Mar 23rd, 2021

Maintain School District Facilities with Annual Capital Outlay Projects

A Capital Outlay Project is a program authorized by Education Law and the NYSED Office of Facilities planning which allows school districts to plan and implement a Capital Project by informing voters about the project in the budget newsletter and including a line item for the project in the school district budget. If the budget is approved, then the school district is authorized to complete the project within the following school year and submit the final cost report. The school district will receive aid based on the costs submitted in the final cost report in the subsequent year and thus it is a perpetual method for a school district to plan and complete small projects on an annual basis to maintain your school facilities.

In planning for your school annual meeting, this is the time of year when you should be working towards completion of your 2020-21 Capital Outlay Project and planning for the 2021-22 project. If you are not pursuing Capital Outlay Projects, we strongly recommend consideration of this useful category of facilities improvements. The special building aid rules applicable to Capital Outlay Projects expedite the aid available and provide a valuable source of rapid funding (on an annual basis) for modest sized capital projects. As a result, we further recommend that the School District’s long-term facilities planning strategy include reviewing whether to engage in a Capital Outlay Project every year. The 2021-22 school year can be a great time to start.

School Districts may qualify a capital project for reimbursement of project expenses during the aid year following the year in which the expenses are incurred if the project satisfies the criteria for a “Capital Outlay Project”. Only one such project may be authorized by NYSED per year. To qualify as a Capital Outlay Project and obtain the special building aid treatment applicable to such projects, it must:

[1] be authorized by the School District’s voters through inclusion as a line item in the annual budget authorization or as a separate proposition specifically authorizing the capital project;

[2] have total costs not exceeding $100,000;

[3] incur all costs for the project (or those for which you will be claiming aid) by June 30th of the year prior to the year during which aid will be claimed;

[4] have the NYSED Office of Facilities Planning designate the project as a Capital Outlay Project;

[5] have Architect prepared project plans and specifications submitted to and approved by NYSED; and

[6] have a Board approved SEQRA (State Environmental Quality Review Act) determination.

Voter authorization may be obtained in one of two ways. The standard approach is to include the project as a line item in the School District’s annual budget; but use of a separate voter proposition authorizing the Capital Outlay Project is allowed.

The total cost of the Capital Outlay Project may not exceed $100,000. The total cost calculation includes all costs associated with the project – construction and incidental. Exceeding the maximum allowed cost jeopardizes the timing of receipt of building aid.

All costs for the project (or those for which you will be claiming aid during the following aid year) must be incurred by June 30th of the year prior to the year during which aid will be claimed. This is an important consideration when planning Capital Outlay Projects. You must plan for a project (or a portion of a project) that can be completed during the fiscal year or jeopardize the special building aid treatment as a Capital Outlay Project.

To ensure expedited aid as a Capital Outlay Project, you must contact the Office of Facilities Planning at NYSED and obtain project designation as a Capital Outlay Project in advance of construction.

Like any capital project, Architect prepared plans and specifications must be submitted to and approved by NYSED before the project can proceed and a Board SEQRA determination is required.

If you meet the applicable criteria and the project qualifies as a Capital Outlay Project for building aid purposes, the applicable building aid ratio will be applied to the expenses reported in connection with the project to establish the amount of the aid. The aid will be paid in the following aid year. Additionally, although rare, the District may elect to spend and report the capital expense over multiple years and receive aid on the same project spread over multiple years, but only one Capital Outlay Project per year can receive aid and only up to the $100,000 maximum total cost per project.

For more information on Capital Outlay Project requirements and expedited building aid, see the NYSED information published at: https://stateaid.nysed.gov/build/html_docs/capexc_aid.htm or contact our Firm at one of the telephone numbers listed below.

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David E. Tinker

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