This fall, Washington voters have the chance to vote for investments in schools, kids, jobs, and smart energy savings. A bill to retrofit school buildings and put energy savings toward education passed the Washington legislature this spring (Engrossed House Bill 2561) and was signed by the Governor last month. It now goes to a referendum by the voters on the November ballot.
The idea is to invest $500 million in the best efficiencies that money can buy in local schools—from elementary schools to universities and community colleges. Money saved by schools on energy bills goes to doing what schools do best: educating students and preparing them for the future. In the bargain, much needed investments in school buildings will create jobs for local workers in the efficiency and construction fields.
In this blog series, we evaluate various aspects of the referendum, especially its potential to save money for schools, create jobs, and reduce climate-changing pollution. Along the way, we’ll also consider potential health and school performance benefits for Washington students.
First, an overview of how it works.
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Kids and local schools benefit from energy savings. The referendum requires that proposed projects follow the principles of performance contracting, which in the simplest possible terms means energy efficiency investments that pay for themselves. In other words, an up-front audit of possible energy efficiencies evaluates the potential cost-savings, then determines which investments will generate enough savings and utility rebates to cover the cost of the work itself. The retrofits pay for themselves through energy savings.
Healthy learning environments boost students’ performance in the classroom and on tests. A study of Washington schools found that investing in energy retrofits for our school buildings not only saves schools money, but it also improves student health and test scores. In other words, better air quality and less time spent away from the classroom due to illness equates to higher achieving students.
Funding for schools. The state will borrow money, in the form of bonds, to support important efficiency improvements in local school buildings—including universities and community colleges. Savings on energy bills would go right back to the schools.
Schools will apply for bond money through a granting process in which proposals will be rated based on three factors:
- Leverage—successful projects will match or exceed state project dollars with local funds, utility rebates, or other funds.
- Energy savings—the higher the savings in energy—and dollars—-the higher the ranking of the proposal
- Expediency—how fast can the project be started? Preference will be given to “shovel ready” projects.
Smart financing. The state pays for the retrofits—the local districts will not be paying back a loan for the work (although some districts may use programs like the Local Option Capital Asset Program LOCAL which we wrote about here)*. By using the principles of performance contracting to review grant proposals, districts will be held to the highest possible standard of energy efficiency work before funds are released to them. School districts will be required to find local matching dollars or utility rebates, as well as demonstrating quantifiable energy savings; that means the state and the districts will realize the maximum energy savings possible. Those savings get put back to work in local classrooms.
A word about the bonds being used to raise the money for retrofits: These bonds are called “general obligation” bonds or GO bonds, as opposed to “revenue bonds.” Revenue bonds are sold with specific revenue—usually a tax—associated with them, often in order to lower interest rates, making the money effectively cheaper to borrow. A general obligation bond, by contrast, means that the payback comes from the state’s general fund. To make this work, the referendum includes a provision that would extend an existing sales tax on the purchase of bottled water beyond 2013. The Department of Revenue estimates that the tax would generate $33 million in revenue for the general fund during the 2011-2013 biennium. This doesn’t make the bonds revenue bonds, however, because the money raised (about 10 cents for a $2 bottle) goes into the state’s general fund, and is not specifically dedicated to debt service. If the referendum passes, the state’s existing sales tax on bottled water will continue beyond 2013. (See our look at how the legislation might affect the state’s credit rating).
Local job creation. This is the ideal green jobs creator. Local workers who are already doing retrofit work will be able to keep their jobs, and the volume of work created by the passage of the referendum will mean more work and more hires. Many of these jobs will be in the construction trades, among the hardest hit sectors in the state.
What’s Sightline’s take on this legislation? The bottom line? In November, Washington voters will have a chance to vote for investments in our local schools that promote healthy kids, local green jobs, and smart energy savings that put money toward education. This combination of outcomes is a win, win, win, and a win for Washington State.
Update: Thanks to Daniel Malarkey of the State’s Department of Commerce for pointing out that districts can still access loan funding from other programs like LOCAL. The LOCAL program has already helped many districts finance retrofits. Use of these kinds of existing resources will make the dollars in the referendum go further.
Photo courtesy of Marcos Casiano on morgueFile.com