Jeffco Capital Improvement Program: The numbers

Figures fluctuate but critics say they never added up to begin with

Bob Wooley
bwooley@coloradocommunitymedia.com
Posted 3/3/21

In the beginning, there was the flipbook. Before bringing the 2018 Bond vote to the people, the Jeffco Public Schools district created a document known as the flipbook. It was a comprehensive index …

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Jeffco Capital Improvement Program: The numbers

Figures fluctuate but critics say they never added up to begin with

Posted

Editor's Note: This version of the story is corrected from an earlier version which mischaracterized funding set aside for remaining CIP bond projects. 

According to Tim Reed, Executive Director Facilities & Construction Management, the 131 projects in the program that are currently classified as ‘not started’ are funded from the bond.
“The total cost of work from ‘not started’ to ‘complete’ totals (an estimated) $726,755,662,” Reed said.
This means the district, after approving funding for an additional four athletic fields at a recent BOE meeting, has just under $94 million in unallocated funds remaining in the CIP at this time.

In the beginning, there was the flipbook.

Before bringing the 2018 Bond vote to the people, the Jeffco Public Schools district created a document known as the flipbook. It was a comprehensive index of individual school projects and their estimated costs. The flipbook was also touted as a way to let Jeffco voters know, school by school, what they would be getting for their money.

Initially, the $705 million program included roughly $547 million in school project costs, $56 million for charter schools, $86 million in overall program contingency and an additional $16 million for unidentified projects. Those are the numbers voters saw when they made the decision to narrowly pass a $567 million Bond initiative to fund part of the improvements.

After the Bond passed, the project’s estimated costs were increased by nearly $32 million for a revised total of just under $737 million for the program. District officials say the increase was a result of changes in scope, market conditions, incorrect estimates or various other factors like asbestos removal, which were determined once the District was able to perform more in-depth evaluations of each individual project.

MORE: Jeffco Schools updated flipbook of bond projects and costs

That extra $32 million and the fact that the District has already spent tens of millions in overall program contingency, has some very vocal critics crying foul. 

It should be noted that in the original flipbook estimates, each specific project had a 10% project buffer included. So, the millions in contingency that have been spent from the initial $86 million program contingency budget is over and above the individual built-in project buffers.

According to Tim Reed, Jeffco’s Executive Director Facilities & Construction, the amount of contingency that had been spent as of Feb. 22, was just over $81 million, of which nearly $12 million went to charter schools and over $3.5 million was spent on hazmat expenses (which technically, do not count as overages). Therefore, the precise amount of contingency that’s been spent on actual projects thus far is $65,815,424.

Reed said he regrets that numbers were included in the flipbook to begin with, because those numbers were never intended to be exact. Both Reed and District Chief Operating Officer, Steve Bell, said because of costs involved for architects, engineers, scientific testing and other factors, it would have been impossible to make the estimates more precise in the initial planning stages because most districts just don’t have that kind of money.

“This model does have an inherent risk in it,” Bell says. “No school district has the ability to go out and do the architectural design and bid projects and have all of the work done like soils testing, electrical evaluation, HVAC — nobody has the money to do that.”

Their explanation for overruns, in some cases, is that until you get hands-on at the site, there are too many unknowns. In other words, getting hands-on at the site turned out to be a $32 million reality check on their initial flipbook estimates.

In a document Reed says is now posted to the Capital Asset Advisory Committee (CAAC) website, all budget variances are listed with specific overage amounts and the reason for the cost variance.

Bell says using the estimates the district could make in the beginning, was the best option available at the time.

Not close enough for everyone

Estimates are, well, by definition, just estimates. But how close should they be to a final number? At least one ardent critic of the CIP says, a lot closer than Bell, Reed and Jeffco came.

Robert Greenawalt, a retired Army Colonel, West Point graduate with an additional Masters Degree in engineering and business administration, has been something of a citizen watchdog of the CIP since its inception. He says his main concerns with the program are honesty and transparency. He thinks lack of oversight and cost overruns could hurt Jeffco’s chances of passing another bond in the future, to finish the nearly $700 million worth of work that District schools will still need after the current CIP is completed. He has a lot of issues with the way the estimates were conducted. He also thinks the District has a problem with accountability.

“What I think is that if you’re going to bust the budget by millions of dollars, you should give an excruciatingly detailed explanation of why,” he says.

Reed and Bell, however, see the matter differently. They don’t agree with Greenawalt’s assessment that the program is being mismanaged. Both feel confident that in the end, the program will have been a success and voters will have gotten everything they were promised.

Research conducted by the newspaper found no national standard for estimating a municipal bond project. In fact, it found no statewide standard for these types of projects either. It’s a process left very much to the individual district.

On the question of the updated numbers in the flipbook, Reed says as they began working on individual projects and estimates changed, transparency was maintained by publicly updating the numbers to reflect changes to the project’s price tag. 

Reed and Bell also maintain that because of the way money is being allocated, and with many of the largest projects being moved up in the timeline to take advantage of favorable market conditions, the percentage of contingency already spent is not indicative of the amount that will be spent moving forward.

When all is said and done

To be clear, Jeffco Schools brought in $128 million in bond premium and interest that was not expected or earmarked when the initial budget for the program was created. Critics say this money is what’s unfairly keeping the program afloat. And that without it, huge discrepancies in estimates, cost overruns and scope-creep would have prevented the District from being able to fulfill their obligations to the voters who passed the bond.

The district looks at bond premium as just another part of overall bond proceeds, much the same as the $11 million in interest the bond money has earned. There were no contractual guidelines stipulating how bond premium had to spent, other than federal rules requiring that it be used only for capital expenditures.

“Scope, budget, schedule — those three things are the direction the Board gave us, and scope was first and foremost,” Reed says. “So we have to complete the scope of what we’ve committed to the voters first.

And then we’re working with this collective amount of money that we also have to spend, per the IRS (regulations).”

Reed said if there’s money left over at the end, it will be capital transfer money that won’t have the same requirements the bond money has, which will give the District more latitude in the way it can be spent.

“We told voters we would accumulate six years of approximately $20 million at the back-end to fill up the program,” Reed says. “So, when we get to the end of the bond, and typically this is what we’ve done with every issuance — if we have money left over, we prioritize other projects, take it to our citizen committee for their advice and consent, and then take it up to the board for approval to do that work. So that’s kind of the way the whole process works. This isn’t new ground.” 

According to Tim Reed, Executive Director Facilities & Construction Management, the 131 projects in the program that are currently classified as ‘not started’ are funded from the bond.

“The total cost of work from ‘not started’ to ‘complete’ totals (an estimated) $726,755,662,” Reed said.

This means the district, after approving funding for an additional four athletic fields at a recent BOE meeting, has just under $94 million in unallocated funds remaining in the CIP at this time.

In a program that spans six years and costs over three-quarters of a billion dollars, should Jeffco have been expected to hit the budget nail right on the head?

“I’m not a construction guy,” Bell said. “But we have a construction guy and I was speaking to him this morning and he said “you know, a year ago the cost of steel was $53 a ton — today it’s $79.” A year ago did anybody know it was going to go from $53 to $79? No.”

But Greenawalt and Tom Coyne, Co-Founder, K12 Accountability Inc., husband of Jeffco Board of Education Director, Susan Miller, and fervent critic of the district office, would say $124 million is far enough off the mark that district staff have much to answer for. 

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