The state is on target to deliver $1 billion to Idaho school districts as promised by House Bill 521, a budget analyst told lawmakers Thursday. And the sum total, stemming from a series of bond sales, could be even higher, depending on whether interest rates stay “low.”
The Legislature and Gov. Brad Little adopted HB 521 in April. Since then, the Idaho State Building Authority has sold $750 million worth of bonds at a 2.7% interest rate. Another $250 million bond sale is scheduled for early next year.
“The state is on track to hit that $1 billion goal, and if interest rates can stay low, then it could exceed $1 billion and be just a little bit more,” Jared Tatro, budget and policy division manager for the Legislative Services Office, told the Joint Finance-Appropriations Committee.
JFAC is meeting in Boise this week for early looks at state budgets ahead of the legislative session, which starts in January. Tatro shared other updates on school facilities funding, including:
Eligible maintenance expenses clarified
School districts can use the bond proceeds on facilities maintenance, as long as improvements have minimum seven-year lifespans.
State officials previously told school leaders that maintenance costs are ineligible uses of tax-exempt bonds, like the ones the state is securing. But the State Building Authority has since clarified that some maintenance expenses are allowed under federal rules, Tatro said Thursday.
Districts can use the state bond proceeds on capital projects — new construction or major renovations — as well as preventative maintenance, building repairs, building security, retrofitting, site improvements, site acquisition and other expenses.
“It cannot be daily, routine maintenance such as purchasing air filters,” Tatro said.
Most districts have received bond proceeds
So far, 78 of Idaho’s 115 school districts have received 80% of their lump sum payments, furnished by the state’s bond proceeds.
The remaining 20% for those districts will come from January’s bond sales, Tatro said. And some districts have yet to complete eligibility requirements, including submitting facilities assessments to the state.
Sending out 80% payments to fully eligible districts ensures that the state doesn’t have to claw back funds if bond proceeds are lower than anticipated, Tatro said.
“The decision was made to make sure that the final distribution is the final distribution.”
Districts using new state funds to pay down bonds, levies
Rep. Wendy Horman, R-Idaho Falls, who co-chairs JFAC, noted that the intent of recent school facilities investments was to reduce districts’ reliance on bonds and levies.
House Bill 292 last year gave school districts $106 million with the requirement that the dollars first be used to pay down bonds, followed by supplemental levies and plant facilities levies then it could be used for general maintenance and savings. HB 521 increased this ongoing funding, which is expected to be $145 million this year.
Tatro told Horman that the money — which is separate from the $1 billion in bond proceeds — has been used as intended. The vast majority is going toward bonds and levies while districts have put a small percentage — just 8% last year — toward savings.
For a breakdown of the various school facilities funding mechanisms adopted by the state in recent years, click here.
