Agenda - 10-08-2024; 2 - School Capital Funding Policy Discussion

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4 Attachment A October 8, 2024 Other Capital Uses The county recognizes that there are expenses that may not be consistent with the Woolpert definitions of priority, nor can be covered in the Current Expense budget. These could include athletic upgrades, component replacements, capital leases, technology purchases. Other Capital Uses will be funded by Recurring Capital and Article 46 Sales Tax Proceeds as described below. Sources of Funds Bond Funds and Supplemental Pay-Go In order to meet the funding requirements for the school optimization plan, the County Commissioners voted to seek a $300 M Bond Referendum and to supplement this bond with an additional $100 M of tax supported Pay-Go (or cash) funding. The intent of the bond funds is to fund the Six (6) Manor Projects identified by the school districts. The supplemental Pay-Go funds are intended to cover all professional services, project management and design costs related to construction. After the six projects are completed, the supplemental pay-go will provide additional annual funding for High Priority Needs and increase the county's annual maintenance funding for the school district portfolio. Annual County Debt Financing The county currently borrows funds on an annual basis to fund both district's annual capital projects, in the amount of$4,429,718 in FY 2025. These funds are programmed to increase by 2% annually. These funds will be used to support both district's High Priority Needs. Lottery Proceeds Lottery proceeds represent the state of North Carolina's contribution towards funding school construction. The state currently manages three lottery programs for school capital: Public School Building Capital Fund, Public School Repair and Renovation Fund, and Needs-Based Public School Capital Fund. These funds are allocated by the state to specific school districts, but the county is responsible for applying for and drawing down the state funds. The County shall aggressively apply for and drawn down all funds available to both districts. In cases where the county draws down lottery proceeds to offset debt service costs on prior school debt issuances; the county shall do so. The county will then provide the districts the same amount of funding as Pay-Go, to provide additional flexibility to the districts. These funds will be used to support the districts' High Priority Needs. Article 46 Proceeds In FY 2012, the County authorized the use of Article 46 proceeds and set a policy of allocating 50% to school capital and 50% to economic development initiatives. The Article 46 funds dedicated to school capital funding are commonly used to fund both districts' technology needs. However, these funds are not restricted for that purpose and can be used for any Other Capital Uses as needed by both districts.