Spending Paradox

How much does a school cost?

It's a straightforward question, but the answer for many education administrators is a frustrating, “It depends.”

The cost of a school facility surely includes what an education institution pays for the building site, design plans, construction materials, workers who assemble the building, and furniture and equipment that fill the classrooms and other spaces.

But do the costs end when the construction team turns the new building over to a school or university? Clearly, they do not; but often, schools and universities don't weigh the expenses that will come once the building is open.

“Many times, they're not thinking about the long term,” says Sara Greenwood, outreach manager for the Collaborative for High Performance Schools (CHPS). “They need to take the time to make the wisest decision.”

Just as a car buyer might be swayed by a low sticker price and not look into the vehicle's track record for maintenance and repairs, education administrators often look at construction costs without considering what it will take to open the building and operate its systems for years to come. Schools and universities that weigh the life-cycle costs of a building and its components are likely to come to different conclusions about how a project budget is allocated and which materials are used.

In general, buildings that are designed with sustainable strategies and constructed with “green” materials and features will use less energy and save schools money over a building's life. Yet some school officials, as well as architects and engineers, may shy away from long-term benefits because they fear it will add to a facility's initial cost.

“People don't look past the initial cost,” says Ron Bratlie, director of special projects in the Elk River (Minn.) school district.

Going deeper

It's not surprising that many administrators, architects and members of the public focus on the initial costs of constructing a building. It's easier for school officials to make the argument that they are spending public funds wisely when the price tag attached to a construction project is as low as possible.

The sensitivity to initial costs is especially present when a building proposal requires voter approval. In planning for bond elections, some institutions first estimate how large a proposal their patrons will support, and then work backward to determine what will be included in the projects.

“That's the way it is in the public sector — they think only short-term,” says Gary Bailey, a principal based in Las Vegas with the Innovative Design architectural firm and a board member of the Sustainable Buildings Industry Council. “School boards — they're all politicians. They tend to want to get re-elected.”

The benefits a school or university gets from life-cycle-costing approaches might not be seen until long after those school board members and administrators are gone. Life-cycle costing looks at facilities as a long-term investment.

“The true cost of a school includes much more than the cost to design and build it,” says the U.S. Environmental Protection Agency's IAQ Design Tools For Schools. “The long-term costs of operating and maintaining the facility must also be included. Only by evaluating all three of these factors can a community understand how much a new school really ‘costs.’”

Although sustainable design approaches and life-cycle costing have become more common in recent years, the concepts are not universally understood or embraced in all of the nation's school districts and colleges.

“Most districts build one school every 30 or 40 years, and are not really savvy about what's going on,” says Bratlie. “They do what the architects tell them to do.”

Some design firms are strong advocates for green-design strategies, but many architects, Bailey asserts, aren't as knowledgeable about those issues as they need to be to make school officials aware of the options available.

“Most architects and engineers never present this information [to education institutions],” says Bailey. “They are neither enlightened nor have a desire to be enlightened. They are looking for a commission. They say what schools want to hear, get their fee and move on.”

Different pockets

For school officials who depend on taxpayer support to build and run their facilities, communicating the complexities of school budgets to the public is a trying task. Constituents aren't inclined to learn the difference between a capital budget that pays for construction and renovation, and an operating budget that covers the ongoing costs of running a facility. A voter who has just supported a multi-million-dollar bond proposal may become confused or annoyed when an institution comes back to voters a short time later, this time for money to operate the facilities being built.

The separation between operating budgets and capital budgets also can lead to administrators protecting their own budgets to the detriment of the institution as a whole. An administrator responsible for the capital budget might be reluctant to add to construction costs, even if it would save on operating costs over the long term — that's somebody else's budget and somebody else's worry.

“The institutional separation of operational and construction budgets can create schools that are economically, environmentally and educationally poor investments,” says the CHPS Best Practices Manual.

The budget process itself may push administrators to take a short-term approach to financial decisions. It's hard to carry out a financial plan for the next five years when stingy legislators control the purse strings and an institution can't count on consistent funding levels from year to year.

But as states continue to impose cost cutting on schools and operating budgets get tighter, schools might be better served if more money was put into capital budgets to pay for upfront construction costs so that buildings will run more efficiently and take a smaller bite out of operating budgets.

Because operating budgets, especially maintenance budgets, are prime targets for cuts, sustainable strategies often seek out systems and equipment that will ease the long-term maintenance burden on schools.

“We know that when budget cuts come, maintenance gets slashed first,” says Bailey. “We don't put in a lot of things that need a lot of maintenance. We use systems with fewer working parts.”

Parts of a whole

The jury is still out on the question of whether schools using sustainable design necessarily have higher upfront costs than those using a more traditional approach (see sidebar, p. 24).

In the Elk River district, says Bratlie, Rogers High School and Westwood Elementary School (see sidebar, p. 22) have been built at costs comparable to or less than a typical project.

“It's a misconception that it costs more,” says Bratlie. “It can be cheaper. We've proven it twice.”

Isolated components may be more costly in a sustainable design, but thorough planning and a clear understanding of how specific design decisions affect the entire project can result in cost savings elsewhere in the design and construction.

“You have to look at the whole building, not just individual components,” says Bratlie.

Installing a higher-quality roof might add to the project's initial cost, but that roof allows a school to save money by reducing the size of the mechanical system, says Dave Church, director of physical plant in the North Clackamas (Ore.) district.

“It essentially becomes a wash,” he says.

Some sustainable strategies are easier to sell than others.

“Daylighting is the easiest sell,” says Bailey. “It has benefits across the board. It saves energy, and it leads to better student performance. You can showcase what it looks like. Improvements that affect the building envelope — window systems and wall systems — are accepted because the long-term savings are more defined.”

Schools have been less likely to embrace other strategies with high upfront costs, says Bailey, such as renewable energy systems or rainwater catchment systems.

In some cases, schools and universities that cannot afford the upfront costs of systems can enter into a performance contract. Companies that are providing high-performance equipment pay the initial costs, and schools repay the companies using the savings generated by the new equipment.

Champions needed

The more sustainable projects that come on line, and the more evidence they generate that life-cycle costing saves schools money in the long turn, the easier it becomes for supporters of that approach to carry the day.

“In the last two years, it has become a lot easier to convince school boards,” says Bailey.

As is the case with most innovations, a school or university is unlikely to embrace life-cycle costing and sustainable strategies without a strong advocate leading the way.

“You have to have someone at the owner level to push expectations and hold people accountable,” says Bratlie. “We've had to educate the architects and the construction managers.”

The key to pursuing a successful sustainable-design project is taking the time to incorporate the strategies early in the planning process and make clear the long term benefits to the school.

Kennedy, staff writer, can be reached at [email protected].

“A better way”

Completed in 2003, Westwood Elementary School in Zimmerman, Minn., is the first school in the state to receive LEED certification for green building design, says Ron Bratlie, director of special projects for the Elk River district.

The school has incorporated a wide array of features that will reduce energy consumption over the life of the building. The U.S. Department of Energy's Rebuild America program cited the school as one of its success stories and notes that the school's operating cost is about half that of a school that meets the minimum requirements of Minnesota's energy code. That translates to energy cost savings of about $45,000 a year.

Bratlie became a convert to sustainable strategies after becoming frustrated with the conditions in his district's buildings.

“We had mold, operational problems,” he says. “We were replacing equipment too soon. I thought, ‘There has to be a better way.’”

His quest took him to Switzerland and Germany, where he visited school facilities that operated more efficiently than those back home.

Elk River used a sustainable approach when it built Rogers High School, and it refined the approach for Westwood.

The school has a displacement ventilation system that uses less energy than a traditional system, and an energy-recovery system that uses exhaust air from the building to heat incoming outside air. The building has a generous amount of daylighting and uses efficient fluorescent light when needed. Low-flow faucets and urinals conserve water.

How much more?

Advocates of life-cycle costing can make a persuasive case that the approach can save schools money over the life of a facility. But if an education institution can't afford the initial cost of a building with these more efficient features, the promise of savings down the road won't carry much weight.

But is it true, as conventional wisdom holds, that sustainable design and construction strategies result in prohibitively higher building costs? That's one of the questions that “The Costs and Financial Benefits of Green Buildings: A Report to California's Sustainable Building Task Force” set out to answer.

The 2003 report notes “a widespread perception in the real-estate industry that building green is significantly more expensive than traditional methods of development.”

The report looked at 33 projects that had registered to seek LEED (Leadership in Energy and Environmental Design) green building certification. The projects — 25 office buildings and eight school facilities — were completed or scheduled to be completed between 1995 and 2004.

“The average reported cost premium for all 33 buildings is somewhat less than 2 percent,” the report states.

That additional 2 percent in upfront costs would translate to life-cycle savings of 20 percent of total construction costs, the study adds. Those savings include reduced energy consumption, water conservation, and lower operations and maintenance expenses.

The data also indicated that project teams with previous experience in green design tended to keep costs lower than those who were attempting a sustainable design for the first time.

“The conclusions … indicate that while green buildings generally cost more than conventional buildings, the ‘green premium’ is lower than commonly perceived,” the report states.

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