Stretching Your Proposition 39 Dollars

One of the biggest drains on California school’s budgets isn’t education-related at all; it’s energy. An upgrade manual authored by the EPA’s Energy Star reports that America’s schools spend more than $7.5 billion annually on energy—more than they spend on textbooks and computers combined. After salaries and benefits, energy costs are the largest operating expense for school districts. Schools, straining under the burden of energy costs, are finally discovering the silver lining amongst the wastage—energy is one of the few expenses that can be decreased without negatively affecting classroom instruction. And in California,Proposition 39 funding can help.

The best way for schools to assert control over their utility costs is to invest in retrofits and ongoing maintenance. When budgets are cut, capital projects are the first to go and maintenance expenditures become a low priority. Cumulatively, the pattern of deferred maintenance adds up to higher energy costs and more equipment malfunctions. And equipment operational problems can impact the student learning environment. Environmental conditions affect student performance and are connected to occupant health, teacher turnover rates and student absenteeism. Poor visibility, indoor air quality, thermal comfort and acoustic comfort all have a huge impact on a student’s ability to focus and learn. With schools facing a plethora of critical needs and limited budgets, it’s easy for energy projects, upgrades and retrofits to take the back burner. Once school districts realize that the problem is the solution—that energy improvements can help create a better learning environment and free up financial resources that used to go toward utility bills—energy efficiency becomes not just a priority, but even a necessity.

CEC 0% Interest Loan Opportunity

Many schools are receiving annual Proposition 39 awards that by themselves aren’t enough to address the mountain of deferred maintenance issues facing them. Fortunately, all schools designated to receive Clean Energy Jobs Act (Proposition 39) awards are also eligible for a 0% loan. The loan term is up to 20 years and is capped at $3 million per entity. However, the loans are available on a first come, first served basis, so it is important schools use the planning phase of Proposition 39 to look beyond their annual award and develop a master plan in order to get in line for this no cost money.

A small K-12 school district in Northern California recently adopted this philosophy when embarking on its planning for Proposition 39. At the end of the planning phase, it became apparent that the annual award from Proposition 39 allowed for only the following upgrades:

  • District-wide outdoor LED lighting upgrades
  • District-wide HVAC control upgrades
  • District-wide network PC power management

In order to address more capital intensive needs and opportunities for deeper cost savings, the district looked to the CEC 0% loan. With a 20 year term, the CEC loan will be able to fund the following additional improvements:

  • Replacement of all HVAC equipment 15 years or older with more efficient right-sized equipment
  • Two ground-mounted solar PV systems to produce 30% of the annual energy needs of the respective schools they serve
  • Advanced lighting controls to allow for daylight harvesting, occupancy-based dimming and remote scheduling
  • District-wide interior LED lighting upgrades
  • Building envelope upgrades
  • Water conservation

The annual life-cycle costs and benefits of these projects is depicted in the following graph. The district will see a cumulative life-cycle savings of $4.5 million. After paying off the $1.28 million loan, the net cumulative life-cycle savings to the district’s general fund will be $3.2 million.

Local, State & Utility Funding Opportunities

Other potential funding sources include scheduled maintenance funds from the State of California, on-bill financing from the utilities, utility rebates and incentives, and local bond initiatives. A community college in Southern California developed a five year energy master plan to capitalize on pending Proposition 39 allocations to address much-needed campus-wide infrastructure upgrades. $2.5 million worth of energy efficiency upgrades were identified for the first two years of the program. When the project budget was first developed, the college set aside about $1.5 million from local bond money to help fund the much-needed upgrades. After completing the investment grade audit (IGA), the local utility was petitioned for over $300,000 in on-bill financing and incentives. The college’s facilities department also obtained over $500,000 in scheduled maintenance funds using the Proposition 39 entitlements as the college’s match. In the end, only $500,000 from the local bond initiative was applied to the project, and the project budget was secured with the following mix of capital sources:

  • Proposition 39 Rounds 1 and 2: 40%
  • On-Bill Financing: 13%
  • Utility Incentives and Rebates: 6%
  • Scheduled Maintenance: 21%
  • Local Bond: 20%

Because the bond money was conserved, it will be able to be combined with Proposition 39 allocations for years three, four and five to address additional infrastructure improvements on campus. These upgrades include replacement of 50 year old HVAC equipment that would have had too low of a savings to investment ratio (SIR) to be funded with Proposition 39 funding alone.

Other Grant Opportunities

The California State Water Resources Control Board has begun a campaign to alert K-12 districts about their $25 million Water Sustainability and Drought Response Grant Program, better know as the Drought Response Outreach Program for Schools, or DROPS. The focus of DROPS is to respond to the present drought conditions and to fund projects that provide multiple benefits that impact water quality, conservation, water supply, greenhouse gas (GHG) reductions, energy, awareness and sustainability. Funding may be used for a variety of water conservation measures to include smart irrigation, low-flow fixtures and water smart landscaping.

Audit Fee Relief

On July 1, 2013, the California Conservation Corp (CCC) was funded with $5 million from the Clean Energy Job Creation Fund to train and deploy Corps members in a new CCC Energy Corp program. The Corps uses this funding to conduct ASHRAE compliant, “no cost” Energy Opportunity Surveys for schools that collect and provide energy efficiency information necessary to identify, calculate, maximize and capture the available energy savings benefits intended by Proposition 39. Schools may assign an energy engineering firm as a proxy to work with the CCC to take the CCC’s Energy Opportunity Survey and turn it into an ASHRAE Level 2 audit as required by Proposition 39 guidelines.

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