Task force identifies 6 ways to fix state PECO funding
A state task force has come up with six new ideas to fix the emaciated Public Education Capital Outlay fund — the main source of cash for college construction projects — during the 2013 legislative session.
The problem: The fund has run dry during the last two years, leaving critical projects, such as $11.9 million in infrastructure and roof projects at the University of Central Florida and the $35 million Fine Arts Auditorium & Conference Center at Seminole State College, without funding.
The good news: The six new ideas don’t involve a new tax or a higher tax rate.
“We’re trying to come up with ideas that will be within the acceptance range of the Legislature and the governor — because the problem is now,” said Judy Bense, chair of the Florida Board of Governors task force.
Here’s how the fund works: It collects taxes on communication, such as land-line telephones, and pledges that revenue for bonds. That money is used to fund capital construction projects at Florida universities, colleges and K-12 schools, and to pay for maintenance of the 40 million square feet of existing classrooms.
From 2005 to 2012, the fund has pumped $6.9 billion into Florida schools, money that has been dispersed into the economy through construction and architecture jobs. But in 2011 and 2012, the fund didn’t collect enough money to go out for bonds, and in 2012, the fund has just $73.5 million for the entire state, in part because of the Great Recession.
The ideas now being discussed are to:
• Amend laws to allow universities to pledge tuition revenue for capital bonds.
• Amend laws to allow universities to blend different fees together so they can be bonded.
• Amend corporate tax regulations so companies can elect to have a portion of their corporate income tax go to public university construction.
• Allow more flexibility in public/private partnerships to include buildings that are purely classroom and research facilities, not just residential buildings.
• Pledge at least $16.5 million in general revenue to be redirected to PECO bonds for facility maintenance.
• Amend regulations so the Higher Educational Facilities Financing Authority, a financing vehicle for tax-exempt bonds, includes public universities, not just private schools.
But some of the proposals may run into problems. For instance, allowing schools to pledge tuition revenue for debt would incentivize schools to raise tuition, which could be a hurdle, said Dick Batchelor, a political analyst and president of Dick Batchelor Management Group Inc.
In the long run, schools need a dedicated revenue stream that works, he said. “It looks like what they’re trying to do is what my grandmother called going around your wrist to get to your elbow.”
A PECO funding increase would have significant local impact. Take DLR Group, an architecture and engineering firm in Orlando, designer of Valencia College’s $2.4 million West Campus student service building renovation.
“It obviously affects our business because we’re focused on state-funded higher education,” said Tim Wagoner, DLR’s higher education leader for Florida. “It’s fundamentally flawed right now in Florida, and I don’t think that’s going out on a limb to say that.”
Meanwhile, the task force will reconvene Sept. 12 , with a final report due to the governor in November.
What this means to you:
• Opportunities for architects, contractors and others if funding is increased
• Opportunities for banks