It’s clear that a post-ESSER funding gap is looming. In fact, as many as 4 in 10 school superintendents expect a budget shortfall in the coming years. Meanwhile, many school buildings are increasingly in need of costly repairs, with the U.S. Government Accountability Office finding that 54% of public school districts report needing to replace multiple building systems. Finding the funding to address pressing facility needs will continue to be a concern for many district administrators.
In this atmosphere, there is a growing trend of stacking multiple funding streams together to help fund larger, more comprehensive projects. This approach requires a thoughtful design to create projects that will solve multiple problems at once and create long-term transformational change. Given this growing trend, and that there are so many funding streams currently available, school leaders shouldn’t miss this opportunity to rethink their budgets.
How does stacking funding work?
In essence, stacking funding means combining many smaller funding streams together to make a bigger overall impact. This works best when all the funds will be pooled together to support a singular goal or purpose. Stacking multiple funding sources can improve outcomes for students, lower overall operating costs and help school districts tackle more robust projects.
“What makes all of this possible is designing a project from the very beginning with funding in mind,” said James Potach of Schneider Electric during a recent webinar series with U.S Green Building Council’s Center for Green Schools. Schneider Electric is seeing the majority of clients explore multiple funding sources including federal stimulus, grants and rebates in support of major infrastructure projects.
Stacking two or more sources of outside funding together is also a great strategy to increase a project’s long-term viability. In addition, many school districts can maximize the impact of public funding sources, like a bond or grant, by stacking them with innovative private funding streams, like energy savings performance contracts (ESPCs.) As a bonus, more robust projects tend to win more grant awards, because awarding committees can see how the funding will be stitched together to help bring the plan into reality.
There are over 20 new federal funds that have been opened or expanded for schools over the past three years, not to mention state and local incentives. But unlocking this funding can be a daunting prospect for districts who do not have an expert partner. Districts often don’t have the time or knowledge to understand different funding mechanisms and their various rules, restrictions and reporting requirements. In their recent school finance guide, national nonprofit Accelerate discussed how school districts also miss out on funding opportunities due to being overly cautious. That can lead districts to get stuck doing things the way they’ve always been done.
Three opportunities for schools to begin stacking funding
For district leaders who have overlooked (or were unaware of) the possibilities that stacking funding represents, now is the time to think differently. Here are a few examples of ways to begin thinking more strategically about stacking funding sources for facility improvement needs:
Maximizing federal funding for deferred maintenance projects: Many school districts find themselves in a vicious cycle when it comes to maintaining their facilities. Costly repairs, like a leaky roof, unreliable HVAC system or a parking lot in need of repaving, often get deferred for more pressing classroom needs. Unfortunately, this causes energy and operational costs to rise, eating away at districts’ overall budgets while the maintenance backlogs keep growing.
Fortunately, there are a huge number of federal grants and incentives related to building improvements currently available to schools. By strategically selecting and stacking these funding sources, district leaders can make upgrades that lower overall operating costs. That saved money in the operations budget, which is typically the second largest line item in a district’s annual budget, can then be used to pay for desperately needed infrastructure projects. For example, fuel costs saved by utilizing an electric school bus grant could be reallocated to repave an unsafe parking lot; or the addition of IRA-funded solar panels could lower energy costs and free-up the funds to replace that leaky roof.
Using public-private partnerships to fund infrastructure upgrades: Leveraging public funding in tandem with an ESPC can allow you to undertake even more ambitious facility improvement projects.
ESPCs are a public-private financing option that allow school districts to finance facility upgrades by partnering with an ESCO to reinvest their own operational savings. A recent research report from Oak Ridge National Laboratory found that leveraging public funding with an ESPC multiplies project size by 1.3 to 2.1 times the amount of the public funding. In other words, it is always more advantageous to stack grants with an ESPC, as compared to using that grant money alone. The report also found that schools see a lot of added value from utilizing ESPCs, like easier project management, guaranteed long-term performance and proper system maintenance.
Layering grant funding to fund ambitious goals, stretch overall operating budgets: Grant funding earmarked for facility improvements can also be stacked to bolster funding for student programming. Just as facility improvements often go hand in hand with improving learning outcomes, district leaders should take a strategic look at how funding streams can be used to support students both directly and indirectly.
Consider, for example, how schools around the country are being faced with the pressing need to improve school safety and security. A variety of state and federal grants are available to help schools finance everything from mental health support, staff training and physical security measures. All these funding sources serve the same overall goal and can be strategically stacked to cover the costs of initial implementation and ongoing program support.
Our clients have found that physical security improvements, which can be funded with a variety of grants, stimulus funds and rebates, also create reliable reductions to maintenance and energy costs. Security vestibules are one proven security measure that also greatly improve the building envelope, saving on energy costs. Indoor and outdoor LED lighting is another security upgrade that also has the added benefit of improved energy efficiency. Every energy dollar saved is a dollar that can be reinvested into the district, extending the value of a grant long beyond the initial payout.
Funding modern, healthy school buildings for the long term
The current influx of ESSER money won’t last forever. District leaders should be looking closely at how they can use every available source of funding to solve their current problems—and pay for future needs.
We help solve the most difficult financial problems by unlocking unique funding streams that make your facilities and infrastructure projects more attainable than you think. Schneider Electric has helped schools nationwide reduce energy and operational costs, capture nearly a billion dollars in funding and create more effective learning environments that maximize student potential.
To read more about what we can help you achieve, download our guide Transforming Schools for the Future: A Guide to Funding Your Vision.