Program to fund school IT upgrades

Issue March/April 2017 By Dennis M. Ryan and Christine Nolan

Massachusetts' public schools are ranked the best in the nation, but how do you keep that competitive edge? And how do you pull up the achievement scores in all schools? To attain those goals, it's increasingly important that schools be able to take advantage of information technology. In times of tight budgets, it's also critical that they be able to do this cost-effectively. The Massachusetts School Building Authority (MSBA), a quasi-independent government authority that is overseen by a seven-member board of directors chaired by State Treasurer Deborah Goldberg, is partnering with the Massachusetts Department of Elementary and Secondary Education (DESE) and the Massachusetts Office of Information Technology (MassIT) to fund information technology upgrade projects in public schools across the commonwealth to help meet the challenge. The MSBA program will support the Digital Connections Partnership Schools (DCPS), an existing information technology grant program that is currently managed by DESE and MassIT. The combined program will allow qualifying schools to implement 21st century digital learning programs through the use of enhanced technology and increased broadband access, and to do it with grants from the DCPS and/or zero percent interest loans from the MSBA that leverage Federal Communications Commission (FCC) e-rate rebates. The result of these three branches of state government working collaboratively produced an outstanding opportunity for school districts.

First, some of the history of that collaboration:

"Digital learning" is the thoughtful and deliberate use of informational technology to support teaching and learning. It allows teachers to (1) tailor the learning environment to afford students more control over the place, time, content, and method of instruction, (2) offer differentiated learning paths for students based upon demonstrated competency in a subject or skill, (3) provide students access to a greater range of learning opportunities and course options, (4) promote greater student engagement and collaboration with peers, (5) network and share knowledge, and (6) intervene more quickly with struggling students. Its use will be central to the education of our students, going forward, and every school needs to become digitally ready as quickly as possible.

To support this need, in 2014 the Legislature appropriated $38,000,000 to the Executive Office for Administration and Finance as part of an information technology financing initiative. The funding was set aside for potential grants "to assist public school districts in improving student instruction and assessment through the use of information technology [including] enhanced information technology infrastructure and increased broadband access … " and to achieve that objective, the legislature directed DESE and MassIT to establish an IT grant program that would "maximize access of broadband to public school districts." In response, DESE and MassIT established the DCPS to manage that funding. (Ch. 257 of the Acts of 2014, Section 2B, line item 1599-7062).

The overriding objective of the DCPS is to increase Broadband Connectivity to and within K-12 public schools through the following process:

  • The IT grant program supports public school IT improvement projects through grants, local matching contributions and discounts for IT infrastructure costs that are available to communities under the FCC's Universal Service E-Rate Program.
  • Grant funds are allocated proportionately to urban, suburban and rural grant pools.
  • Applicants are assigned to an appropriate grant pool.
  • Applications are compared and ranked based upon the quality of each applicant's vision and plan for successfully implementing a digital learning program.
  • DESE awardsgGrants.
  • Applicants provide a local matching contribution that is proportional to their MGL CH. 70 program contribution. Those contributions range from 30 to 70 percent of the estimated cost of a project.
  • FCC E-Rate discount rebates are used to offset a portion of the cost of the IT infrastructure costs. Rebates are available to pay for 20 to 90 percent of a community's total IT infrastructure cost depending upon economic need and rural status.
  • MassIT manages all contract payments to IT infrastructure providers and then applies for, collects and returns available e-rate rebates to applicants.

In 2015, the DCPS began approving projects for the IT grant program. Initially, 247 schools from 98 districts applied for IT grants and, of those applicants, 47 schools in 17 districts were designated as finalists and 200 schools in 81 districts were designated as semi-finalists or candidates. Finalists received grants; their projects were approved, and $7,837,153 in technology upgrades were completed using $4,240,000 from grants and $3,597,153 from local matching funds. The average project value was $461,009. Semi-finalists and candidates did not receive grants and even though $7 million of IT grant funding had been released by the Executive Office for Administration and Finance, it became clear as of July 2016 that more IT grant funding was needed as soon as possible so that all schools could quickly become digital learning-ready. It was then that the MSBA, DESE and MassIT joined forces to dramatically increase support for the existing program.

MSBA Background

The MSBA is a quasi-independent government authority created by the legislature in 2004 to reform the process of funding capital improvement projects in the commonwealth's public schools. Its charge is to effectively manage "the commonwealth's investments in school building assets [by] promoting positive educational outcomes, ensuring the health, safety, security and wellbeing of students, easing and preventing overcrowding, maintaining good repair, efficient and economical construction and maintenance, financial sustainability of the school building assistance program, thoughtful community development, smart growth and accessibility." (MGL c. 70B, Sec. 1). To accomplish this goal, the MSBA is given a statutorily dedicated revenue stream of one penny of the state's 6.25 percent sales tax which the MSBA leverages to borrow funds which are used to provide "grants and loans to cities and towns for the planning and construction of school building and school facility projects." (MGL c. 70B, Sec. 3, emphasis supplied). Indeed, the MSBA works hand in hand with local communities to plan for and fund a large portion of the cost of the design and construction of affordable, sustainable and energy efficient schools across Massachusetts. Given that mission and the MSBA's expertise and resources, the MSBA was happy to join with the DCPS to effectively support the program.

Since the DCPS was seeking alternative funding sources, the MSBA, DESE and MassIT worked to create a funding structure which could support the IT grant program without causing any concomitant damage to the overall MSBA School Building Assistance Program. The solution had to be practical (the average amount needed to fund the cost of a school's IT infrastructure could not support the cost of hiring bond counsel to manage and opine on the legality of a bond), legal (allowed under the MSBA enabling statute) and immediate (the program needed to move forward as quickly as possible). The solution was the MSBA IT Loan Program, which is structured as follows:

  • The MSBA will provide zero percent interest loans to applicants to pay for IT infrastructure on the basis of need as determined by DESE.
  • The loans will be limited to DESE approved projects that have a total estimated IT-infrastructure cost of at least $10,000 but no greater than $2.5 million.
  • $10 million will be made available for loans each year for a period of five Years, from FY 2017-2022. The total amount available will be $50 million.
  • Loans will be made using funds that are available for general use because they are not classified as "restricted" under the requirements established by the General Accounting Standards Board.
  • MassIT will determine the total cost of procuring and installing IT infrastructure for each approved project.
  • Borrower applicants will provide the MSBA with all required appropriation documentation and will sign a loan agreement with the MSBA. Each agreement will conditionally assign all loan proceeds to MassIT and will include a provision that allows the MSBA to intercept the borrower applicant's state aid if a loan payment is not made.
  • The form of note used by a district will be submitted under the State House note service for certification by the director of the Bureau of Accounts of the Division of Local Services in the Massachusetts Department of Revenue. The certification service is attractive because it does not require an official statement or full disclosure. However, the director will withhold certification if the laws relating to municipal indebtedness have not been complied with or if it appears that the proceeds of the note are not to be used for the purpose specified in the vote authorizing the loan.
  • MassIT will use the loan proceeds to make direct payments to IT infrastructure providers.
  • When the work is completed, MassIT will apply for and collect available e-rate reimbursements from the FCC and return those rebates to the borrower applicants.
  • Borrower applicants will pay all amounts due the MSBA within the terms of the loan agreement.

The DCPS will soon begin approving IT infrastructure projects and the MSBA will concomitantly begin loaning funds to approved participants. Everyone involved with the MSBA and the DCPS program is excited by the combined potential of the DCPS IT Grant Program and the MSBA IT Loan Program's potential. State Treasurer and MSBA Chairperson Deborah Goldberg remarked that the MSBA is "excited to collaborate with DESE and MassIT through this loan program; by making these loans available to school districts across the state, the MSBA is providing assistance for much needed IT infrastructure improvements for the thoughtful use of technology to support teaching and learning." Similarly, Governor Charlie Baker stated that "we are thrilled to begin this important and unique partnership with the Massachusetts School Building Authority to improve connectivity across public school districts in the commonwealth." In addition, DESE Commissioner Mitchell Chester stated that "in order to provide a world-class education, our students and educators need access to 21st century technology [and] I'm thrilled that our agencies have partnered to upgrade school technology infrastructure for the benefit of our students." Karthik Viswanathan, the head of MassIT's Office of Municipal & School Technology, indicated that "MassIT is … happy to help schools leverage the strength of the commonwealth at the local level by providing IT expertise and economies of scale." The result of this collaboration will enable our teachers and our students to reap the myriad benefits of a digitally driven 21st century education.

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