5 Year Agreement (5YA) funding
Your 5 Year Agreement (5YA) funding is based on a formula. There is a minimum budget set so that all schools have 5YA funding to do their essential work. As a board of trustees, you need to decide how to allocate your 5YA funding in your 10 Year Property Plan (10YPP) following certain rules. We review your 5YA funding after you have been in the funding programme for 3 years.
- How your 5YA funding is calculated
- Following the 5YA spending rules
- Reviewing your 5YA budget
- Making changes to your 10YPP
- Paying for urgent health and safety work
The Ministry gives each board of trustees a capital funding budget to use over a 5-year period. This enables you to plan for capital upgrades as part of the 10YPP process.
You must use your 5YA funding to upgrade, modernise or replace your existing buildings. 5YA is not intended for expanding the building area of your school.
The basic formula for your 5YA funding is:
(base area rate x base funding) x 5 years
Your base area is the lesser of:
- your actual area of Ministry-owned buildings at the school, in gross square metres, or
- the gross area you are entitled to under the School Property Guide (SPG) plus legitimate space.
Your base funding rate for 5YA funding is:
- $30 per square metre of base area, plus
- a catch-up rate if your school has received less than the expected rate per square metre since 1992/93.
To calculate the school’s catch-up funding, we compare past spending on property with what you should have received. We include all past spending on property in the comparison, apart from spending on:
- making special education property modifications (external link)
- new buildings and extensions
- work paid for through the SPG funding programme (external link)
- furniture and equipment.
The result is then multiplied by 5 years.
If you qualify for it, we will add the following to your 5YA:
- a top-up rate if you have received less than $40 per square metre since 1992/1993 and the average building age of your school is older than 30 years
- an isolation rate if your school has an isolation index (external link) of more than 2.
We add top-up funding to help you pay for priority 1, 2 or 3 work. This work involves urgent health and safety, essential infrastructure and Flexible Learning Space (FLS) upgrades.
More information: 10 Year Property Plan (10YPP)
Minimum 5YA budgets
All eligible schools receive at least the minimum 5YA budget so that they have 5YA funding to do their essential work. The current minimum budget is $45,000.
This benefits small schools that have all the usual infrastructure but based on their student numbers and SPG entitlement would otherwise get less than $45,000.
It also benefits schools that are new or have a number of new rooms. We assess all buildings on a weighted average building age. This is a formula we use to assess the 5YA for new buildings on the basis that they won’t need to upgrading or modernising for a number of years.
Proceeds of property sales are added to the budget
If you sell surplus school property, you receive:
- 100% of the net proceeds from the sale of school houses
- 50% of the net proceeds from the sale of any other school property.
This money is added to your 5YA funding to be used to meet the goals of your 10YPP.
For more information about disposing of surplus houses and school buildings, go to Surplus school property (external link) .
Your 5YA funding allocation is one of the inputs into your 10YPP. Once we have approved your 10YPP we will send you a letter giving our approval and include 2 copies of your 5YA for signing.
You need to follow these rules when deciding how to use your 5YA funding in your 10YPP.
1. Capital work only
You need to understand the difference between capital and maintenance work. 5YA funding is for capital maintenance and upgrades (work over $5,000).
Capital work must meet three criteria:
- The work:
- creates new property
- replaces new property, or
- substantially upgrades existing property.
- a new asset is created in the Ministry's balance sheet or
- an existing asset needs to be updated in the Ministry's balance sheet.
- substantial roof replacement
- extension to an existing building.
You cannot use 5YA funding for routine maintenance. Maintenance funding, provided through operational funding, is to carry out day-to-day maintenance of existing school property.
We monitor 5YA spending when we receive the Occupancy Use Certificate for 5YA projects to make sure it is being spent on capital works and upgrades. You or your project manager must reconcile the Schedules of Payments in the Occupancy Use Certificate back to the project and provide copies of all supporting invoices.
2. Work on existing buildings only
You must use your 5YA funding to pay for work on existing buildings. Usually you cannot use it for new buildings or extensions.
There are 2 exceptions:
- when you replace an existing building that has reached the end of its useful life with a new building of the same size (that is, you are not increasing your school’s net building area)
- when you need to extend an existing block in order to meet FLS (external link) criteria and there is no way to achieve this without an extension (this is known as a footprint extension).
All footprint extensions must be approved by the Ministry’s 10YPP Quality Assurance Panel and meet the following criteria:
- FLS upgrades cannot be achieved within the existing building footprint
- after the extension, your school will have under 300 m2 in gross surplus area
- money is not being spent on a footprint extension at the expense of maintaining other school property.
More information: Step 5: 10YPP approval (external link)
3. Work on Ministry-owned buildings only
You can only use 5YA funding on Ministry-owned buildings and facilities.
You cannot use it to:
- pay for work on community or board-owned buildings
- build something, such as a car park, on land not owned by the Ministry.
4. 5YA contingency sum
Following a review of the 10YPP policy, the 5YA 10% contingency will no longer be required to be set aside.
Removal of 5YA contingency aims to support improved long term asset management planning across the school property portfolio, as it enables schools to use funding more effectively.
The full 5YA budget is now available to consider as part of your 10YPP planning process, and you may allocate your total 5YA to projects.
The 10YPP Application in the Property Portal has been updated to reflect this change, and no longer automatically keeps the 10% contingency aside.
Although you are no longer required to set aside 10% of your 5YA funding as a contingency, you may set up a project called ‘Contingency’ and hold this for any unexpected urgent health and safety or essential infrastructure projects.
5. Unspent 5YA budgets
In your 10YPP all your 5YA funding will be committed to projects. If any projects are not completed within the 5 years, the 5YA budget will be transferred to your next 5YA period.
6. Advances on next 5YA budget
We do not give advances on 5YA budgets. If you need to carry a project across 2 5YA periods because you can’t afford it in one period, you should break it into 2 separate contracts.
7. When Ministry approval is needed
You must get our approval before doing something that is outside 5YA spending rules.
In addition, all projects over $500,000 must be confirmed by the board by 30 June of the year before the project starts.
8. Timeframes and limits
Your timeframes and limits around spending 5YA funding depend on when the Ministry signs your 5YA. For instance:
- if we sign your 5YA by the start date (1 July): you can spend up to 90% of your 5YA budget immediately
- if we sign your 5YA by 30 September in Year 1: you can spend up to 50% of your 5YA budget immediately
- if we have not signed your 5YA by 31 December in Year 1: your property advisor will work with you to address any issues.
9. Engaging contractors for your 5YA projects
You must follow normal Ministry procurement rules to engage contractors and consultants to carry out your 5YA project.
For details of this process, see Procurement.
We will review your 5YA budget after Year 3 of your 5YA programme. The review will take into account changes in your school roll. Your budget may be increased if it has grown. The budget will not be reduced if your roll drops.
If you are making major changes to your 10YPP, you will need to talk with your property advisor and then update your 10YPP and send it to the Ministry for approval.
These major changes include:
- cancelling capital projects, or adding new projects to the 5YA (which includes adding new floor area, also known as a footprint extension)
- adding a project in the SPG funding programme
- changing the order of projects
- changing project costs which impact other projects.
If you have an urgent health and safety issue to deal with at your school, and your 5YA funding is insufficient, talk to your property advisor. You may be able to get Budget Plus or Unforeseen work funding to pay for this work.
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