School Building Authority foresees funding shortfall
With sales tax revenue on a steady decline, the Massachusetts School Building Authority is projecting its portion of state funds will fall short by at least $100 million this fiscal year.
The authority gets about 1 cent for every 5 cents collected in state sales tax to help cities and towns pay for school construction, renovations, and major building repairs. Under the law establishing the authority, it expected at least $702 million to spend for the year that ends June 30, regardless of the amount of sales tax collected because of a minimum budget the state guarantees.
Katherine Craven, the authority's executive director, said that if the state isn't able to make up the shortfall, some 200 or more projects now in the earliest planning stages could be in jeopardy and the authority might have to cut back on future projects.
Those schools that have already been approved for feasibility studies or for design and budgeting would not be affected by a deficit, she said.
Craven said she has had ongoing discussions with Governor Deval Patrick's executive office for administration and finance and is confident the money will be there.
"I don't think they would renege on that at this point," Craven said. "The governor and the administration and finance [office] are supportive of this program."
Cyndi Roy, communications director for the office for administration and finance, puts the shortfall closer to $110 million, saying sales tax revenue has been "abnormal" this year.
But she said the authority will have the entire $702 million. "There's no question that's what they're going to get," Roy said.
The authority has a five-year, $2.5 billion capital pipeline to fund school projects. Yesterday, the board of directors voted unanimously to approve about $60 million in spending for three new elementary schools in Belmont, Burlington, and Middleton and for critical repairs to three schools in Braintree, Foxborough, and Littleton.
"In the short term, we can handle revenue blips," said Andrew Cherullo, the authority's chief financial officer.
Most worrisome, he said, is the view various credit rating agencies might take should the state not fill the gap.
"That's scarier to us," Cherullo said of the prospect of the authority being downgraded from the high-grade bond rating it now has. That rating enables the authority to get better terms on loans, which keeps costs down for everyone, Cherullo said.
In coming years, the authority will have to keep an even closer eye on sales tax revenue and project costs. Beginning July 1, the state will remove the minimum-budget guarantee and the authority will rely solely on sales tax revenue. "Next year, we're on our own," Craven said.
To make sure districts are spending their funds wisely, the authority has conducted 800 project audits and is encouraging some communities to consider adopting a "model school" program, which lowers costs by standardizing facilities' designs.
