Capital Needs and Resources of Nevada’s Public Schools

1. Capital Needs and Resources of Nevada’s Public Schools Nevada Rural School Districts Paul Johnson, CFO White Pine County School District 1135 Avenue C Ely, Nevada 89301 (775) 289-4851 x125 (775) 289-3999 (fax) (775) 293-0569 (cell) paujohns@whitepine.k12.nv.us

2. Nevada Rural School Facilities • Over 1,000 rural school district facilities • Includes multiple facilities on one campus • Includes support facilities (i.e. Transportation, Admin Offices, Storage, etc.) • 9.3 million SF of building space • $1.7 billion estimated value • NPAIP Replacement Cost – Based on appraisals • 47,751.6 weighted students • NRS 387.303 report FY2013 • 15 counties covering 95,587 square miles • http://www.indexmundi.com/facts/united-states/quick-facts/nevada/land-area#map • School ages range from 129 to 4 years

3. School Facility - Ages

4. Estimated Replacement Costs

5. Condition of Facilities • Requested the District indicate conditions as good, fair, or poor. • Received responses covering approx. 74% of school facilities • Approx. 50% of rural school facilities are in need of improvement • This assessment was not based on a common set of objective Arch/Engcriteri

6. Other Common Demands • Equipment Replacement • Heavy Equipment, tools, etc… • Transportation • School Busses • Fleet vehicles • Maintenance • Technology • School Safety • Facility assessments and improvements as a result of school shootings.

7. Deferred Costs - Examples • Douglas CSD • $450,000 annual deferred maintenance • $72 million construction/improvements • Other Capital Needs: • Bus fleet replacement – 800,000 average miles • Vehicle fleet – 34% poor or fair condition • Technology • Operations Equipment • Food Services Equipment

8. Deferred Costs - Examples • White Pine • $10,520,226 in deferred facility improvements • Concrete, asphalt, asbestos abatement, clean and repoint masonry, etc… • 1913 White Pine Middle School Replacement • 1908 David E. Norman Elementary Replacement • Other Capital Needs • $1.4 million bus fleet replacement: Purchased 4 new busses in 2005. Other replacements have been used vehicles from other districts as they have been rotated out of inventory. • $1.3 million Technology/Telecommunications/Internet • $300,000 equipment

9. Funding Options for School Facilities • Primary source of funding is Property Tax • Property taxes for school facilities require voter approval • Cap on overlapping tax rates limits tax rate access • 11 counties at or within pennies of the cap • Abatement caps limit revenue increases • 10 year rolling average of assessed value growth (one of the factors in calculating the cap) could be less than 1% for many districts in a few years • Other revenue sources are imposed by county commission or legislature – not by school district • Fund to assist schools with capital improvements (NRS 387.333). No funding currently available.

10. Current Tax Rates and Voter Authorization JNA Consulting Group, LLC

11. G.O. Debt & Ad Valorem (Exc. NPM)

12. G.O. Debt & Ad Valorem (Inc. NPM)

13. Other Sources • .125% Sales Tax (NRS 374A) • Only available to districts utilizing the Fund to Assist School Districts (NRS 387.3335) • .25% Sales Tax (NRS 377B) • Imposed by county commission • Allocation of funding determined by county commission • Few districts have seen any money in the seven counties levying the tax • Residential Construction Tax (NRS 387) • Imposed by county commission • Must be reviewed every 4 years by Tax Commission • Room Tax (NRS 244)/Real Property Transfer Tax (NRS 375) • Approved by Legislature in 1997 for Clark County JNA Consulting Group, LLC

14. G.O. Debt & Sales Tax

15. Availability of Other Revenue Sources Available Prohibited JNA Consulting Group, LLC

16. Revenue Challenges • Per Capita Taxes do not generate sufficient revenue for demand • Property Tax Base is insufficient to support capital demands of multiple local government entities with competing interests and “allowable” rates.

17. Construction Challenges • Construction companies have to relocate and pay per diem costs to their workers. • Logistics can increase mobility costs • The long distance can increase costs for even simple jobs.  • The freight costs for everything shipped also adds to high repair costs.  • Experience difficulty getting competitive bids • Big jobs can exceed local contractor’s bonding capacity • Local vendors can not provide supplies to construction projects so materials must be shipped • Voter Approval

18. Nevada Studies • 1954 – Peabody Report • 1971 – Governor O’Callaghan Study • 1994 – Legislative Commission’s Subcommittee to Study Public Elementary and Secondary Education (S.C.R. 52 Committee) • 1996 – Legislative Commission’s Subcommittee to Study the Realignment of School Districts (S.C.R. 30 Committee) • 1998 - Nevada School Needs Assessment (ISES Corporation Study)

19. Nevada Initiatives • State School Construction Relief Fund (1955-1979) • No continual funding source was established and the fund was eliminated. • Account for State Assistance for School Construction (1979-1983) • No continual funding source was established and the fund was eliminated. • Fund to Assist Schools With Capital Improvements (1999 – Present) • No continual funding source established • All of the programs contained specific criteria to qualify for funding and limit state liability • Other legislation has been confined to specific appropriations

20. Learning Environments • Research has confirmed that there is a consistent relationship between the condition of a school facility and student performance. • The cognitive requirements for learning and teaching are affected by the physical surroundings where they take place • (Do School Facilities Affect Academic Outcomes ?; National Clearinghouse for Educational Facilities; Mark Schneider, November 2002) • The amount of natural light, the indoor air quality and temperature impact student learning • (Prioritization of 31 Criteria for School Building Adequacy; Glen I. Earthman, Professor Emeritus, Virginia Polytechnic Institute & State University, January 2004) • Poor building conditions greatly increase employee absenteeism and turnover that directly affect the quality of education • Growth and Disparity: A Decade of U.S. Public School Construction, October 2006

21. Impact of Quality Schools • School quality has a direct and positive impact on property values or tax base (Kane et al. 2003); • School quality affects the quality of life and ability to attract businesses and workers (Salveson and Renski 2002); • Investments in the construction and maintenance of school facilities bring money into local economies through job creation and supply purchases (Economics Center for Education Research 2003); • Investments in a community have a multiplier affect that indirectly affects local merchants, local tax revenue, and the labor force. • New or well-maintained school facilities can help revitalize distressed neighborhoods (Local Government Commission 2002) • Environments that are in a well ordered condition may stop vandalism as well as crime (http://www.manhattan-institute.org/pdf/_atlantic_monthly-broken_windows.pdf). • Growth and Disparity: A Decade of U.S. Public School Construction, October 2006

22. Discussion Points • Each school district has there own unique capital demand and financial hurdles • Existing sources of revenue are insufficient to meet demand • Deferred construction, improvements and maintenance will continue that may adversely affect economic development, property values and student performance • As capital demand continues to outpace funding, more and more capital projects will be deferred making it increasingly difficult to maintain facilities • All school districts regardless of size are financially stressed to meet operating and capital demands • Smaller school districts may never be able to replace or construct school facilities