Because it is critical for districts to understand all of the variables affecting building aid, CSArch often serves as a guide.
The New York State Education Department’s State Aid Office is responsible for determining and distributing state building aid to public school districts and BOCES. For district’s considering school renovation or new construction projects, the office has produced informational materials explaining the various formulas and standards to support the decision-making process.
Because it is critical for districts to fully understand all of the variables affecting building aid, our team at CSArch often serves as a guide. Our 25 years of experience helping NYS public schools decipher this information has informed the below list, which we compiled to define and interpret some key terms associated with calculating building aid.
Although the state pays building aid based on the district’s aid ratio, it is not a lump sum payment. In general terms, the aid is paid annually over a period of time based on the type of projects. Typically, 15 years for renovation projects, 20 years for additions, and 30 years for new construction of gut rehabilitation projects. On projects that are combinations of the different categories, the aid will often be paid based on the predominant category.
Each district is assigned a building aid ratio based on a complex formula that is related to the property wealth of a school district. The building aid ratio is the percentage of the total project costs that are eligible for building aid that would be paid for by the state. The balance of the costs would be the local share for the project.
Building Aid Unit (BAU)
Building Aid Units are assigned to instructional space and in some special cases non-instructional space. BAUs vary by the type of space.
For example, a regular elementary classroom receives 27 BAUs, but a regular secondary classroom receives 30 BAUs. An elementary art classroom does not receive any BAUs, but a secondary art classroom receives 30 BAUs.
Understanding how BAUs are assigned is one of the primary steps in calculating the building aid for a project. The total BAUs for a building will be multiplied by the Cost Index and other factors to obtain the Maximum Cost Allowance (MCA) for a project.
It should be noted that the total of the BAUs is not the enrollment capacity of the building. For elementary schools, the total BAUs will be close to the maximum enrollment, but for secondary schools there is less of a correlation. If a building project only includes renovation work and does not include a grade level reconfiguration, the State Education Department will use the BAU total that they have on file from previous projects and will not recalculate the BAU total based on any planned changes to the building.
The cost index is a dollar amount per BAU that is one of the factors used in calculating the Maximum Cost Allowance. The cost index is broken down into two components: The Construction Cost Index and the Incidental Cost Index. The index varies by the grade level of the rooms and is updated monthly based on inflation or deflation in the construction market. The different categories are Grades PreK-6, Grades 7-9, Grades 7-12, and Special Education. The cost index categories have not been updated to better reflect the typical grade level configuration in most school districts of PK-5, 6-8, and 9-12. Therefore, when calculating the MCA for a Grades 6-8 middle school, the sixth grade classrooms need to be designated separately from the 7-8 grade classroom, as they receive a different cost index.
The actual cost index for a project is set based on the month that the general construction contract or main contract is signed. This requires a projection on what the final cost index and resulting MCA will be. Cost indexes tend to trend higher over time, but there are times when they go down.
The Incidental Cost Allowance is 20 percent of the Construction Cost Allowance for Grades PK-6 and 25 percent of the Construction Cost Allowance for Grades 7-12 and Special Education.
Another factor that needs to be considered when planning a capital project is the district’s debt limit. Since the district usually needs to borrow the money through the sale of bonds, the total of outstanding debt cannot exceed the district’s debt limit. The debt limit can be exceeded if the voters approve the project by a 60 percent majority.
Final Cost Report (FCR)
When a project is complete and all expenses have been paid, a Final Cost Report is submitted to SED. This documents all of the costs associated with the project and serves as the information for the final building aid to be calculated. Except when an approval is given for early aid on large projects, no building aid will be received until the Final Cost Report is submitted.
Maximum Cost Allowance (MCA)
The Maximum Cost Allowance is the maximum amount for a project that is eligible for building aid. The MCA will have two components: A Construction MCA, which is the maximum amount for construction work that is eligible for building aid; and the Incidental MCA, which is the maximum that is eligible for building aid for professional fees, furniture, equipment, site work, and other non-construction expenses.
It may not sound correct, but site work for play fields, parking lots, etc. is considered an incidental cost, not a construction cost.
The MCA is not the maximum size project that can be proposed but any costs over the MCA will be paid 100% by the local tax payers.
Maximum Cost Allowance Calculation
The Maximum Cost Allowance is calculated using the following formula:
(Total Building Aid Units) x (Cost Index) x (Regional Cost Factor) = Maximum Cost Allowance
Total Building Aid Unit Adjustments
When determining the total BAUs to use in the Maximum Cost Allowance calculation, there are some modifications that are done for secondary schools, and it is not just the sum of all of the building aid units for each individual classroom. For larger secondary schools, typically over 500 students, the total BAUs are run through this formula to get the BAU total to use in the MCA calculation.
(Total BAUs - 200) / 1.16 = BAUs for MCA Calculation
For smaller schools, the classrooms that receive BAUs for the MCA calculation are limited to classrooms for English, Social Studies, Math, Foreign Language, and Health Education.
Regional Cost Factor
Since construction costs vary by location in the state, a Regional Cost Factor is assigned to adjust for the differences. Regional Cost Factors are based on the county where the building is located and are adjusted annually. Regional Cost Factors currently range from .92 in Lewis County to 1.8254 in NYC. However, if the Regional Cost Factor is less than 1.0, then 1.0 is used in the calculations. If a school district has schools in different counties, there is the possibility that there could be different Regional Cost Factors assigned to different buildings.