Background Since 1999, Supplemental Severance Tax Bond (SSTBs) - PowerPoint PPT Presentation

Background  Since 1999, Supplemental Severance Tax Bond (SSTBs) proceeds have been the principal source of funding for the Public School Capital Outlay Council (PSCOC) for Deficiencies Correction and then the current Standards ‐ based process. The SSTB as a source was enacted as a result of the Zuni Lawsuit.  PSCOC programs funded annually are: SB ‐ 9 (a state match for capital asset purchases, facility maintenance & construction) @ 13%, Lease Assistance @ 7% (primarily utilized by f ilit i t & t ti ) @ 13% L A i t @ 7% ( i il tili d b charter schools) & 75% Public School Construction. PSFA’s operating & school district master planning awards are also funded from SSTBs.  Since 1999, over $2 billion of SSTBs Since 1999, over $2 billion of SSTBs SSTBs Uses by PSCOC in FY12 SSTBs Uses by PSCOC in FY12 have been allocated to PSCOC ($148.7M) programs. Construction 75% Other Other 1% All financial information contained is sourced from monthly reports of the PSCOC. Projections and estimates are prepared PSFA Operating by staff of the PSCOC indicated with an asterisk ( * ). 4% Lease Assistance 7% 7% SB ‐ 9 13% PSFA presentation to the Board of Finance ‐ January 18, 2012

SSTB Balances Construction Prior Year 2011 Awards Awards/Uses $54M $20.3  The majority of the balance of proceeds Certified but Unissued for ($470M) for PSCOC projects sold through June p j g 2008 2008 2011 Projects 2011 P j t 30, 2011 are for the more recent award years. Awards $42.3M $82.3M  Are all the 2008, 2009 & 2010 projects expected to be under construction soon?  Most projects, yes. Some, no. PSFA is in 2009 Awards $94.7M the process of identifying projects whose 2010 Awards long construction horizon may allow $217.5M proceeds to be reallocated to other proceeds to be reallocated to other projects that are more “ready to go”. PSFA presentation to the Board of Finance ‐ January 18, 2012

Two Phase Award Process Construction  PSCOC employs a two ‐ phase approach to awarding funds : Design (Phase 1) and Construction (Phase 2).  At Design Awards, the PSCOC Certifies to the Board of Finance the need to sell SSTBs for both the Phase 1 and Phase 2. After the bonds are sold, they are budgeted to the Fund. PSCOC Design PSCOC Design PSCOC Design PSCOC Design District District District District School District School District State / PSFA State / PSFA Avg. Phase Duration: 12 Months.* Phase 1: Award Award Procurement Procurement Purchase Order Purchase Order Construction Construction District District School District State / PSFA Phase 2: Avg. Phase Duration: 18 Months.* Award Award Procurement Procurement Purchase Order Purchase Order  Projects typically commence construction soon after the design work is complete. But not always.  Three factors that can prolong construction are:  The size of a project (larger projects take longer)  Multiple phase projects  District funding difficulties / failed bond elections PSFA presentation to the Board of Finance ‐ January 18, 2012

Two Phase Award Impacts Construction  Percent of 2010 awards committed after 15 months (avg.): 84%.  Percent of phase award expended after 15 months (avg.): 22%. Percent of phase award expended after 15 months (avg.): 22%.  Improvement is possible bl due to a Construction Information Management System with “ball ‐ in ‐ court” y type workflow processes . PSFA presentation to the Board of Finance ‐ January 18, 2012

PSCOC Projects “in the pipe” Construction PSCOC Active Projects Snapshot Jan ar 12 2012 Snapshot: January 12, 2012. Current Active Projects Statewide: Contract 149 Balance $ $102M Award Balance Current Dollars Under Contract: 16% $166M 27% $455.6M.  106 (70%)* will be substantially complete within Expenditures $354M 12 months. 57%  2012 Awards (scheduled for July 2012) capacity is  2012 Awards (scheduled for July 2012) capacity is projected to be approximately $75 million*.  Funding needs (and timing of needs) for construction for existing projects are regularly g p j g y evaluated by PSFA staff. PSFA presentation to the Board of Finance ‐ January 18, 2012

Spending SSTB Proceeds: Outlook Construction  PSFA estimates $169M in project expenditures and $215M in new contracts in $215M in new contracts in 2012.  Large projects result in the accumulation of funds and large balances. They tend to $215M “New” Contracts* be expended over a longer time horizon.  Review of award &  Review of award & certification policies as well as $169M Payments* statutes governing capital financing and budgeting is recommended. PSFA presentation to the Board of Finance ‐ January 18, 2012

Construction Contract Schedule Construction PSCOC NEW CONSTRUCTION ENCUMBRANCE SCHEDULE (Millions) 1 Year 2 Years KEY 2012 Q1 Q2 Q3 Q4 2013 Q1 Q2 Q3 Q4 2014 Q1 Q2 New Construction Contra TOTAL $86.8 $52.3 $62.9 $9.1 $12.8 $35.6 $14.9 $37.3 $28.9 $30.2 Project # District Project 07 ‐ 08 ‐ 80 Espanola Espanola MS East $1.0 P06 ‐ 012 Espanola Alcalde ES $7.2 P08 ‐ 003 Gadsden Gadsden HS $14.4 $14.9 $13.8 P09 ‐ 011 Central Natanni Nez $4.9 P09 ‐ 014 Clovis James Bickley ES $4.7 P09 ‐ 015 Clovis Lockwood ES $11.5 P10 ‐ 007 Las Cruces Loma Heights ES $8.1 P11 ‐ 013 Los Alamos Los Alamos MS $4.0 P11 ‐ 016 Roswell Valley View ES $5.2 P11 ‐ 017 Roswell Berrendo ES $6.4 P11 ‐ 018 Roswell Military Heights ES $4.8 P11 ‐ 019 Roswell El Capitan ES $11.0 P12 ‐ 014 West Las Union ES $0.9 Vegas P12 ‐ 015 Rio Rancho Colinas del Norte ES $1.6 P12 ‐ 016 Rio Rancho Vista Grande ES $0.9 C10 ‐ 001 NMSD NMSD $5.9 C10 ‐ 002 NMSBVI NMSBVI $5.5 Yucca ES New P11 ‐ 002 Alamogordo $6.5 School P11 ‐ 005 Gallup Washington ES $6.8 P11 ‐ 015 Los Lunas Los Lunas HS $25.0 $24.6 P12 ‐ 006 Espanola Velarde ES $2.6 P11 ‐ 004 Gallup Juan de Onate ES $8.5 P11 ‐ 007 Gallup Thoreau ES $9.5 P11 ‐ 011 Las Cruces Las Cruces HS $13.1 $28.1 Douglas MacArthur P12 ‐ 001 Albuquerque $1.8 ES P12 ‐ 002 Albuquerque McKinley MS $4.0 P12 ‐ 003 Albuquerque Chaparral ES $7.3 P12 ‐ 004 Belen Family School $ $1.6 P12 ‐ 009 Estancia Estancia MS $4.4 P12 ‐ 010 Santa Rosa Rita Marquez ES $4.2 P12 ‐ 011 Socorro San Antonio ES $2.2 P12 ‐ 012 T or C T or C ES $4.5 P12 ‐ 013 West Las WLV Family $1.8 Vegas Partnership MHS P12 ‐ 008 Espanola E.T.S. Fairview ES $9.1 P11 ‐ 001 Alamogordo Yucca ES $3.7 P11 ‐ 003 Cobre Bayard ES $5.3 P11 ‐ 014 Los Alamos l Aspen ES $3.8 $ P11 ‐ 008 Gallup Jefferson ES $8.8 P11 ‐ 009 Gallup Lincoln ES $8.4 P12 ‐ 005 Bernalillo Bernalillo HS $18.4 P09 ‐ 022 Raton New Raton ES $12.7 P10 ‐ 002 Eunice Caton MS $0.8 P11 ‐ 006 Gallup Church Rock $8.0 P11 ‐ 010 Gallup Roosevelt ES $8.4 PSFA presentation to the Board of Finance ‐ January 18, 2012

PSCOC Project Expenditures Construction  The peak expenditure years resulted from high oil and gas (O&G) prices of the times. More subdued expenditures in 2009 and going forward are reflective of O&G prices coming down O&G prices coming down.  Recent SSTB capacity PSCOC Project Expenditures forecasts point to annual (millions) project expenditures for project expenditures for $400 $400 2012 – 2015 at $127M.* 340.0 $350  The amount of PSCOC $300 strict unds awards estimated to $250 Dis Fu maintain the statewide 238.3 $200 218.3 average Facility Condition at $150 169.0 150.7 par is $134M.* Going 146.1 $100 116.0 forward, modest forward, modest 88.6 88 6 $ $50 24.2 improvement in school $0 facilities will be the norm. 2005 2006 2007 2008 2009 2010 2011 2012*  SSTB sales precede budgeting of funds, which allow SSTB sales precede budgeting of funds, which allow new contracts to be entered into, followed by project expenditures, then drawdown of SSTB proceeds. PSFA presentation to the Board of Finance ‐ January 18, 2012