St. Paul Public Schools will scrap its rolling five-year plan for building improvements and develop a new one after spending far more than expected in the program’s first three years.
The Pioneer Press reported in May that cost estimates for 18 building projects had grown by 61 percent — to $471 million, up from $292 million — in two and a half years.
As construction spending far outpaced revenues in 2017 and 2018, seven projects were quietly postponed and another was canceled.
Following that report, Superintendent Joe Gothard in June stopped all pre-design work on five upcoming school projects and appointed a review team to figure out what went wrong.
“We’re pushing pause on this because we’re going to do it right,” Gothard said at a school board meeting Tuesday night.
The review team experts on Tuesday presented a 160-page report with scores of recommendations. Key among them was crafting a new Facilities Master Plan with updated cost estimates and a new project schedule for the 56 other campuses.
They also suggested the district, given the high costs of renovation, consider closing some schools — enrollment is down, after all — and perhaps building some new ones.
The group also called for several new positions, formal systems for monitoring progress and changing costs, and improved communication internally and externally.
‘OVERLY OPTIMISTIC’
Review team members included six employees of Jacobs, a Dallas-based engineering firm on a 12-week, $157,514 contract.
The firm concluded that district leaders were “overly optimistic” in their capacity to manage the Facilities Master Plan, which raised the district’s yearly facilities spending from $30 million to $112 million.
“I can count on maybe two hands the number of people I would trust” to manage a program of that size, Jacobs principal Chappell Jordan said. “Those people are really hard to find.”
The initial five-year construction plan, adopted by the school board in 2016, included insufficient contingency and lacked essential elements, such as money for furniture, fixtures and equipment.
“You were 7 to 10 percent off the day you approved it,” Jordan said.
The district also routinely underestimated the cost of site improvements and repairs to aging mechanical systems.
However, a review of three particularly costly projects — Humboldt and Como Park high schools and American Indian Magnet — found the skyrocketing costs largely were driven by changes to the scope of the projects, not overruns during construction.
“You didn’t pay $179 million for $100 million of work. You paid $179 million for more work,” Jordan said.
Although the district had spent two years sketching out capital improvements in consultation with each school, their ambitions grew before the projects went out for bids.
At Humboldt, for example, school staff insisted on significant renovations to accommodate changes to special education instruction.
Facilities Director Tom Parent expanded the scope of those projects with little oversight.
“Whenever a scope change occurred, Facilities simply downgraded another priority project to afford the increased cost,” Jacobs wrote in its report.
Although the school board has approved the rolling five-year building plans each October, there have been no formal budgets for individual schools. Scope and cost increases to the early projects will mean major delays, at best, to future work at other buildings.
“There was actually an undermining of our ability to do our job,” board member Steve Marchese said Tuesday.
Jacobs recommended a new, formal process for addressing changes during construction.
Besides changes related to academic needs, the district at Humboldt found unexpected utilities problems and mechanical systems that needed replacement, not repairs.
“Everything you could see as an unforeseen risk happened,” as the school’s estimated costs went from an estimated $26.8 million to $48 million in two years, Jordan said.
Humboldt’s costs since have continued to climb even higher, Jacobs found.
Jordan said the 2016 plan should have anticipated that costs would rise as projects came closer to fruition. He said contingencies of 40 percent are appropriate.
In St. Paul’s case, even that would have been insufficient with its first 18 projects.
Jordan noted that St. Paul had the freedom to adjust its plans on the fly because it’s one of four school districts in the state that don’t have to ask voters for permission to borrow for capital projects. Otherwise, it would have had to have stuck to a firm budget for each school.
NEW PLAN
When the school board approved the initial Facilities Master Plan in 2016, pledging to improve every building in the district over in 10 years, they committed to a series of $30 annual tax increases on the average homeowner.
But higher than expected costs on the earliest projects has pushed that schedule back.
“What was once a 10 year plan is most likely in excess of 15 years,” Jacobs wrote.
The total cost of improving the look and function of the city’s schools, including the work done since 2016, is roughly $1.5 billion, up from $1 billion, they found.
The district either will have to keep raising taxes to improve the rest of its buildings or take projects off its list, disappointing students and staff.
Jacobs also suggested the district consider consolidating some of its schools after losing thousands of students since the 2016 plan was written. In some cases, Jacobs found, it may make more sense to build a new school rather than renovate an old one.
“Were you aware that many of these projects are (more than 80 percent) of the cost to build new?” the firm asked.
TOO FEW BIDS
Although scope changes were the main driver of project costs, the review team found the district could do better around the edges.
Jacobs suggested that to save money and reduce risk, the district use a construction manager model instead of general contractors.
The district frequently has received a low number of bids for its construction projects, for a number of reasons:
- Late payments: Every contractor interviewed complained about having to wait two months after submitting invoices to get paid.
- Bid schedule: The district at times waited too long to solicit bids for projects, so contractors were already booked.
- Inability to plan: Jordan said the district could get more bidders by posting a detailed construction schedule publicly so that contractors can plan ahead and prioritize district work.
Jordan said, too, that the district’s decision to suddenly and dramatically increase the number of projects it was taking on likely limited competition. Contractors don’t want to win more jobs than they can handle, so they turn in higher-dollar bids or bid on fewer schools.
“Sometimes, you become your own escalation enemy,” Jordan said.
TRACKING PROGRESS
The review team found a lack of coordination and communication between finance and facilities personnel has plagued the construction program.
Until recently, the district had no computer programs dedicated to managing construction projects or tracking costs. They’re now testing two software programs while still using “several hundred disparate Excel spreadsheets, Word documents and other tools,” Jacobs wrote.
With no master schedule that displays project timelines, budgets and cashflow, the firm’s consultants labored to make one themselves from a long list of documents.
“We spent the first month of us here just trying to figure out what ballpark we were in,” Jordan said.
One of the firm’s key recommendations is to create a master schedule that will not only assist district employees to monitor progress but also the public and school board. They suggested it be posted online and updated monthly.
Jacobs gave the district low marks in communication, noting “infrequent and irregular” reports to the school board, outdated information on its website, and scant information on progress made.
A master schedule, they said, would resolve that, enabling residents to see what their tax dollars are doing and whether the district is hitting its targets.
STAFFING
The review also noted St. Paul was hit by a lot of turnover in the positions supervising and reporting to both finance and facilities directors.
Steve Torgrimson, a review team member and former director of business finance for Minneapolis Public Schools, made numerous staffing recommendations, including:
- “Hire an experienced capital construction program manager to take over implementation” of the Facilities Master Plan.
- Hire a dedicated director who works with the finance and facilities departments.
- Hire more facilities staffers with experience in construction, not architecture.
- Embed a finance support staffer inside the facilities department, which is housed in a different building.
Parent, the facilities director, still is on the job and participated in the team’s review of the department’s problems.
Cedrick Baker, the superintendent’s chief of staff, said the district’s struggles were systemic, not the fault of one person.
“I don’t personally see that it is one individual’s problem. We’ve got to really think about the system to meet the needs of our students,” he said.