Four strategies for successful capital planning
I recently held an informal poll during a presentation to a group of school board members, superintendents, and CFOs from more than 60 districts.
I asked the audience, “Raise your hand if you have an education strategic plan for your district.” The majority of hands were raised.
“Now keep it raised if you have a capital plan for your district.” Not so many hands remained.
The second biggest expense in a school district’s budget is its facilities, yet many districts do not have a formal, district-wide strategic plan in place to map out future capital needs related to life-safety, technology and equipment, differed vs. continuous maintenance, and upgrades.
In today’s competitive educational climate, it is crucial that your district sets future success in motion with a successful capital plan.
How to create a successful capital plan
Now is the ideal time to create your strategic capital plan. Use these four strategies to ensure your district is addressing both short-term and long-term capital items relative to your educational plan.
1. Start with the money
Housing values are increasing in many districts, which could mean greater taxable values for current and projected millage rates related to bonds and sinking funds. This would alleviate the need to request additional taxes from the community.
Some districts are also paying off previous bonds, allowing them to refinance or reissue new bonds with no increase in the millage rate. For instance, both Novi Community School District and Birmingham Public Schools recently passed bond proposals with no new taxes.
What factors do you foresee influencing your district’s revenue or expenses? Review your current budget and consider the economic factors that may influence your capital project budget in the future.
2. Consider your educational goals and objectives
Is your district considering a change to the grade configuration or taking a building offline? Is your district reviewing options to potentially construct a new building or make improvements to achieve the “21st century classroom”?
We recommend you have a facility utilization study conducted to ensure your district’s facilities are being used at or near the recommended capacity. Also make sure you assess your facilities and evaluate them from an educational, operational, and functional perspective.
3. Review your pupil enrollment data
Many districts are seeing declining enrollment in some of their schools at the same time enrollment is increasing in others. Your capital plan should consider whether changes are needed to balance the utilization percentages of each building.
First, review your pupil enrollment projection for an estimate of the future enrollment in your district. Then determine possible revisions to existing attendance boundaries at each grade level. These steps can help inform your future funding, academic offerings, and capital improvement decisions.
4. Create a comprehensive facility and technology plan
The average age of a school districts’ facilities is 40 years, and many of these buildings have only seen minor updates and repairs. Significant upgrades to your facilities’ layout and technology are needed to support a 21st century learning environment and keep your district competitive.
We recommend you have thorough facility assessment performed. These assessments will give you a detailed analysis of your facility utilization, site and building layout, and building conditions so you can begin to create the framework for a strategic capital plan.
A successful capital plan starts with the money
A successful capital plan ensures that your district can accurately and effectively support the ever-changing fabric of education.
That’s why we recommend these four strategies: When you start with a detailed capital cost program, broken out by facility, as well as estimates from the district’s different funding mechanisms, you can factor in the rest of the moving parts described above — enrollment, capital needs, utilization, economic factors, and more — to make a comprehensive and strategic capital plan.
Does your district have the internal resources and expertise to assess and evaluate critical, deferred, and enhancement needs? As you develop a district-wide strategic plan for your future capital needs, it’s important to consider pulling in experienced professionals to support your in-house staff through the capital planning process.
If you’d like to learn more about the resources Plante Moran Realpoint (PMR), formerly Plante Moran Cresa has available for your district, let’s have a conversation. I’d be glad to discuss your capital planning strategy in more detail.