Cash for Buildings programme

Purpose of Cash for buildings

Previously, an increase in your space entitlement could only lead to construction of new buildings. Cash for buildings gives you greater control over your property funding by allowing you to choose between additional space and cash payments, which can be used for any educational purpose.

Examples of how the funding could be used include purchasing computers, equipment for trades-related education or hiring a part time teacher. If the funding is sufficient, you could use it to lease space, such as a community gym.

Calculating Cash for Buildings funding

The level of funding is calculated by multiplying a school’s new space entitlement under the Roll Growth or SPG Deficiency programmes by a conversion rate.

The conversion rate approximately averages the cost of providing one square metre of space over 40 years; that is, the economic life of the foregone building. The costs associated with providing school buildings include:

1. site works and building construction, including a furniture and equipment grant (capital costs)
2. 40 years of Operations Grant funding (maintenance costs) 
3. 30 years of Five Year Agreement (5YA) funding (modernisation costs – buildings less than 10 years old do not receive modernisation funding).

The conversion rate varies by school type, as shown in the following table:

Below is an example of how the annual payments are calculated:

A secondary school (years 9-15) is entitled to 80m2 of additional space. The conversion rate for a year 9-15 school is $162 per square metre of foregone space (2009/10 rates).

Annual payments = space entitlement in m² x conversion rate
= 80 m² x $162
= $12,960

The payments continue until the school is no longer eligible for the space or until it opts out of the cash for buildings programme.

The conversion rate will be inflation adjusted at three-year intervals after you enter the programme.

Getting cash for buildings funding

Schools that experience roll growth must apply for additional space under the Roll Growth or SPG Deficiency programmes. Once the entitlement to new space has been confirmed, schools can decide whether they want to apply for cash for buildings.

To apply for cash for buildings, you must fill out the application form below and submit it to your local Ministry of Education office for approval.

The Ministry will assess your eligibility for cash for buildings funding based on your school’s history of financial and property management. More detail is provided on the application form.

If you have become entitled to additional space during 2010 but have not yet received funding for a new building, you can apply for cash for buildings.

Your local office will advise you about the timing of the payments.

Reviewing cash for buildings eligibility

Once you have entered the programme, your school’s eligibility for the cash payments will be reviewed at the same time as your 5YA is renewed. The first review of cash for buildings will occur at the second 5YA after you enter the programme and subsequent reviews will occur at each 5YA date. If your school’s roll has declined so that you are no longer entitled to new building space, the cash for buildings payments will be stopped at the 5YA review.

The conversion rate will be inflation adjusted every three years.

This diagram illustrates how the programme will be reviewed:

Timelines illustrating how the Cash for Buildings programme will be reviewed.

Exiting the programme

You can opt out of the programme each year and take your space entitlement, provided you are still eligible for additional space. If you have entered into a lease agreement using the funding, you can only opt out of the programme if you can also exit the lease agreement.

Lease agreements

One option for using your cash for buildings funding is to lease property. It is important that the lease agreement includes adequate protections for your school, in particular:

• leases must include rights of renewal or exit clauses that line up with your school’s 5YA renewal dates. This ensures that if your roll declines so that you are no longer eligible for funding at the 5YA review, you will be able to exit the lease
• as the cash payments will only be adjusted for inflation, you must also make sure that the rent review provisions are reasonable and equitable.

The Ministry must approve all lease agreements before they come into effect and may reject leases if they do not meet these requirements.

If your cash for buildings funding has been approved, your board can negotiate and manage lease agreements that are likely to be below $250,000 in total value over the term of the lease; ie, the rent payments and other lease costs for the total term of the lease will be less than $250,000. If the lease value is likely to be above $250,000 over its term, the Ministry will manage the lease. In this case, you will still be able to exit the lease when your 5YA is renewed as the Ministry lease will include exit clauses.

Boards negotiating lease agreements should get their own legal advice. For more information about leases, contact your local Ministry of Education office.