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School Facilities Oversight Board

Revision Date

Agency Contact Information

School Facilities Board

Authority

The School Facilities Board (Board) was established by Laws 1998, 5th Special Session,

Chapter 1. Statutory authority for the Board can be found at A.R.S. §§15-2001 et seq. Administrative rules are found at A.A.C. §§R7-6-101 et seq.

In 2021, the Board was restructured as a division within the Arizona Department of Administration and renamed the School Facilities Oversight Board. Statutory authority for the Oversight Board was renumbered as A.R.S. §§41-5701 et seq. See Laws 2021, Chapter 404, Sections 60 to 105 and Sections 115 and 116.

Function

The purpose of the Board is to evaluate the school capital needs of K-12 school districts, distribute monies to school districts in order to address existing deficiencies, and to provide funds for building renewal and new school construction (Laws 2018, Chapter 287). The Board is charged with overseeing school facilities and equipment in Arizona, as well as distributing grant funding related to school facilities and equipment. To this end, the board maintains a database of school facilities; inspects school facilities to ensure safety and maintenance compliance; certifies and drafts school facility plans; creates documentation for the grant application process; and submits funding projections to the Joint Committee on Capital Review (see A.R.S. §15-2002 for a detailed list of powers and duties).

The Board is empowered to contract for private services, construction project management services, assessments of school buildings to determine if they have outlived their useful life, and services related to land acquisition and development of a school site.

The Board is made up of nine members appointed by the Governor according to the following criteria: 1) an elected member of a school district board with finance experience, 2) a private citizen who represents an organization of taxpayers, 3) a person with knowledge and experience in school construction, 4) a professional architect with knowledge and experience in school architecture, 5) a person with experience managing school facilities in a public school system, 6) a person with knowledge and experience in demographics, 7) a teacher currently providing classroom instruction, 8) a registered engineer with knowledge and experience in school engineering, 9) an owner or officer of a private business. The Superintendent of Public Instruction (or the SPI's designee) serves as a non-voting advisory member.

An executive director is appointed by the Governor and is required to have expertise in school finance, facilities design, or facilities management. The director oversees the implementation of the grant application review process, assists the Board with a variety of tasks, assists school districts with facilities related issues, and reviews or audits the spending of grant monies (see A.R.S. §15-2002(C) for a detailed list).

The Board is also authorized to enter into or approve a school district board entering into a lease-to-own for school facilities, up to a maximum of $200 million in a single fiscal year (see A.R.S. §§15-2004 and 15-2005 for specifics).

Funds

The Board administers several funds including the Capital Reserve Fund, the Emergency Deficiencies Correction Fund, Building Renewal Grant Fund, and the New School Facilities Fund.

The Capital Reserve Fund consists of monies from the New School Facilities Fund. This fund can only be legislatively appropriated to the Deficiencies Correction Fund or the New School Facilities Fund. These monies can be invested by the State Treasurer at the Board's request. Earnings are credited to the fund.

The Emergency Deficiencies Correction Fund is established by monies from the New School Facilities Fund and provides monies to correct defects in school facilities that pose health or safety concerns (A.R.S. §15-2022).

The Building Renewal Grant Fund is funded by appropriations from the Legislature and allows school districts to apply for grants to cover the cost of renovations, repairs, upgrades and infrastructure.

The New School Facilities Fund consists of appropriations from the Legislature and the lease or sale of state trust lands. Monies are used to construct new schools, based on enrollment projections and additional square footage needed to maintain school standards.

Bonds

The Board also has the right to issue negotiable revenue bonds if authorized by the Legislature; these include bonds for both state school facilities revenue (A.R.S. §§15-2051 et seq.) and school improvement revenue (A.R.S. §§15-2081 et seq.). Both the school facilities revenue bonds and the school improvement bonds can fund any reserves or sinking accounts established by the bond resolution; otherwise, the monies generated by these bonds go into the new school facilities fund or the building renewal grant fund, respectively.

History

Background

The School Facilities Board was created by Laws 1998, 5th Special Session, Chapter 1 as the result of a series of legislative enactments, litigation and court decisions regarding the state's system for school capital funding.

The 1998 legislation is commonly referred to as Students FIRST (Fair and Immediate Resources for Students Today). In Roosevelt v. Bishop (179 Ariz. 233, 1994) the Arizona Supreme Court held the existing school capital funding system to be unconstitutional. Subsequent legislation, enacted in 1996, 1997 and 1998 was also found by the courts to be unconstitutional. Finally, the Legislature enacted a centralized capital funding system for K-12 school districts that all litigants agreed in July, 1998 satisfied constitutional requirements.

The bill created a nine-member board, plus the Superintendent of Public Instruction; outlined board powers and responsibilities, created school facility adequacy requirements, established several different funds, and authorized the issuance of revenue bonds. The Board was initially exempt from the legislative appropriation process, receiving its funding based on direct transfers from the State Treasurer. However, subsequent legislation required all future funding to be appropriated by the Legislature.

Session Laws

Laws 2001, Chapter 11 allowed the Board to contract for construction services and materials to correct existing deficiencies in school district facilities. The Emergency Deficiencies Correction Fund was created in the same year by Laws 2001, Chapter 297 allowing schools to apply for funds to correct emergency deficiencies in school facilities. All deficiencies were to be corrected by June 30, 2006.

Laws 2002, Chapter 330 required schools to develop routine preventative maintenance guidelines and required the Board to ensure compliance with those guidelines as part of their facilities inspection process. The same legislation also allowed the Board to enter into lease-to-own agreements with one or more school districts, established a lease-to-own fund and outlined requirements related to the agreements.

Laws 2005, Chapter 182 required the Board to conduct an environmental site assessment as part of the approval process to construct a school building. The Board was also required to enforce certain indoor air quality standards and ensure HVAC systems function adequately.

Laws 2005, Chapter 287 repealed the deficiencies correction fund, leaving only the emergency deficiencies correction fund in place.

Laws 2006, Chapter 353 eliminated the Board's ability to enter into lease-to-own transactions, requiring funding of new school construction on a pay as you go basis. Note: The Legislature reauthorized lease-to-own purchasing in subsequent fiscal years (see 2016 Master List of State Programs, School Facilities Board).

Laws 2008, Chapter 287 created the Building Renewal Fund Grant Fund, and outlined its distribution and uses.

Laws 2013, 1st Special Session, Chapter 3 repealed the Building Renewal Fund.

Laws 2018, Chapter 285, the K-12 budget reconciliation bill, made statutory and session law changes necessary to implement the 2018 budget and addressed a number of issues specific to the Board. The measure modified qualifications to serve on the Board and required the Board to establish policies and procedures regarding: building renewal grant change orders; notice to school districts regarding funding for construction, renovation and repair projects; project eligibility assessment; the application process; and prioritizing critical and noncritical building renewal projects. The measure also required the Arizona Auditor General to conduct a special audit of the School Facilities Board Building Renewal Grant Fund expenditures covering the period from July 1, 2016 through June 30, 2018. The audit is due no later than June 30, 2019. Copies of the audit must be provided to the Legislature, the Joint Legislative Budget Committee, the Governor's Office of Strategic Planning and Budgeting, and the Secretary of State.

Laws 2019, Chapter 85 requires the SFB to establish a school procurement consulting pilot program. The measure outlines qualifications to participate and requires SFB to provide technical assistance and procurement consulting services for school districts that are selected. A report of findings is required to be submitted no later than September 1, 2020 to the Governor, the Legislature and the Secretary of State.

Laws 2019, Chapter 265, the K-12 budget reconciliation bill, made statutory and session law changes necessary to implement the 2019 budget and addressed a number of issues specific to the Board. The SFB is required to use the projected 100th day, rather than the most recent 40th day, average daily membership to determine square footage requirements for school facilities. In addition, the method to determine distribution of monies from the New School Facilities Fund for additional square footage is modified. The measure also requires the SFB to notify the Joint Legislative Budget Committee and the Governor's Office of Strategic Planning and Budgeting of a transfer of monies to the Emergency Deficiencies Correction Fund.

Laws 2021, Chapter 404, the K-12 budget reconciliation bill, transferred the SFB and related responsibilities to a division within the Arizona Department of Administration. The SFB is restructured, renamed the School Facilities Oversight Board, and statutory authority is renumbered as A.R.S. §§41-5701 et seq. The measure outlines succession of authority, powers, duties and responsibilities, including administrative rules, orders, and all administrative matters; contracts and judicial actions; all certificates, licenses, registrations and permits; all equipment, records, and furnishings; and all appropriated monies. See Sections 60 to 105 and Sections 115 and 116 of the measure.

Sources

  • Arizona Revised Statutes §§15-2001 et seq.
  • Arizona Administrative Code §§R7-6-101 et seq.
  • Session Laws
    • Laws 1998, 5th Special Session, Chapter 1
    • Laws 2001, Chapter 11 and Chapter 297
    • Laws 2002, Chapter 330
    • Laws 2005, Chapter 182 and Chapter 287
    • Laws 2006, Chapter 353
    • Laws 2008, Chapter 287
    • Laws 2013, 1st Special Session, Chapter 3
    • Laws 2018, Chapter 285
    • Laws 2019, Chapter 85 and Chapter 265
    • Laws 2021, Chapter 404

Master List of State Programs
Arizona School Facilities Board website
Joint Legislative Budget Committee FY 2015 Baseline Report
Arizona State Senate Education Committee Program Presentation: School Facilities Board. February 10, 2009: Available from the Arizona State Senate Resource Center
Arizona Supreme Court website
Arizona School Facilities Board annual reports
Performance Audit and Sunset Review, Arizona School Facilities Board- 2017
Performance Audit and Sunset Review, Arizona School Facilities Board- 2007
Sunset Review of the School Facilities Board- 2007
Supreme Court rulings on Students FIRST

  • Roosevelt v. Bishop (179 Ariz. 233, 1994)
  • Supreme Court order in Symington v Albrecht CV-96-0614 (1997)
  • Hull v Albrecht, 190 Ariz 520 (1997)
  • Hull v Albrecht, 192 Ariz 34 (1998)

RELATED COLLECTIONS AT ARIZONA STATE ARCHIVES

  • Record Group 193 – School Facilities Board