SCHOOL BUDGETING–A CASE STUDY
 Excellence is not a State mandated program for California schools. School Districts are free to adopt as many or few of the recommendations as they see appropriate to their situation or specific project. School districts, however, could, if they choose, mandate Excellence within their boundaries. In a cautionary essay, a Coordinator of Facilities Planning for a Southern California school district presents some real life scenarios and his recommendation for flexibility.
As you consider the benefits of Excellence in Public School Facilities, such as CHPS and LEED certification, please keep in mind that any savings are not passed on to taxpayers, nor do they provide any significant enhancements to a school district's master facilities plan. I know that there is no agreement on whether or not there is any added cost to the initial construction of a school project. For the sake of this argument, let's presume there is, and that any increase in cost will only exacerbate any facilities-related problems, both new construction and modernization.
Let's review some basic principles of school district budgeting (as practiced by many school districts).
Districts receive annual funding based on the student population, and in most cases budgets are developed with all money accounted for, including any carry-over and reserves. Budgets relating to facilities and maintenance are usually formula driven. These budgets are augmented from time to time as may be necessary, and they are often "raided" in times of fiscal necessity. One-time savings are usually used for one-time expenses, while ongoing savings are expected to be used on salaries and benefits. Some budgets are allowed to carry-over any unused balance while many other budgets are not. The bottom line is school districts spend the money they receive.
If Excellent designs result in utility cost savings, there is no direct benefit to facilities and maintenance (Operations) programs. Utilities are normally a General Fund expense (other than facilities/maintenance/operations budgets). Any saving is returned to the General Fund, and is not available for Operations. If there is no increase in construction cost for Excellence designs, and no extra maintenance/replacement costs, and the maintenance is the same, there is the appearance that Excellence has no negative aspect to facilities and operations.
Now let's examine a "real world" condition, such as a volatile bid climate. If a school board passes a resolution stating it wants all facilities projects to be LEED certified, or OPSC requires this in the future, is there any room for value engineering before bidding? When bids are rejected because they are over budget, will a district be allowed to use deductive alternates? Can individual structures be eliminated in a re-bid situation, hoping to add a structure in better times? If almost as efficient HVAC systems are available at a significant savings, can they be substituted? Different hardware?
My experience in the past couple of years has been that the two "interim" campuses we established using relocatable classrooms may have worked well as a short-term fix to get two new schools up and running, but replacing them with permanent facilities is a different matter. Two similar campuses were designed as part of an adaptive reuse of designs that have been built several times. The bidding climate was such that two permanent classroom buildings, including restrooms, had to be eliminated. The loss of these 16 permanent classrooms was offset by purchasing 16 of the relocatable classrooms already installed. Needless to say, these classrooms are not as energy efficient, do not have the same daylighting features, have no built-in casework/teaching walls, have no running water, etc. We also had to purchase the relocatable restroom building that has been used the past two years. This was a 50/50 project through OPSC's School Facility Program (SFP). The district actually paid approximately $2 million in additional funding. It is anticipated that the second permanent school facility will be built with funding through the SFP's Financial Hardship Program (FHP). The district does not have the additional funding for this project, nor is it allowed in the State's FHP. This project, as designed, cannot be built with the SFP funding that is authorized. It certainly cannot be built as an FHP project.
If we assume, for argument's sake, that Excellence adds a 5% premium to the cost of a project, what might happen if two identical school districts were newly created? Each district operates the same, has the same number of students, and thus has comparable facilities/operations budgets. Over a period of a few years, District A builds 20 new schools (non-Excellence design) while District B can only afford to build 19 new schools (Excellence design). If the schools are similar, District B must have higher student-to-teacher ratios in all classes. District B has significant utility savings in comparison, plus additional savings in staffing only 19 schools. None of these savings will be used for facilities/operations. District B may have higher transportation costs because the some students live farther from their schools than those in District A. Both districts' teacher associations have now negotiated similar agreements, including class size reduction (CSR) and maximum student-to-teacher ratio, which just happen to match the existing District A numbers. District B cannot add a school, so it distributes an equal number of relocatable classrooms throughout the district to be in compliance with the teachers' association agreement.
The relocatable classrooms can cost $25,000 to $40,000 each to be installed, including underground power and low voltage systems. They can cost up $50,000 or more per classroom to purchase, or lease for up to $9,000 per year. The equivalent of one school comprised of relocatable buildings must now be added to the utility bills annually. No additional money has been provided by the State to add these classrooms or pay their utilities. If Excellence systems/components are assumed to have a higher maintenance/replacement cost, it is easy to see that District B cannot do as much maintenance, or other discretionary projects, as District A. Any annual utility savings may not offset the additional utility costs plus electrical system upgrades.
If Excellence design principles promote better learning environments and higher achievement scores, are these benefits offset by overcrowding? Do they offset the disruption to the instructional programs to install the relocatable classroom buildings? Have the relocatable classrooms been installed in fields where they are constantly being washed down by irrigation systems? (Additional maintenance will be required.) Are kids in classrooms where balls are bouncing of their relocatable buildings, or can they hear students at recess because the buildings are located on the playground? The play area-to-student ratio has gone down at District B. Chances are these distractions are not helpful in maintaining or raising student achievement.
School districts often rely on State and local bond elections to provide facilities funding. Bond language usually states that teacher and administrator salaries are not to be paid with bond proceeds. If Excellence designs result in savings to the General Fund of a school district, it could be argued that the utility savings are going to the salaries of administrators and teachers. This is especially true in a case such as Districts A and B above, where fewer facilities can be built with bond funds.
If a school district has a change of heart about Excellence systems/components, the savings in utility costs may not be achieved as shown in a life-cycle cost analysis. HVAC equipment might not be replaced with comparable equipment (efficiency-wise). An energy management system (EMS) with limited control of classroom thermostats might be eliminated when the district's superintendent receives too much pressure from the teachers' association. Some design elements may not have been installed as a result of value engineering or substitutions that are required to build a project.
I am supportive of Excellence design principles as a recommendation, but certainly not as a mandate. Who will "enforce" Excellence after projects have been designed? School districts will do whatever it takes to get a project built. I don't believe either OPSC or DSA wish to monitor designs and substitutions that closely, and certainly not deferred and routine maintenance for Excellence compliance in later years.
Excellence is a good (voluntary) concept, and it should remain as a voluntary program.
- Richard "Pete" Peterson
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