School construction money for upcoming year a big question

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As legislative economists look at a dwindling school construction and maintenance fund, Gov. Rick Scott this year will be requiring schools to return some unspent money from the account, leaving upkeep needs from elementary to the university system in question.

At issue is the Public Education Capital Outlay, or PECO program. The money, which comes mostly from a tax on utility use, has been depleted in recent years as the economy has contracted, and because of changes in utility usage, including conservation. Officials have been questioning for months whether there would be any ability to issue bonds to pay for new projects because of the dwindling availability of the revenue that backs the bonds. And in a recent letter to the State Board of Education and the Board of Governors, Scott said that some projects going forward won’t be able to be completed.

“Due to reduced revenue into the PECO trust fund, the state will not be able to issue PECO bonds in sufficient amounts and timeframes to meet the project schedules for all previously authorized projects,” the governor’s letter said.

So school systems, from local K-12 districts up through the university system, are being told they’ll have to return unspent cash that won’t be able to be augmented to complete projects.

State law generally requires unspent construction and maintenance money to be returned if it isn’t used, but in the past, the state university system has been allowed to keep money to continue university projects. Last year, for example, no PECO money for the university system was taken back as part of the reversion process by which unspent construction money goes back to the state’s coffers.

Early this year universities were told that money appropriated and earmarked for construction of educational facilities are subject to being taken back by the state on Feb. 1. “This includes appropriations granted from any funding source, including Public Education Capital Outlay and general revenue,” a memo from the Department of Education to universities said.

The possibility that schools may have to return up to $250 million in unspent PECO money follows Scott’s veto last year of more than $165 million in building, construction and maintenance dollars for colleges and universities. In his proposed budget for the coming year, Scott didn’t recommend new PECO money for colleges, universities and traditional K-12 schools, in part because of the inability to bond. The governor is recommending $55 million in PECO money for charter schools.

There have been some suggestions about changing how school maintenance and construction are paid for, but legislators have generally been cautious about considering a major overhaul, or scrapping PECO. The looming inability to borrow against the incoming PECO revenue has been an issue for several months.

In a House Higher Education Appropriations Committee this past week, Scott Kittle with the governor’s budget office delivered the same message as the governor – there likely won’t be new PECO money. The collections are no longer flat, they’re declining.

“We’re now seeing that the PECO trust fund is seeing significant decreases in the amount of revenue available to issue new bonds,” Kittle told the committee. “We’re at a state where next year the revenue conference has projected that there is no revenue for PECO funding.”

It worried Rep. Mia Jones, a Jacksonville Democrat.

“I have a great concern when we start having them turn money back in when we know that the reason they’re still holding it is because they don’t have everything they need just yet,” Jones said.

Colleges and universities say the requirement to give the money back is easier said, than done. Many of the projects funded by PECO have been in the pipeline for years and are in various stages of development.

Projects already under contract are exempt from the reversion request, along with specific appropriations for land, planning design, and equipment.

Some schools say they aren’t sure whether they have any available money to give back, and that the request doesn’t bode well for future projects.

Via The News Service of Florida.

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including SaintPetersBlog.com, FloridaPolitics.com, ContextFlorida.com, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.