In 1998, two years after rejecting a $390 million proposal, voters in Houston swallowed hard and signed off on a $678 million construction package — at the time, the largest-ever school bond issue in Texas. In return for their investment, taxpayers would get 10 new schools and renovations at 69 other district facilities.
Three years later, the Houston Independent School District approved the last of the contracts covered by the bonds, and after district administrators tallied up the spending, they still had a hefty chunk of change in their pockets — $103 million.
“We were very fortunate,” says Dick Lindsay, senior project executive for the Houston district's Rebuild 2002 program. “We have a good project administration team.”
As the economy continues to stagnate, districts that can demonstrate the ability to complete their construction projects on time and on budget will be the ones most likely to persuade cost-conscious constituents to open their wallets for capital improvements needed in the future. With thorough planning, focus, teamwork and discipline, school systems such as Houston and San Diego have proven that they can manage massive and complicated construction programs without becoming mired in financial and bureaucratic difficulties.
Winning credibility
Before a school or university can manage a building program effectively, it has to have a plan and the money to pay for it. Most often, that means putting a proposal before voters.
With the 1996 bond defeat still fresh in their minds, Houston school officials made sure that their proposal two years later was rooted in a foundation of solid data. In the past, critics knocked the district for letting politics determine who got scarce funds for building upgrades. So officials spent $3.4 million and had an outside company perform a comprehensive study of all facilities in the 210,000-student district.
“We did an independent assessment of all our facilities,” says Lindsay, “and ranked their conditions worst to first. Then we made a commitment to do the worst first.”
To ease the public's concern that the district might bungle such a complex program, the district formed a bond oversight committee of architects, contractors, business leaders and parents.
“They brought expertise to the table, as well as support,” says Lindsay. “They help us to operate in a commercial environment instead of a bureaucratic environment.”
The San Diego Unified School District went a step further when it sought a $1.51 billion bond proposal in 1998. Ballot language mandated that the district establish an oversight panel. Geoff Patnoe, executive director of the San Diego County Taxpayers Association, says that was critical in his group's decision to endorse the bond issue.
“In California, we have a definite sense of skepticism,” says Patnoe. “Oversight is one of the things voters like to see.”
After the election
Both San Diego and Houston passed their 1998 bond issues by comfortable margins. The districts next had to make their ambitious plans a reality. In San Diego, that meant upgrades and repairs to 165 schools and construction of 13 new schools. It didn't start off too well.
“They passed the bond issue and looked around and said, ‘What do we do now?’” says Lou Smith, whom San Diego hired in December 2000 to run the construction program.
The size of San Diego's bond issue, known as Proposition MM, was unprecedented, and officials were unprepared to handle it. The December 2000 report of the district's Independent Citizens Oversight Committee noted that two previous bond programs in San Diego involved 65 projects; Proposition MM called for more than 2,500.
“There was a failure to recognize the radical differences between the previous propositions and Proposition MM,” the report stated.
The program stalled as the district struggled with planning, organization and management.
“For a while, it was a pretty messy situation with starts and stops, and getting up to speed on state regulations,” says Patnoe, who also served as a member of the oversight committee.
The oversight committee said in December 2000 that “the past two years have been difficult and disappointing.”
Fast-forward about a year and a half, and it's a complete turnaround. In May 2002, the taxpayers association gave the San Diego district an award for its efficient use of tax dollars.
“Despite the slow start, Proposition MM maintenance and repair work is now ahead of schedule, and aggressive plans are in place so that all San Diego City Schools will receive what was promised to them,” says the taxpayers association.
The turnaround coincided with the hiring of Smith. The district lured him from the U.S. Navy, where he served 32 years and reached the rank of rear admiral. Smith had been the Navy's chief of civil engineers and was responsible for the Naval Facilities Engineering Command in Washington D.C. And, as the son and the husband of school teachers, “I've been listening to teachers complaining about buildings for a long time.”
Smith arrived to find the San Diego district unable to get its footing and losing ground in its project schedule.
“In two years, they fell two years behind,” says Smith. “So we came in and installed our version of the West Coast offense.”
Like the game plan that Joe Montana perfected for the San Francisco 49ers, Smith's system emphasizes discipline, efficiency and planning. Having built military facilities around the world, Smith was adept at guiding a construction team to overcome bureaucratic obstacles.
“You have to force yourself to stay at the 30,000-foot level and see the whole picture,” says Smith.
Keeping your word
Maintaining focus means having the discipline to make sure that projects don't snowball out of control. That's easier said than done. Even though $1.5 billion is a massive amount of money by anybody's standards, it wasn't nearly enough to deal with the district's building problems. San Diego had identified $4 billion in facility needs.
“You have to stick to what you say you're going to do,” says Smith. “You get to a school and find more things that need to be done. But you can't do that or you'll run out of money real fast.”
To make sure his project team keeps its focus on the overall program, Smith keeps a picture of Standley Middle School on the wall in his office. “That is the last school scheduled for renovation,” says Smith. “Nobody in California has ever gotten to the last school. They've always run out of money.”
As of now, Smith will finish work on Standley in 2004 — two years ahead of schedule.
In Houston, they have gotten to the last school — and with a surplus of $103 million, kept going.
“We were able to do what we said — and then some,” says Lindsay.
The original construction program called for construction of 10 schools and renovation of 69 others. With the surplus bond revenue, Houston is renovating nine additional schools and building one more elementary school.
“We worked very hard at becoming a preferred client,” says Lindsay. “We streamlined our contracting process. We worked to pay our bills on time. We tried to create more of a cooperative environment instead of getting mired down in bureaucracy.”
Accepting change
To carry out programs of such unprecedented scale, school districts have to be willing to do things differently — especially if the old ways aren't working. In San Diego, district officials initially had been reluctant to schedule projects in buildings while students were present. But Smith concluded that had to change.
“We were two years behind schedule,” says Smith. “We had to do something or this is never going to get fixed. We can't afford to pay the premium for second or third shifts to allow the work to be done in the summer. We don't do anything unsafe or unnecessarily disruptive.”
The district also had to change the way it worked with contractors.
“We focused a lot at the beginning at ‘throwing the bums out.’” says Smith. “People who do bad work for us don't come back to work here. Having to fire some of those people sends a message that it won't be tolerated.”
Although the Proposition MM renovations are ahead of schedule, the new schools won't be ready when San Diego initially promised. Smith says planners had estimated that it took five years to get an elementary school built. But with additional regulations to satisfy, the process actually takes about 6½ years.
Laying the groundwork
Administrators who keep their eyes on the big picture know that a good track record will be a key selling point when a district returns to voters with another bond referendum.
As San Diego upgrades most of its schools, officials also are doing site surveys to create a comprehensive database of the district's facility needs. “That will give us the knowledge we need for follow-on projects,” says Smith.
In Houston, Lindsay knows the district will have to come back to voters soon. The success of the current program will make that much easier. “This was just one-third of what we need,” says Lindsay. “This was the first of a trilogy.”
In fact, Houston is already looking at what will be involved in its next bond proposal. The district has completed another facilities assessment, which found $1.16 billion in unmet facilities needs.
Lindsay says the district won't address all those needs in a single program.
“We'll do it in bites that keep the projects manageable and keep the district accountable,” he says.
Sidebar: Overseeing North Carolina construction
When North Carolina voters went to the polls in 2000 to decide on a $3.1 billion construction proposal for the state's higher-education institutions, they knew that someone besides the schools themselves would be keeping track of what happened with the money.
As part of the legislation that placed the proposition on the ballot, lawmakers mandated the creation of an independent bond oversight committee.
“It was something that gave people comfort that there would be a second, independent set of eyes that didn't have a vested interest,” says Kevin MacNaughton, associate vice president of finance for the University of North Carolina system.
The proposal, approved by voters in 2000, calls for $2.5 billion to be spent on projects on the 16 University of North Carolina system campuses and $600 million for projects on the state's 59 community college campuses.
The committee, with a majority appointed by state legislative leaders, has been a valuable resource in guiding the colleges and universities.
“They were very instrumental in getting us involved in a wider array of construction delivery methods,” says MacNaughton.
Thorough planning and the committee's oversight, as well as a favorable construction market, have helped the university system deliver the first phase of projects below cost. “We have gotten great prices in the building market,” says MacNaughton, “about 13.5 percent below our estimates.”
Delivering projects on time and below cost is critical for a higher-education system that had identified $6.9 billion in facility needs.
“When we come back to the trough again, it will be important to have that record of success,” says MacNaughton.
Sidebar: A busy 2001
After a discouraging beginning in carrying out its $1.51 billion construction program, facility-management officials in the San Diego school district have more than made up for its slow start. Here's some of what the district did in 2001:
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Completed major repairs and upgrades at more than 50 sites.
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Opened Ellen Browning Scripps Elementary School, the first of 13 new schools in the district.
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Awarded more than $225 million in construction contracts.
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Converted to a year-round construction schedule, which accelerated contracts for 30 projects.
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Hired a consultant to provide management support for the building program.
In 2002, the district expects to complete $280 million in projects at more than 80 school sites, as well as pursuing site acquisition for 11 new schools.
Kennedy is staff writer for AS&U.