Tf$ Financing Tools for Schools Julio Rovi The Cadmus Group, Inc.

Tf$

Financing Tools for Financing Tools for SchoolsSchools

Julio RoviJulio Rovi The Cadmus Group, Inc.The Cadmus Group, Inc.

Financing Tools for Financing Tools for SchoolsSchools

Julio RoviJulio Rovi The Cadmus Group, Inc.The Cadmus Group, Inc.

August 10, 2001 2Tf$

We Will Discuss...We Will Discuss...

• EENERGYNERGY S STAR TAR and the finance initiativeand the finance initiative

• Cost savings from energy efficiency projectsCost savings from energy efficiency projects• Cost-saving examples Cost-saving examples • Your cost-saving potentialYour cost-saving potential

• Internal vs. third-party financingInternal vs. third-party financing

• Burning your money: costs of delayBurning your money: costs of delay

• How EPA can helpHow EPA can helpIndoor Air Quality

Tools for Schools


Who are you?Who are you?Why are you here?Why are you here?

Name, affiliation, perspective

In what capacity are you here?

What do you expect from this working session?

Any additional insight you would like to share


Indoor air quality is a significant problem as important as outdoor air quality.

Indoor air quality affects the health and productivity of students, teachers, and staff in schools..

There are many actions that you can take to improve IAQ. You need not be an expert, and many solutions are simple and low cost, or even no cost.

Immediate action is needed now to prevent and solve IAQ problems.

Key IAQ Messages from Key IAQ Messages from Yesterday’s PresentationsYesterday’s Presentations


Indoor air quality is a significant problem, as important as outdoor air quality.

Indoor air quality affects the health and productivity of students, teachers, and staff in schools.

There are many actions that you can take to improve IAQ. You need not be an expert, and many solutions are simple and low cost, or even no cost.

Immediate action is needed now to prevent and solve IAQ problems.

Focus on 3rd Key Focus on 3rd Key MessageMessage


There are many actions that you can take to There are many actions that you can take to improve IAQ. improve IAQ.

You need not be an expert.You need not be an expert.

Many solutions are simple and low cost, or Many solutions are simple and low cost, or even no cost. even no cost.

Breakdown of 3rd Key Breakdown of 3rd Key MessageMessage


There are many actions that you can take to improve There are many actions that you can take to improve IAQ.IAQ.

You need not be an expert.You need not be an expert.

Many solutions are simple and low cost, or even no Many solutions are simple and low cost, or even no cost.cost.

Others are expensive, perhaps very expensive.

Implied Component of 3rd Implied Component of 3rd Key MessageKey Message


The economics to justify The economics to justify good indoor air are being good indoor air are being

developed.developed.

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Human Costs of Poor IAQ

Decreased Ability of Childrento Learn

Decreased Effectivenessof Teachers and Staff

Increased Absenteeismfor Students, Teachersand Staff

Source: IAQ TfS Training Module 1 (CD-ROM)

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Economic Costs of Poor IAQ

Pay for Substitute Teachers and Staff

Lower Operating Efficiency of Equipmentand Plant

Emergency Equipment

Consultants During an “IAQ Event”

Absent Students Reduce Funding

Liability

Closing Schools andRelocating Students

Source: IAQ TfS Training Module 1 (CD-ROM)

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AdditionalPotential Costs

Negative Media Coverage

Angry or Frightened Parents, Staff, and Public

Increase Risk of Legal Action by Unions or Parents

Accountability toSchool Boardand OtherOfficials

Source: IAQ TfS Training Module 1 (CD-ROM)August 4, 2000 11

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Many solutions are simple and low cost, or even no cost.

Others are really expensive.

The economics to justify good indoor air are being developed.

There are multiple ways of paying for good indoor air, after the simple, no-cost and low-cost options are exhausted.

Financing IAQ Financing IAQ ImprovementsImprovements

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The Costs Are The Costs Are RealReal

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Common HVAC SystemProblems

Insufficient Outdoor Air Supply

Controls Broken orDisconnected

Dirty Filters

Microbiological Growth inDrip Pans, Ductwork, Coils,and Humidifiers

Improper Operationand/or Maintenance

Source: IAQ TfS Training Module 1 (CD-ROM)August 4, 2000 14

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DiscussionDiscussion

You’ve seen the cost of poor IAQ.You’ve seen the cost of poor IAQ.

Now ESTIMATEESTIMATE funds needed for . . . funds needed for . . .1. No-cost IAQ improvements2. Low-cost IAQ improvements3. Deferred maintenance4. Major upgrades

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Are the no-cost, low-cost options enough to Are the no-cost, low-cost options enough to address IAQ problems in schools that need it?address IAQ problems in schools that need it?

Are IAQ investments competing with other Are IAQ investments competing with other priorities in the school? (salaries, supplies, priorities in the school? (salaries, supplies, equipment, transportation, etc.)equipment, transportation, etc.)

If money were not a problem, would IAQ issues If money were not a problem, would IAQ issues disappear?disappear?

DiscussionDiscussion

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Categorizing Financial Categorizing Financial InstrumentsInstruments

Capital Expense Bonds Loans QZABs

Operating Expense Lease/Lease-

Purchase

No Expense Grants Rebates Fundraisers

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Bottom LineBottom Line

Never really freeNever really free Sweat and tearsSweat and tears Opportunity costsOpportunity costs Costs of delayCosts of delay

LimitationsLimitations Not enough for substantial improvementsNot enough for substantial improvements

Issues of disparity, equityIssues of disparity, equity Gift giving is not uniform across school districtsGift giving is not uniform across school districts

Financing With Financing With “Freebies”“Freebies”

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No interest fundingNo interest funding Not for everybodyNot for everybody

Only for economically challenged schoolsOnly for economically challenged schools Requires issuing of a bond or equivalent debtRequires issuing of a bond or equivalent debt

Time factorTime factor Must apply Must apply

Through State Dept. of EducationThrough State Dept. of Education Available funds may be limitedAvailable funds may be limited

QZABs end Dec 2001QZABs end Dec 2001(Qualified Zone Academy Bonds)(Qualified Zone Academy Bonds)

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CapitalCapital vs. Operating vs. Operating BudgetBudget

Capital BudgetCapital Budget (Debt)(Debt)

Operating BudgetOperating Budget (Expense)(Expense)

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Bottom LineBottom Line Competitive AppropriationCompetitive Appropriation

IAQ versus other prioritiesIAQ versus other priorities Is the allocation enough?Is the allocation enough?

LimitationsLimitations What is the school district’s rating?What is the school district’s rating?

Requires issuing of a bond or equivalent debtRequires issuing of a bond or equivalent debt Time factorTime factor

Financing With Financing With CapitalCapital

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Are IAQ operations part of the school’s Are IAQ operations part of the school’s operations?operations?

IAQ is not exactly like a utility payment.IAQ is not exactly like a utility payment.

IAQ is not exactly like leasing buses or copiers.IAQ is not exactly like leasing buses or copiers.

Financing from Financing from OperationsOperations

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StrategyStrategy

Pay for no-cost and low-cost items Pay for no-cost and low-cost items from grants, rebates, and fundraisersfrom grants, rebates, and fundraisers

Focus on behavioral changes and Focus on behavioral changes and education for ALL stakeholderseducation for ALL stakeholders

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Pay for expensive items from capital Pay for expensive items from capital andand operating budgets operating budgets

Focus on the best you can get that can Focus on the best you can get that can pay for itselfpay for itself

StrategyStrategy

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Expensive IAQ improvements Expensive IAQ improvements do not fit neatly into the two do not fit neatly into the two sources of money: sources of money: capital and operating budgetscapital and operating budgets

ConundruConundrumm

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OpportunitOpportunityy

Most school districts are already Most school districts are already spending the money they need for spending the money they need for the more expensive portion of IAQ the more expensive portion of IAQ improvements but do not know it.improvements but do not know it.

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Common HVAC SystemProblems

Insufficient Outdoor Air Supply

Controls Broken orDisconnected

Dirty Filters

Microbiological Growth inDrip Pans, Ductwork, Coils,and Humidifiers

Improper Operationand/or Maintenance

HVAC SYSTEMS WASTE ENERGY

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Capital versus Operating Capital versus Operating Budget -- RevisitedBudget -- Revisited

Capital BudgetCapital Budget (Debt)(Debt)

What is the approval process? Board/Council Referendum

Ceiling on capital expenses?Restructure capital expense

budget?

Operating BudgetOperating Budget (Expense)(Expense)

Already in utility payments Easier approval process Energy efficiency projects

may provide access to captive funds for other needs

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Lease-Purchase Lease-Purchase AgreementsAgreements BenefitsBenefits

Non-Appropriation Non-Appropriation LanguageLanguage

Legal issuesLegal issues Not Considered Not Considered

“Debt”“Debt”

Performance Performance ContractsContracts Understanding the Understanding the

differencesdifferences Determining the best Determining the best

options for youoptions for you

Third-Party Third-Party Financing MechanismsFinancing Mechanisms

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Proven SuccessProven Success

More than 700 public sector institutions More than 700 public sector institutions partner with EPA and ENERGY STAR on partner with EPA and ENERGY STAR on energy-efficiency efforts.energy-efficiency efforts.

They include state agencies, higher They include state agencies, higher education, K-12, and municipalities.education, K-12, and municipalities.

Better IAQ fits transparently into a Better IAQ fits transparently into a comprehensive energy management programcomprehensive energy management program..

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Milwaukee Milwaukee PhiladelphiaPhiladelphiaSan DiegoSan DiegoMiami-Dade CountyMiami-Dade County

……and many

and many othersothers

K-12 K-12 “Million Dollar Plus” “Million Dollar Plus” ListList

After making energy-efficiency upgrades, these school districts save more than $1 million per year on their utility bills:

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Why aren’t most schools Why aren’t most schools

using third-party financing?using third-party financing?

CFOs, energy managers, and health professionals CFOs, energy managers, and health professionals are not talking to each other and do not know are not talking to each other and do not know about this type of financing.about this type of financing.

PTAs, School Boards, and the public are PTAs, School Boards, and the public are generally unaware of this unique opportunity.generally unaware of this unique opportunity.

Third-party financing does not ensure good IAQ.Third-party financing does not ensure good IAQ.

Behavioral changes are needed while equipment Behavioral changes are needed while equipment upgrades take place.upgrades take place.

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Costs of DelayCosts of Delay

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Every month you wait is “money out the window.”Every month you wait is “money out the window.”

You can save more money in the You can save more money in the short- short- and and long-long-termterm by installing measures by installing measures TODAY TODAY using third-using third-party financing rather than waiting for next year’s party financing rather than waiting for next year’s budget.budget.

The capital budget does not have to be used, and The capital budget does not have to be used, and the operating budget does not have to be exceeded.the operating budget does not have to be exceeded.

Calculating Costs of Calculating Costs of DelayDelay

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Next StepsNext Steps

Who should act?Who should act? School Administrators, Health Care Officials, Community School Administrators, Health Care Officials, Community

Based Organizations, Facility Managers, Teachers, …etc.Based Organizations, Facility Managers, Teachers, …etc.

What is your role?What is your role?

Where can you contribute?Where can you contribute?

Where can you get training and support?Where can you get training and support?

Why are you waiting?Why are you waiting?

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SummarySummary

IAQ is a serious problemIAQ is a serious problem There are no-cost and low-There are no-cost and low-

cost solutionscost solutions Profound changes in HVAC Profound changes in HVAC

systems are costlysystems are costly A combination of behavioral, A combination of behavioral,

managerial, and technical managerial, and technical changes will be neededchanges will be needed

Significant cost savings are Significant cost savings are possible from energy efficiency possible from energy efficiency projectsprojects

IAQ and energy efficiency are IAQ and energy efficiency are intertwinedintertwined

Third-party financing can Third-party financing can provide the funds for these provide the funds for these projectsprojects

Delaying these projects is Delaying these projects is expensiveexpensive

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Questions and Comments?Questions and Comments?

Tf$ Financing Tools for Schools Julio Rovi The Cadmus Group, Inc.

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Transcript of Tf$ Financing Tools for Schools Julio Rovi The Cadmus Group, Inc.