July 20 2016 Board Memo


TO:           Board of Directors
                 Massachusetts School Building Authority
FROM:     Maureen Valente, Chief Executive Officer and
                John K. McCarthy, Executive Director/Deputy Chief Executive Officer
DATE:     July 20, 2016
RE:          Authorization to Establish an MSBA Public School Information Technology Loan Program
The MSBA is seeking Board authorization to establish an MSBA Public School Information Technology Loan Program (“MSBA IT Loan Program”). The MSBA IT Loan Program will support an existing Informational Technology Grant Program (“IT Grant Program”) that is currently being managed by the Department of Elementary and Secondary Education (“DESE”) and the Massachusetts Office of Information Technology (“MassIT”).
The IT Grant Program was established in 2014 as part of an Information Technology Financing Initiative which appropriated $38,000,000 in IT Grant Funding to the Executive Office for Administration and Finance.  The Funding was earmarked “to assist public school districts in improving student instruction and assessment through the use of information technology [including] enhanced information technology infrastructure and increased broadband access …”.  To achieve that objective, the legislation directed DESE and MassIT to establish an IT Grant Program that would "maximize access of broadband to public school districts" by awarding funding to Applicants who demonstrated a strong "commitment ... to improve the efficiency and productivity of education through the use of technology, to deliver statewide online assessments, to provide student access to individualized and rigorous digital learning experiences and to ensure that educators and administrators have the knowledge and skills to develop and implement digital learning curricula.” (Ch. 257 of the Acts of 2014, Section 2B, line item 1599-7062).
In 2014, DESE and MassIT established its Digital Connections Partnership Schools (“DCPS”) to manage the IT Loan Program. The Overriding Objective of the DCPS is to increase Broadband Connectivity to and within k-12 public schools through the following process:

  1. The IT Grant Program supports Public School IT Improvement Projects through Grants, Local Matching Contributions and Discounts for IT Infrastructure Costs that are available under the Federal Communication Commission’s (“FCC’s”) Universal Service “E-Rate Program”.
  2. Grant Funds are allocated proportionately to Urban, Suburban and Rural Grant Pools.
  3. Applicants are assigned to an appropriate Grant Pool.
  4. Applications are compared and ranked based upon the quality of each Applicant’s Vision and Plan for successfully implementing a Digital Learning Program.
  5. DESE awards Grants.
  6. Applicants provide a Local Matching Contribution that is proportional to their MGL CH. 70 Program Contribution. Those Contributions range from 30-70 percent of the estimated cost of a project.
  7. FCC E-Rate Discount Rebates are available to pay for 20 to 90 percent of a Community’s Total IT Infrastructure Cost depending upon Economic Need and Rural Status.
  8. MassIT manages all contract payments to IT Infrastructure Providers and then applies for, collects and returns available E-Rate Rebates to Applicants.

To Date, $7,000,000 in Grant Funding has been released by the Executive Office for Administration and Finance as outlined below:

  1. 247 Schools from 98 Districts have applied for Grants.
  2. 47 Schools in 17 Districts were designated as Finalists and received Grants.
  3. 200 Schools in 81 Districts were designated as Semi-Finalists or Candidates and did not receive Grants.
  4. $7,837,153 in technology upgrades were completed.
  5. Funding for the upgrades included $4,240,000 from Grants and $3,597,153 from local matching funds.
  6. The Average Project Value has been $461,009.

It is unclear whether additional IT Grant Funding will be released. As a consequence, the MSBA is proposing to provide loans, in collaboration with DESE and MassIT, that will support the IT Grant Program as outlined below:

  1. Loans will be available to Applicants to pay for IT Infrastructure on the basis of need as determined by DESE.
  2. Loans will be limited to DESE Approved Projects that have a Total Estimated IT-Infrastructure Cost of at least $250,000 but no greater than $2,500,000.
  3. $10,000,000 for Loans will be made available each year for a period of 5 Years, from FY 2017-2021. The Total amount available will be $50,000,000.
  4. Loans will be made using Unrestricted Funds.
  5. MassIT will determine the total cost of procuring and installing IT-Infrastructure for each approved Project (“Total Estimated IT-Infrastructure Cost”).
  6. Borrower Applicants will provide the MSBA with all required appropriation documentation and will sign a Loan Agreement with the MSBA.  Each Agreement will assign all Loan Proceeds to MassIT and will include a provision that allows the MSBA to intercept the Borrower Applicant’s state aid, if a loan payment is not made.
  7. MassIT will use the Loan Proceeds to make direct payments to IT-Infrastructure Providers.
  8. When the work is completed, MassIT will apply for and collect available E-Rate Reimbursements from the FCC and return those rebates to the Borrower Applicants.
  9. Borrower Applicants will pay all amounts due the MSBA within the terms of the Loan Agreement. 

The MSBA has the statutory authority to make loans to fund school projects and those loan amounts are not subject to the MSBA Grant Cap. (MGL Ch. 70B, Sections 3 and 7).