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Balancing School Building Needs With Capital Project Funds

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School administrators constantly grapple with the challenge of balancing their school building needs with available capital project funds. Fortunately, they have an effective tool at their disposal: Performance Contracting, enabled by RSMO 8.231. This mechanism empowers school districts to finance building projects using energy savings, offering flexibility to address infrastructure needs without relying solely on bond issues. Some schools even combine bond issues with Performance Contracts to maximize the scope of work within their budget. In this article, we explore how schools can address long-standing facility concerns that may have been postponed during the pandemic as administrators prioritized student well-being and education.

In Missouri, our schools collectively spend $240 million annually on energy to power their buildings, which translates to approximately $200-300 per student. Besides salaries and benefits, energy costs are typically the second most significant expenditure for school districts. Notably, many schools can achieve energy bill savings ranging from 20% to 35% through more efficient operations. These potential savings offer a substantial opportunity for budget reductions or funding various district needs.

A graph of cost and savingsDescription automatically generated with medium confidence

One school district that has successfully harnessed this approach to address building needs is the Platte County R-3 School District. As is often the case, Platte County recognized that they had more needs than available funds. Consequently, the district decided to implement a Performance Contract before their bond issue. Through the Performance Contract, they projected savings of $6,294,875 in utilities over a 15-year period. This project focused on upgrading outdated and inefficient HVAC equipment and building automation systems throughout the district, with the entire project being funded from energy and operational savings. By financing the project this way, the district freed up resources to address other needs in future bond issues, instead of allocating bond issue funds to deferred maintenance projects.

Six years into the program, the district continues to see remarkable results from the projects they've implemented. In the first year, they achieved a reduction of over $360,000 in their utility bills, with cumulative savings exceeding $3,000,000 to date.

The success story of Platte County R-3 School District is just one of many such examples across the state. Redirecting utility funds back into education has proven to be a significant achievement for school boards and communities alike. While this approach differs from the conventional design and construction process, it can hold great potential for your school district as you assess your building needs. An Energy Services Company (ESCO) can guide you through the evaluation of utility bills and conduct a preliminary assessment of your buildings to determine whether this mechanism could add value to your district. If you're not familiar with an ESCO, you can begin by exploring NAESCO, the National Association of Energy Services Companies, to identify active companies that can assist in your efforts to enhance your school buildings.

For additional information contact:

Ryan Terry, PE, CEM
25618 w 103rd | olathe ks 66061
o 913.344.0035 | c 913.593.9919