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5 <br /> Financing Sources <br /> The principal funding source for the Capital Invest Plan is County funded debt. The 10-year plan <br /> includes$621.6 million County funded debt. Other significant sources of funds include additional <br /> pay-as-you-go funds for schools and Lottery and Article 46 sales tax proceeds($191.4 million over <br /> 10 years) which are also dedicated to fund school capital needs. The Plan also includes <br /> approximately$23 million in pay-as-you-go or cash funding for County Projects to support design <br /> and architectural services and smaller projects with short useful lives. <br /> Recommended Year 1 (FY2025-26) Projects <br /> Education Capital Improvements <br /> The FY2025-35 CIP is the first to follow the School Capital Funding Policy the Board adopted in <br /> early 2025. That policy defines capital spending categories and assigns funding sources to those <br /> categories. The policy also specifies that Major Projects and High Priority Needs projects are <br /> budgeted by project. At the same meeting, the Board adopted the Major Project Planning Policy <br /> Addendum which priorities,guidelines, and principles under which new facilities will be designed. <br /> The FY2025-26 Recommended CIP finances High Priority Needs projects as defined by the School <br /> Long Range Optimalization Study and provides cash funding to begin planning and design for <br /> major projects such as replacement school facilities and significant renovations. <br /> • High Priority Needs-$6.3 million <br /> The CIP includes an annual allocation to address high priority facility needs. High Priority <br /> Needs include instances where a failure would impact the facility's ability to remain open,the <br /> health of major systems, the efficiency and usefulness of the facility, as well as life cycle <br /> replacements of major components with one to three years of remaining useful life. <br /> High Priority Needs are funded using annual debt financing and lottery proceeds. For FY2025- <br /> 26,the debt financed allocation is $4.5 million and lottery proceeds of$1.8 million. The Plan <br /> assumes that the amount of debt financing increases by 2% each year. <br /> • Planning Funds for Major Projects <br /> The primary intent of the bond funds is to fund Major Projects such as facility replacements <br /> and significant renovations as identified by the school districts and consistent with the <br /> principles of the School Long Range Optimization Plan. The $300 million in general obligation <br /> bond proceeds are allocated between the districts at $174.7 million to Chapel Hill-Carrboro <br /> City Schools and $125.3 million to Orange County Schools. <br /> In addition to the bond funds, the Board expressed support for allocating $100 million for <br /> planning, design, and project management over the next 10 years.This work is planned using <br /> Pay-Go (or cash). The FY2025-26 CIP recommends beginning with a $6.4 million allocation in <br /> Pay-Go funding. This equates to a tax rate impact of 1.98 cents per$100 of property value. <br /> Page 13 <br />