With stimulus packages currently in the headlines, it is useful to understand how government funding is distributed to educational facilities. This blog provides readers a general
understanding of the types of government funding and how those funds can be used.
A federal grant is one form of federal financial assistance in which the main purpose is to carry out a public purpose. Grants can be awarded at federal, state, or local government levels. Grants are always distributed via two methods: competitive funding or formula funding.
Competitive Grant vs. Formula Grant
Competitive funding involves competing against other grant applicants in your jurisdiction for a limited amount of money. Parameters for competitive grants are developed in association with the funding party (government and/or private entity) and candidates compete with one another in accordance with these predetermined guidelines. A panel reviews all applications and decides how many points are awarded for each section of the grant request. Those with the highest scores are awarded grant funding.
Utility companies usually fund grants encouraging energy efficiency. Lighting generally wins precedence in efficiency-centric grants over Heating Ventilation Air Conditioning (HVAC) systems because of Return on Investment (ROI) over the lifespan of the equipment. Consider the following example:
Replacing an existing fluorescent fixture
New fixture cost: $300
Energy savings per year: $40
Lifespan of fixture: 15 years
Savings vs. cost: ($40 x 15) / $300 = 2
Replacing an existing Air Handling Unit (AHU)
New unit cost: $10,000
Energy savings per year: $100
Lifespan of unit: 20 years
Savings vs. cost: ($100 x 20) / $10,000 = 0.2
The above AHU replacement example would likely be denied funding for an efficiency grant but would likely qualify for a grant funding designated for deferred equipment maintenance, repair, and replacement.
In contrast to competitive funding, formula funding distributes money to recipients via predetermined distribution formulas. Non-competitive funding is awarded to eligible entities according to population, census, and other factors (as long as minimum application requirements are met). Most federal funds are distributed from the federal level to individual states based on predetermined distribution formulas. States then determine how to award funds to local entities. This type of funding is often referred to as “pass-through funding” since the money from the funding source passes through another entity before being awarded to the recipient of funds. This type of distribution is usually because a federal program lacks the organizational structure to be able to assist directly to the final fund recipient.
Title 1 Fund Distribution
The January 2021 Stimulus Package will be distributed to K-12, colleges, and private schools via formula grant, specifically, Title 1 Fund Distribution. Title 1 refers to Title I, Part A of the Elementary and Secondary Education Act (ESEA). Funds provide assistance to districts and schools with high numbers/percentages of children from low-income families to help ensure that all children meet challenging state academic standards. Title 1 funds can be used for comprehensive, school-wide interventions (building infrastructure & operations) as well as non-instructional costs that help improve student achievement (behavior support, attendance program, community engagement).
Title 1 funds cannot be used for anything funded in other similar schools with state and/or local dollars or any services that were in prior years paid for with state and/or local funds. The Adams County School District 14 (Adams 14) in Colorado recently received funding from the State of Colorado for the implementation of new Trane Synexis Spheres to improve air quality and slow the spread of COVID-19. Since state and local grant funds were used for this purpose, any school in Colorado must be cognizant not to use any of the January 2021 Stimulus Package funding for the implementation of Trane Synexis Spheres.
Competitive grants make allocating funds for use straightforward because of specific criteria considerations required to win the funding. Formula grants are less clear on how the total amount of funding should be allocated. While there are guideline stipulations, it is generally left to the fund recipient to determine how to specifically apply funding. For example, the December 2020 Covid Relief Package required colleges to spend at least the same amount on emergency student aid as they did during the March 2020 CARES Act. The maximum amount reserved for emergency student aid is left to the discretion of the individual college.
Schools and universities must consider in-person building infrastructure upgrades among a nearly countless number of other considerations. Individual school budgets, improving remote learning infrastructure, combating learning loss, and even what other schools in the state have spent money on are all aspects that must be weighed when determining priorities. Proper planning ahead of receipt of formula funding will help ensure your school’s infrastructure improvements are being addressed in the proper priority.
Abdullah Khaliqi, PE, CPQ
Senior Associate, Academic Market Leader