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Chicago Public Schools Fiscal Year 2014 Budget

Capital

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Each year, Chicago Public Schools invests in its physical assets (i.e. buildings and equipment) to ensure children have a safe and quality learning environment. With more than 600 buildings, 60million square feet of space and an estimated $4.9 billion in unmet capital needs, annual capital demand is significant.

 

As part of the $307.6 million fiscal year 2014 (FY2014) Capital Budget, CPS is investing $187.7 million of district resources and another $120 million of outside funding to make our buildings safe, warm and dry; to relieve overcrowding; and to expand access to Career and Technical Education programs. Combined with over $900 million in capital projects in the pipeline from prior years, there are over 200 projects planned or under way to address the needs of hundreds of schools throughout the district.

 

The FY2014 Capital Budget aligns with the district’s five-year plan that will help CPS meet its most urgent needs and educational priorities while recognizing the district’s fiscal constraints. As CPS works to improve facilities and infrastructure in ways that will provide every student in every school in the district with a high-quality education, we remain committed to allocating resources efficiently and effectively.

 

The Five-Year Capital Plan, released on May 1, 2013 and updated on July 24th, details specific projects the district plans on carrying out through 2018. The July 24th update added $120 million in outside funded projects and $25 million in projects funded by CPS resources to the previously announced $161.8 million FY2014 capital plan.  The Five-Year Capital Plan, as well as project level detail for the FY2014 budget, can be found at www.cps.edu/capitalplan

 

Below is a summary of the guiding principles underlying the FY2014 Capital Budget.

 

GUIDING PRINCIPLES

 

On May 1, 2013, CPS released the draft Educational Facilities Master Plan, a 10-year outline of community area-level needs and individual school-level needs, in accordance with state statute (P.A. 097-0474, as amended by P.A. 97-1133). We have used the findings and recommendations of the draft Master Plan to guide our FY14 Capital Budget. Areas of focus in the FY14 Capital Budget derived from the draft Master Plan include:

 

  • Educational goals guide the direction. Investments in Career and Technical Education Programs; Early College Science, Technology, Engineering, and Mathematics Schools (ECSS); and Recess initiatives and other programmatic initiatives are a top priority for new capital investment.

 

  • Health/safety must be maintained. Because the scope of our capital investment is limited, we are focusing directly on investments to protect the health and safety of the students, teachers, and adults in the school community. This means repairing masonry that is cracked and at risk of crumbling, chimneys that are in danger of collapse, roofs that are leaking and causing interior damage, and boilers that are in urgent need of replacement.
  • Support Full School Day. Continue building new playgrounds at schools currently lacking the facilities, which provides space for a real recess so students can exercise and refresh.

 

  • Relieve overcrowding. Several communities in the district have too many students for the space available. The five-year capital plan begins to address the need to relieve overcapacity through annual investments in new Annexes.
  • Partner for external support. The district has been successful in expanding the scope of its capital program in the past through external funding sources, such as Tax Increment Financing (TIF).  Any additional resources, such as through TIFs, can help expand the FY14 – FY18 Capital Plan beyond the current projects.

 

MAJOR INITIATIVES

 

Career and Technical Education
Made up of approximately 40 different programs of study, Career and Technical Education (CTE) is offered as a series of classes focused on preparing students for high-demand industries. Courses incorporate rigorous classroom instruction, hands-on training, real work experience and extra student supports into a college or career curriculum designed to prepare students for future success. The FY2014 Capital Budget expands CTE offerings at Hyde Park, Clemente, Ray Graham, Bowen and Southside Occupational through $4.2 million in investment for lab build-outs.

 

Playgrounds
Recess is a key component of the Full School Day.  Recess provides elementary students with the opportunity to release energy, re-boot and return to the classroom ready to learn. To ensure children have access to a safe place for recess CPS has a five-year, $18 million plan to invest in playgrounds through 2017. The FY2014 budget proposes spending the second $3.6 million installment to construct or replace 12 to 15 playgrounds at schools yet to be determined.

 

Improvements and Repairs to Chimneys
The district is currently assessing the conditions of chimneys – many of them tall, aging smokestacks – at 225 schools. The order of repair will be determined based on life-safety considerations.  A total of $5 million has been set aside in the FY2014 Capital Budget for stabilizing or replacing approximately 10 chimneys in a state of disrepair. This investment is the third of a multi-year plan to address all chimneys that may pose future safety issues as the district also is repairing a number of chimneys under the FY2012 and FY2013 Capital Budgets.

 

Building Envelope Renovations
Two neighborhood schools, Carson School and Hamline, will receive major building renovations. These two schools were identified in the budget because they are in need of imminent repair after years of temporary fixes. At Carson School, $6.4 million is budgeted for roofing, masonry and parapet repair, and fire alarm replacement. At Hamline, $2 million will pay for roofing work, masonry repairs, and ceiling improvements.

 

Mechanical and Electrical
Shoesmith School will receive mechanical and electrical upgrades in FY2014 to replace existing boilers and provide air conditioning for the school. CPS has budgeted $4.5 million to complete this project.

 

New School Construction
As a result of the passage of new legislation (PA 98-0018) CPS expects to receive approximately $18.4 million up front and $13.3 million annually from the State School Infrastructure Fund as part of the State School Construction Program that will support debt service for the construction of new schools.  We anticipate that this funding will enable us to support approximately $110 million of new school construction. 

 

Overcrowding Relief
Oriole Park will receive a new $20 million Annex to relieve overcrowding at the school. In addition, CPS will address overcrowding at Dever, Hubbard, Peck and Wildwood as part of the FY2014 budget with investments at the four schools totaling $4.5 million.

 

Building Interior
The Building Interior category consists of Americans with Disabilities Act (ADA) projects and furniture, fixtures and equipment (FF&E) purchases. ADA projects are completed as needed and include accessible ramps, signage, modifying bathrooms to include accessible stalls and renovating individual classrooms/programs to become accessible. FF&E purchases in the Building Interior category support new programmatic teaching spaces. The FY2014 Capital Budget includes $4.5 million in ADA and FF&E projects.

 

Information Technology Upgrades
As schools increase use of online curriculum and web-based applications to complement more traditional teaching methods, the district’s network infrastructure must be upgraded to provide the bandwidth required of the latest technological tools. The FY2014 Capital Budget includes more than $23.6 million of information technology investments or upgrades, including additional bandwidth for the wireless network at approximately 100 schools and in-school network upgrades for 120 schools. This category also includes funds for additional safety and security equipment where needed. Many of the IT investments will be supported by federal E-rate funds.

 

 

PROJECTS UNDER WAY
In addition to the FY2014 Capital Budget, CPS has over $900 million in ongoing projects addressing the most pressing structural and programmatic needs at over 200 schools. These projects were started at various times over the last several budget years and include major renovations, new facility construction, building interior projects, programmatic additions, information technology build-outs and early childhood expansion, to name a few. Details of the district’s ongoing capital projects can be found at www.cps.edu/capitalplan.

 

SOURCES AND USES
The FY2014 Capital Budget totals $307,615,924 and will be funded by a combination of CPS resources, TIF funds and State School Construction Funding. Below is a summary of the Sources and Uses of the FY2014 Capital Budget by project type.

 

Sources
 Debt Proceeds $287,693,924
 TIF Funding $9,922,000
 State New School Construction Funding $10,000,000
Total FY14 Capital Budget Sources $307,615,924
 
Uses
 Building Envelope Renovations $30,000,000
 Mechanical & Electrical $6,017,000
 Building Interior $15,900,000
 Major Renovations $53,600,000
 New School Construction $110,000,000
 Overcrowding Relief $24,500,000
 Career and Technical Education $4,192,400
 Facility Site Improvements $5,460,000
 Contingency $25,000,000
 IT, Educational Programming and Other Projects $23,646,524
 Capital Project Support Services $6,900,000
 Legal/ Regulatory Requirements $2,400,000
Total FY14 Capital Budget Uses $307,615,924

 

IMPACT OF FY2014 CAPITAL PROJECTS ON OPERATING BUDGET

 

All projects considered for inclusion in the annual capital budget are analyzed for projected impact on the district’s operating budget. Due to fiscal constraints, CPS asks departments to reallocate operating funds in order to accommodate any additional operating need resulting from the award of a capital project. For projects with operating savings, such as energy efficiency improvements, CPS is able to capture the savings for the benefit of the district. The FY2014 Capital Budget is estimated to generate operating savings of approximately $5.1 million for the district. Below are details of the operating impact by project type, with savings expressed as a negative number in parentheses and additional operating costs expressed as a positive number.

 

Building Envelope Renovations Energy Savings

The Carson and Hamline projects are expected to have a positive impact on the operating budget as old structural issues are fixed and result in increased energy efficiency, although it is difficult to estimate or measure savings. In addition, once completed, building envelope renovations generally free up engineers and other CPS resources to focus on other buildings in need of attention.

 

Mechanical and Electrical Energy Increase

The Shoesmith Mechanical and Electrical project will likely result in a slight increase in energy costs as efficiency gains from replacing old equipment is more than offset by the additional demand created from air conditioning. However, the new boilers require less maintenance than older, existing machines, which frees up CPS resources for other mechanical systems in need of attention.

 

Building Interior No Impact

The Building Interior category consists of ADA and furniture projects. ADA improvements and furniture purchases require virtually no maintenance and do not impact the operating budget.

 

Career and Technical Education No Impact

The FY2014 CTE capital projects are being completed to support programs being funded with operating funds. The completion of these projects does not trigger any additional operating expenses related to the CTE program. For more details on the CTE program please visit: /Programs/Pathways_to_success/CollegeCareer/CTE/Pages/CTE.aspx.

 

Facility Site Improvements/ Playgrounds No Impact

New playground construction requires some maintenance and cleaning to prolong the life of the playground. While this maintenance requires an engineer or custodian – thus taking time from the individual’s other job duties – there is no impact on the operating budget as maintenance is absorbed by current school personnel. The benefits of the playgrounds in conjunction with the district’s recess initiative easily outweigh the small personnel commitment.

 

Capital Project Support Services (6.9 Million) Savings

Capital Support Services are paid out of capital funds because of their sole focus on capital-funded projects. Due to this funding classification, the’s operating budget is able to spread the cost of the Support Services over the life of the project, saving nearly $6.9 million in operating expenses in FY2014.

 

New School Construction $1.3 Million

The addition of new buildings in the district brings the need for facilities support personnel such as custodians and engineers, and increases overall district utility costs. We cannot be sure of the actual increase in operating costs related to the new school construction until details are finalized, but we estimate approximately $700,000 in facility operating costs associated with new schools and another $650,000 associated with Principals, Clerks and Counselors allocated on a per school basis.

 

Information Technology, Educational Programming and Other Projects $0.45 Million

Many of the Information Technology (IT) and Educational Programming projects consist of infrastructure, hardware, or software implementation that does not trigger any additional operating costs. However, the projects listed below require ongoing support totaling $450,000. The sponsoring department, in conjunction with the IT department, will absorb any ongoing operating cost increases with current available staff, resulting in no increase to the district’s operating budget.

Local Area Network System Improvement $51,000
Opteman Network Upgrades $260,000
Distribution Server Upgrade $139,000

 

 

 

 

 

CAPITAL PROJECTS FUNDS

The Summary of Capital Projects Fundstable shows FY2014 capital revenues and capital outlays (expenses) to be incurred in FY2014 regardless of the year the project was appropriated. The Fund Balance (unspent revenues received in prior years) accounts for the difference in expected FY2014 capital outlay versus revenues. For example, the district raised approximately $469 million in bond proceeds during FY2013, but only expensed roughly $461 million in the same time period. The remaining $8 million was carried in the Fund Balance for use during FY2014.

 

FY2012 - FY14 Summary of Capital Projects Funds
(In Millions)

 

 

FY2012
Actual

 

FY2013
Estimate

 

FY14
Budget

 

 

 

 

 

 

 

Beginning-Year Fund Balance

 

$182.9

 

  $88.8

 

    $134.2

 Revenues:

 

 

 

 

 

 

   Local Revenue
   State Revenue
   Federal Revenue

 

59.7
1.3
18.1

 

5.3
31.7
0.4

 

182.9
25.9
0.0

Total Revenue

 

79.1

 

37.4

 

208.8

Expenditures:
Capital Outlay

 

 

576.9

 

 

460.9

 

 

601.0

 

Debt Proceeds

 

 

403.6

 

 

468.9

 

 

300.0

 

 

 

 

 

 

 

End-of-Year Fund Balance

 

$88.8

 

$134.2

 

$42.0

 

Local revenue of $9.92 million is expected from new Chicago TIF related projects, while $173 million is expected from prior-year TIF funded projects.

 

The state revenue total is comprised of $15.9 million in previously announced state Department of Commerce and Economic Opportunity (DCEO) and Early Childhood grants, and $10.0 million for new school construction.

 

Spending by Year (Cash Paid Out)
  Total Appropriations FY2010A FY2011A FY2012A FY2013E FY2014E Remaining Spend
Prior Year/ Other Expenditures   557.7 347.0 85.3 15.1 3.9 -
FY2010 Capital Budget 382.1 2.9 99.9 49.9 15.0 37.0 -
FY2011 Capital Budget 456.0 - 86.6 270.5 90.1 8.8 -
FY2012 Capital Budget 659.9 - - 102.2 237.0 162.0 158.7
FY2013 Capital Budget 473.3 - - - 66.1 309.6 97.6
FY2014 Capital Budget 307.6 - - - - 55.4 252.2
Modern Schools Across Chicago* 446.0 131.2 29.9 44.7 37.6 24.4 -
Total Spend by Year   $691.8 $563.4 $553.6 $460.9 $601.0 $508.5
*Some MSAC Projects are included in the Fiscal Year Budget lines
All values in millions
A=Actual E=Estimated