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Understanding Capital ProgramsUnderstanding Capital Programs

September 2007September 2007

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Responsibilities

• School Boards– providing schools and facilities for their students

– operating and maintaining their schools as effectively and efficiently as possible

• Provincial Government– providing adequate financial resources and the flexibility to enable

boards to meet those responsibilities

– monitoring board actions to ensure accountability to the taxpayers

• Capital Programs Branch– CPB is responsible for developing and implementing policies governing

pupil accommodation.

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• Boards submit their capital needs via online tools to provide the Ministry with accurate and current data

• Ministry manages and consolidates school board data• Tools:

– School Facilities Inventory System (SFIS)– School Board Capital Plan– Geographic Information System (GIS)– Renewal Capital Asset Planning Process (ReCAPP)

• As of June 12, 2006, Ministry approval is required for transfers from capital reserves (PAG and POD) for new capital commitments, prior to the board completing the transfer.

– This is to ensure that the board has the financial resources to sustain existing capital debt as well as planned new projects

Accountability Framework

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School Facilities Inventory System

• Contains detailed information on each school facility• Used to determine capacity of schools on a uniform and consistent

basis.• Pupil Accommodation Grants are based largely on information

stored in SFIS• Continuously tracks changes to boards’ capital inventories• Maintained by school boards and administered by the Ministry

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Capital Plans

• Boards set and maintain rolling 10-year capital plans• Contains integrated data relating to projected capital needs and

plans intended to meet the needs• Enables CPB to consolidate board data to identify unfunded needs

and ensure asset utilization– Ministry is not approving a board’s individual capital plans. The capital

plan tool is to capture a board’s capital needs and future plans for the Ministry to discuss with the board.

– Ministry is working with boards to review and analyze the plan in order to identify and assess the capital needs across the province.

• Link to SFIS and GIS system

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• Used to locate schools, calculate school-to-school distances and query specific capital related information from a spatial perspective

Geographic Information System

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Geographic Information System

• Aerial Photographs of Facilities

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• Standard software application used to capture the detailed inventory of each school

• Allows boards to manage school facility renewal data

• Generates summary reports for Ministry use

• Used for all capital renewal programs including Good Places to Learn renewal and School Renewal

• All boards received a licence to access their ReCAPP database

Renewal Capital Asset Planning Process (ReCAPP)

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Capital Programs

Grant forGrant forSchool OperationsSchool Operations- Top Up Funding- Software Licensing Fee- Community Use of Schools

Grant forGrant forSchool RenewalSchool Renewal- Top Up Funding- School Renewal Enhancement- GPL Renewal

Grant forGrant forNew Pupil PlacesNew Pupil Places- Pure NPP- Enrolment Pressures- French Cap Trans. (old)- PTR (old)- 2005 Policy Transitional

New Capital New Capital ProgramsPrograms- New PTR- 4-year French Cap. Trans - Growth Schools- PCS Capital- Best Start- Capital Debt Commitments

School BoardsSchool Boards

TPFRTPFR

EFISEFISSFISSFIS

Policy ToolsPolicy Tools- Capital Plans- Pupil Accom. Review- ReCAPP- GIS

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SFIS in relation to EFIS

School BoardsSchool Boards

TPFRTPFR

EFISEFIS

By School Year- Facilities Information- Classroom summary:

(Room Details, Permanent GFA/Age, Non-Permanent GFA/Age)- PTR/ EP / 2005 Policy Trans. Adj. Schools- New Facilities (completed, underway)- Capacity (NPP, OTG)- Capital Plan:

(Planning Area, Enrolment Projections, Accommodation Changes, Programs (PCS, PTR, Best Start, etc..))

SFISSFIS SFIS EFIS

SFIS EFIS

Section 11- Pupil Places- Total Project Costs

Appendix C- OTG- Open Facilities- Top Ups Funding

Schedule 13- Most recent ADE

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Pupil Accommodation Grants

2007-08 Projections of $2.8 Billion

• School Operations • School Renewal• New Pupil Places• Program Specific funding:

• Prior Capital Commitments and Debt Charges

– Good Places to Learn - Renewal – Best Start

– Capital Transitional Adjustments – Primary Class Size Reduction

– Prohibitive to Repair – Growth Schools

Formula Based

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School Operations Allocation

2007-08 Projections of $1.7 Billion (includes summer enhancement of $20M in School Operations)

• Heating, lighting, cleaning and maintenance• Operations Grant is based on enrolment and various benchmarks• Top-Up Funding

– Regular Top-Up (+20%)– 2003-04 Rural Education Strategy (Scaled)– 2007-08 Rural schools (100%)– 2007-08 Supported schools (100%)

• Community Use of Schools• Asset Management Software

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School Operations Components

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

$M

1,900

1,910

1,920

1,930

1,940

1,950

1,960

1,970

1,980

1,990

2,000

Enrolment (000's)

School Operations Top-up TOTAL Fixed Amounts Enrolment

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School Renewal Allocation

2007-08 Projections of $0.4 Billion

• Repairs and renovations (existing needs)

• Renewal Grant is based on enrolment and various benchmarks

• Top-Up Funding– Regular Top-Up (+20%)

– 2003-04 Rural Education Strategy (Scaled)

– 2007-08 Rural schools (100%)

– 2007-08 Supported schools (100%)

• Good Places to Learn Renewal

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School Renewal Components

-

50

100

150

200

250

300

350

400

450

500

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

$M

1,900

1,910

1,920

1,930

1,940

1,950

1,960

1,970

1,980

1,990

2,000

Enrolment (000's)

School Renewal Top-up TOTAL Energy Retrofit Good Places to Learn Enrolment

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• The facility assessment process identified a backlog of renewal needs over a five year period, 2002-03 to 2006-07

• In February 2005, the Good Places to Learn (GPL) initiative was announced with a goal of investing $4 billion to address school renewal and new school construction:

• $2 billion was specifically targeted to reduce the backlog or renewal needs identified through the facility assessment. – Stage 1 (Spring 2005) provided $1 billion to fund approximately 40% of

high and urgent needs identified for 2002-03 and 2003-04

– Stage 2 (Spring 2006) provided $0.5 billion to fund 18.5% of the 5 year high and urgent needs and missing or inadequate program needs less funding provided in Stage 1

– Stage 3 (Fall 2007) will provide $0.5 billion – TBD

Good Places to Learn

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School Condition Assessment

• In 2002, the government announced an initiative to assess school renewal needs across the province.

• The Ministry contracted with CPSI (Capital Planning Solutions Inc) to undertake a comprehensive facility assessment of all schools in the province utilizing building analysis software.

• Independent assessors performed on-site inspections of each school– Deferred maintenance needs over 5 years (2002-03 to 2006-07)– Specialized teaching spaces (gym, science labs, etc.)

• Assessment information captured in ReCAPP database.

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New Pupil Places Allocation

2007-08 Projections of $0.5 Billion

• Supports about $7.5 billion in capital investments over 25 years• Construction of new schools or additions• “Pure” New Pupil Places is based on enrolment greater than

capacity and various benchmarks

• Enrolment Pressures– For boards whose capacity is greater than enrolment

– Significant and persistent enrolment pressure at a school

– Not sufficient capacity in nearby schools

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NPP - Growth Boards

• Board’s capacity is ‘fixed’

• New Pupil Places allocation grows with enrolment

• Boards can continue to build new spaces to meet space needs

24000

26000

28000

30000

32000

34000

2000-01 2003-04 2006-07 2009-10 2012-13 2015-16 2018-19 2021-22 2024-25

Enrolment Capacity

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24000

25000

26000

27000

28000

29000

2000-01 2003-04 2006-07 2009-10 2012-13 2015-16 2018-19 2021-22 2024-25

Enrolment Capacity

NPP – No Capacity Reductions

• Feb 2005: Boards no longer able to remove permanent capacity

• New Pupil Places funding declines with enrolment

• May have created pressure to finance existing debt commitments

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Outstanding Capital Commitments & Debt Charges

• Outstanding Capital Commitments– Continuation of funding for $650 Million capital program in 1997-98 and

1998-99

– Converted to New Pupil Places

• Debt Charges– 1998: committed to provide funding in 98-99, 99-00 and 00-01 for

servicing costs of capital project loans approved prior to amalgamation

– 2001: approx. $1.1 Billion of this debt was permanently financed.

– 2003: permanent financing for capital-related debt not already permanently financed.

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• The facility assessments completed for all boards in 2002 also provided the ability to produce a Facility Condition Index (FCI) for each school

• FCI is an industry measure of the building state of repair, indicating the renewal costs as a percent of the total replacement value. – Schools with an FCI <30% should be the focus of maintenance funding

to preserve the boards’ buildings.

– Schools with an FCI between 30-65% are likely the top candidates for the GPL renewal monies

– Schools with an FCI of 65% or greater, are deemed prohibitive-to-repair (PTR) and should be considered for retirement and/or replacement

Facility Condition Index

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FCI GroupingsFCI for All Elementary and Secondary Schools in

Ontario

17631478

557140

13

80

254

461

0

500

1000

1500

2000

2500

0 - 25 25-45 45-65 >65

FCI Range (%)

Nu

mb

er

of

Sc

ho

ols

Elementary Schools Secondary Schools(As of October 2006)

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• The Ministry identified a preliminary inventory of approximately 200 prohibitive-to-repair schools across the province based on FCI Index.

• Boards have increased the list to almost 500 schools based on renewal needs either missed or not included in the original visual inspections, including asbestos and accessibility.

• Boards are required to keep proceeds of disposition from the sale of any PTR schools or sites in a special capital reserves.

• We are still in the process of reviewing PTR candidates for funding.– As of Sept 2007, PTR funding and planning approvals of about $360

million had been approved to recognize approximately 57 PTR schools.

Prohibitive to Repair

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French-Language Capital Transition

• Since 2001-02, this program annually addressed areas for which French-language school boards did not have permanent accommodation

• Beginning in 2006-07, a four-year commitment was made to support permanent accommodation in areas where needed and to support student retention in French-language boards

• Made available based on board business cases

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• More than $700M has been allocated to school boards to address their PCS accommodation needs.

• This capital funding provides school boards with the opportunity to make a one-time adjustment to their elementary capital stock to reflect the increased space required to support smaller primary class sizes, by either constructing or acquiring new classrooms.

• It is expected that boards will use this funding over the next few years to undertake capital projects that are required to meet their PCS-related space needs.– It is estimated that this funding will be used to build or acquire over 1,900

new classrooms.

Primary Class Size Capital

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Best Start

• Capital funding for Best Start child care spaces in new schools

• Conditions:– Planned, tendered, or under construction in 2005-2006 or 2006-07

school years

– Confirmation that the spaces are approved by the municipality within its Best Start Plan

– Operating funds committed for the spaces

• Funding is the lesser of the costs of constructing the child care space or the elementary pupil place benchmarks x 1.4

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Capital Debt Commitments

• Debt commitments made before August 31, 2006 exceed board’s Grant for New Pupil Places

• Conditions for funding:– Board had planned to remove capacity– Board has unexpected decline in enrolment– Pupil Accommodation Allocation Reserve and Proceeds of Disposition

Reserve applied to any shortfall

• Made available based on board business cases

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Growth Schools

• Boards need schools in areas of new residential development and Grant for New Pupil Places is insufficient

• Conditions:– New Pupil Places grant is not sufficient to support existing capital debt and

the cost of new schools– The board currently has an EDC by-law in place– Project is to be located on a site within an area identified in the EDC

background study– Utilization rate for the planned school averages 80% or greater for 10

years– Construction for the planned growth school is needed for the 2007-08,

2008-09 or 2009-10 school years

• Made available based on board business cases

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OFA Long-Term Financing

• The Ministry is working with the OFA to establish a provincial vehicle to provide long-term financing for approximately $1.5B of construction costs incurred by school boards under the following new capital programs:– Good Places to Learn – Renewal – Prohibitive to Repair– Primary Class Size Capital – Growth Schools– Capital Transitional Adjustment Programs for French-language

boards

• Boards will be able to long-term finance up to the maximum capitalized principal amount determined under each of these programs once the projects are substantially complete.

• Boards are reimbursed for the short-term interest costs incurred while these capital projects are underway.