School Board CIP Work Session #1

We had a great turnout for the School Board’s CIP working session last night. Seven of us were joined by several others from the Oakridge and Wakefield communities. This was not a session for public comment. Rather, our role was to observe and track the discussions and leanings of the School Board.

Summary:
Wakefield is currently proposed for planning and pre-construction in 2011, with construction to begin in 2013 and run approximately 5 years. The School Board is discussing the financial implications of accelerating the planning/pre-construction into 2009 and the construction to begin in 2011. There is no decision made; the School Board raised many questions that staff will be analyzing and answering at the next working session on Tuesday, 5/13.

Details:

First, a primer: How do bonds work?
The citizens (that’s us) vote on bond referenda every two years for the Schools Capital Improvement Plan (CIP). That doesn’t mean the money is spend that same year. For example, if voters approve a $156 million bond in November, 2012 elections, the bonds can then be issued after that. The Superintendent is proposing issuing the bonds evenly over 5 years, which would fund construction at Wakefield from 2013-2018. So it’s this 5-year timeframe where the major costs are incurred – if we accelerate that timeline, the School and County Boards must consider how that affects their overall budgets and debt levels.

Recap of the proposed plan in regards to Wakefield:
2008 Bond – No Wakefield funding
2010 Bond - $11.1 million for Wakefield Planning & Pre-Construction
2012 Bond -- $156 million for Wakefield construction to run from 2013-2018

So, can we accelerate everything by 2 years -- and smooth out the bonds so there is not such a big chunk to stomach in 2012? Here is where the School Board discussions went:

1. Is it possible to begin building Wakefield two years earlier?
Asked about moving construction up from 2013 to 2011, Superintendent Smith replied, “We can do whatever we want.” Yet when the numbers were presented, it became clear that Dr. Smith did not favor the plan. His concern was incurring the expenses two years earlier would violate 5% debt service limits the School Board has agreed to with the County Manager. Another negative implication is that funds available for new projects would drop to $2 million in FY2015.

What does this mean? Simply put, the school’s budget will take on more debt than the County is comfortable with.

What about the School Board?
Of all of the School Board members, Libby Garvey stood out as the strongest champion for this accelerated plan. She proposed alternative funding ideas such as looking into issuing 30-year bonds rather than the traditional 20-year. Dr. Smith’s team indicated that they had discussions with County looking at 25-year bonds, but data was not yet available.

There are pros and cons to this approach. Think about it like a mortgage. A 30-year mortgage offers borrowers lower monthly payments, but it also costs the borrow more interest over the life of the loan.

Alternatively, Garvey proposed a compromise position, which would merely move-up the $11.1M design and pre-construction funding to the 2008 bond and leave options open for 2010 and 2012 referenda. She noted that getting to the design and pre-construction phase earlier seemed prudent to determine how construction in 2011 might be possible.

Accelerating the design and pre-construction phase seems an appropriate strategy since that takes time. In fact, Assistant Superintendent for Facilities, Clarence Stukes, noted that design and pre-construction phase fast-tracked for Washington-Lee still took more than a year.

2. Can we smooth the 2010 ($11.1M) and 2012 ($156M) bond referenda planned for Wakefield?
The 2012 Bond of $156 is proposed as a strategy that will secure all construction funding in a single bond. The risk here is a far-out timeline and very large bond for voters to stomach.

Smoothing the bond referenda between 2010 and 2012 would split construction, which forces the Board to go to voters twice, could increase costs and takes more planning to reach some sort of interim completion. Dr. Smith also pointed out that the actual construction date may still need to remain 2012 or 2013 in this scenario, so there is a risk of not meeting the voters’ expectations with construction funding in the 2010 bond.

What about the School Board?
At first Garvey appeared to stand alone with support for an earlier, phased construction approach, Abby Raphael added her support for the split, stating that the School Board could manage the expectations of the community that money in the referenda not be held, unspent, through the next bond cycle.

What's Next? Next working session is scheduled for Tues, 5/13. We'll have representation there again.