, rates• Few have experience working in good settings

Good space is a critical factor in program quality• Supports meaningful interactions• Supports parent engagement• Supports staff professionalism, morale, & commitment

Key concerns included: Building Code: 12 – 17% Classrooms without windows: 20% Indoor air quality: 22% Lack of adult workspace: 22% Thermal comfort: 34% Lack active play space: 54% Lack technology for teachers: 65% Lack classroom sinks: 70%

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Housing Bond Bill: More History

Mav Pardee offered the same presentation as offered to the Fiscal Committee to the Board on January 8, 2013.

Her goal was to secure the support of the EEC Board.

Board Member Beth Childs reported that the Fiscal Committee was very enthusiastic about this opportunity and offered that endorsement by EEC’s Board would be viewed as a significant statement to move this project forward. Board Member Wasser Gish thanked Ms. Pardee for her persistence in getting this important work done and noted the striking alignment between program facility needs and program quality across all domains.

On a motion duly made and seconded, it was: VOTED that the Board of Early Education and Care support the capital bond bill, as presented by the Children’s Investment Fund at the board meeting on January 8, 2013, and authorized the Department to issue a letter of endorsement. The motion passed by majority vote.

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Overview: 2013 Housing Bond Bill

The 2013 Housing Bond Bill, now Chapter 129 of the Acts of 2013, added a new section to M.G.L. c. 15D, and created a new Early Education and Out of School Time (EEOST) Capital Fund under the Department of Early Education and Care with a $45M initial capital expenditure authorization for grants.

The aim of this new program is to issue grants for the development or renovation of licensed early education and out of school programs. The idea for this program came from a 2010-2011 statewide survey that revealed a need for bond funds to improve existing facilities and to open new facilities.

Grant recipients are required to demonstrate: That there is a need for the project, including a need for

financial assistance; That the project benefits low-income children and the

community; That there is local support for the project

EEC may give preference to projects that have suffered damage due to a natural or man-made disaster, such as the 2011 Springfield tornado.

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Early Education and Out of School Time Capital Fund/EEOST – Process

Expenditure Authorization: No expenditure shall be made from this item without the prior approval of the Secretary of Administration and Finance. EEC will be working with ANF to ensure that funds are placed in our account.

Regulatory Process: The Housing Bond Bill requires EEC to promulgate regulations for the implementation, administration, and enforcement of this grant program.

Administrative Entity: Per the Housing Bond Bill language, EEC may contract with one or more quasi-public or non-profit entities to administer this program. EEC is contracting with Community Economic Development Assistance Corporation (CEDAC) to administer the grant program since this entity was named specifically in the approved legislation.

Open grant application process Award Grants

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EEOST Capital FundExpenditure Authorization

The terms bill for the Housing Bond bill were filed on January 27, 2014.

No expenditures can occur without authorization.

EEC will continue to check-in with the Executive Office for Administration and Finance on the projected timeline for expenditure authorizations.

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EEOST Capital Fund Contract with CEDACSCOPE OF WORK

• The scope of work (SOW) has been negotiated between CEDAC and EEC and has been submitted to the EEC Legal Unit for review.

• EEC and CEDAC have agreed to the services to be provided by CEDAC in connection with the EEOST Program.

The following outlines the content process contained in the SOW: EEOST Grant Application Review EEC Review and CEDAC Initial Underwriting CEDAC Recommendation for Award EEC's Approval and EEC’s Authorization to Proceed Legal Representation Grant Award Disbursement of Funds Payment for CEDAC's Services CEDAC Receipt of Grant Recapture Availability of Records Ancillary CEDAC Services CEDAC's Liability Termination Authorization Notice Tax Exemption EEOST Capital Program Design and Development (Start Up)

 

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EEOST Capital Fund Contract with CEDAC

PROGRAM GUIDELINES

• The Guidelines are currently being developed by CEDAC, in conjunction with EEC, to clarify, interpret and supplement the statutory and regulatory requirements of the EEOST Capital Fund program. 

• The purpose of the Guidelines is to assist eligible facilities (large group and school age child care centers) to understand the key grant requirements, the application and award process, and the closing and post-closing requirements. 

• EEOST Capital Fund grants will be awarded and managed by CEDAC, as EEC’s Financial Intermediary. 

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EEOST Capital Fund Contract with CEDAC

BUDGET

Program Design and Development Start Up

• During the first year of the EEOST Capital Fund Program, CEDAC shall provide support to EEC in the design and development of the EEOST program, as may be requested by EEC and agreed to by CEDAC. CEDAC shall provide support to EEC in the development of program regulations, guidelines, grant applications, application review and recommendation form, grant award documentation, as well as other marketing material as may be requested.

• CEDAC shall be reimbursed for staff costs as well as the cost of third party services procured to support the design and development of the program, upon submission of periodic invoices that sufficiently document the services provided and time spent in performing the service.

• CEDAC has submitted a budget which is currently under review.

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EEOST Capital Fund Contract with CEDACBUDGET

EEC Compensation to CEDAC:

• For underwriting and other services in conjunction with awarding grants, CEDAC shall be paid a fee of 6.00% of each award. This amount shall be due and payable to CEDAC when EEC issues an Authorization to Proceed for each project.

• The maximum fee due and payable to CEDAC shall not exceed $60,000 per project. In the event that an EEOST grant does not attain final closure, the fee due and payable shall be reduced to 3% of the grant award amount for the project.

• CEDAC will serve as EEC’s Financial Intermediary; no additional fees shall be due and payable for this service.

• CEDAC will provide certain grant servicing services as described in the SOW. The fees provided above shall constitute payment for this service. No additional fees shall be due and payable to CEDAC from the EEOST Capital Fund for this service.

• CEDAC will be reimbursed for payment of legal services. To ensure that state funds are adequately safeguarded, CEDAC, in consultation with EEC, shall designate at least one law firm to represent CEDAC in closing EEOST Capital Fund Program Grants.

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EEOST Capital Fund Overview

Key Statutory Provisions: Eligible Facilities must:

Be owned or leased by an "eligible organization" which is a non-profit corporation or an entity in which a non-profit has a controlling ownership or management interest

At least 25% of the slots in the facility shall be for low income families eligible for public subsidy

Eligible Projects must: Be an EEC-licensed large group and school age program, which

includes out-of-school time programs; Show that the project benefits low income children and the affected

community; Show a financial need for assistance in order to undertake the

project; and Show local support for the project.

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EEOST Capital Fund Regulations

Key Provisions of Proposed Regulations:

Funding shall be used for: Acquisition Design Construction Repair Renovation

Grant term is a minimum of 25 years for grantee-owned facilities or a minimum of 15 years for grantee-leased facilities.

Grant shall be secured by a mortgage lien in favor of EEC and/or CEDAC. Land use restrictions, limiting use to child care programs, shall apply. Grant funds subject to recapture should eligible facilities fail to comply

with the grant terms. Grantees must be in good standing with EEC and free from any pending

investigations, past legal actions, or other actions that call into question the program's ability to care for children in a manner that ensures their safety.

EEOST Fund Guidelines shall be developed that set forth detailed, specific grant terms.

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EEOST Capital Fund Regulations Timetable

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Tasks Timeline

Presentation of Proposed Regulations to Board for Vote to Release for Public Comment

April 8, 2014

Notification of Proposed Regulations sent to Local Government Advisory Council and Massachusetts Municipal Association

April 9, 2014

Proposed Regulations and Notice of Public Comment sent to Secretary of Commonwealth for Publication in MA Register (5/9/2014)

by April 25, 2014

Proposed Regulations sent to Joint Committee on Education and House and Senate Committees on Ways and Means for review

by May 2, 2014

Public Comment Period Ends May 23, 2014

Review of Public Comment and Incorporate Changes, if neededMay 24 –30, 2014

Board Vote on Final Regulations June 10, 2014

Final regulations sent to Secretary of Commonwealth for publication in MA Register (7/3/14)

by June 19, 2014