Many schools getting less bang for bonds

By ERICA PEREZ, SAM MILLER and FERMIN LEAL
The Orange County Register

Nearly half of the county's school districts with voter-approved taxpayer bonds have had to significantly cut their construction projects, an Orange County Register investigation found.

While Anaheim Union and Santa Ana Unified have made headlines for slashing schools and upgrades in the most crowded districts, they are not alone. Others are cutting as much as 30 percent of their construction programs.

The Register looked at all of the 19 school districts that have passed construction bonds since 1990 - totaling $1.7 billion - and found that six are delivering nearly everything they promised voters.

The rest have struggled. Reasons vary - and include rising construction costs, bad timing, politics and unstable soil - according to an analysis of construction budgets, bond measures and interviews with dozens of district administrators.

Here are the findings:

The two districts with proven mismanagement - Anaheim Union and Santa Ana Unified - made some of the most ambitious promises and, eventually, the deepest cuts.

Seven districts made drastic cuts, some canceling new classrooms or schools. La Habra City School District scrapped classrooms at three schools when costs shot up 34 percent. Enrollment also dropped, reducing need.

Four districts didn't have to cut as drastically but scaled back on items such as parking, locker rooms and gymnasiums because of soaring costs. At Placentia-Yorba Linda, rising costs ate $24 million for three campuses.

Of the six districts that seem to be on their way to completing everything presented to voters, three were successful in part because they promised the minimum they could deliver. Fullerton Joint Union will add one more building than was promised. Tustin Unified and Huntington Beach Union are on schedule and mostly within budget.

More than aesthetics is at stake. Repairs and upgrades keep buildings safe, uncrowded and conducive to learning.

Multiple studies show students perform 5 to 10 percentile points lower on state tests when they learn in substandard classrooms, said Glen Earthman, a professor emeritus at Virginia Tech University who recently studied the importance of facilities for the state of Maryland.

"You can have the best schoolteacher in the world, the best curriculum and materials and everything else, but when that room temperature gets up above 76, the learning curve drops," he said.

Still, many school administrators said it was nearly impossible to do everything they planned, especially when they were caught off-guard by explosive price increases.

"You tell me how we can do all the work we needed when construction costs go up by 30 percent across the board?" said Paul Reed, deputy superintendent in Newport-Mesa Unified.

TOUGH TO SCRUTINIZE

Districts vary so drastically in their construction approaches, accounting methods, contracts and budgets, it's difficult for the public to know when money is wasted.

Even districts themselves may not know exactly where money is spent because of the number and scope of projects.

And no single state watchdog agency ensures that districts spend bond money efficiently.

The state audits money it contributes, but responsibility for monitoring usually falls on the shoulders of construction managers, district administrators, trustees and citizens oversight committees.

Required audits can range from inexpensive three-page handouts to pricey 65-page reports.

"There's nobody that dictates over these school districts," said Lisa Sachs, president of Construction Controls Group, hired to help Anaheim Union High School District get back on its feet. "Unless the voters are aware and cause a stink, they won't do more than they have to do."

In Anaheim Union, regular audits reviewed accounting practices only. It took a $300,000 independent audit three years later to show how much money the district had spent and how much remained.

Audits for Placentia-Yorba Linda Unified, on the other hand, checked whether projects were on schedule and on budget. Auditors also made sure that construction managers weren't being paid too much and that change orders were within industry standards.

"If a district hadn't done any construction work in 20 or 30 years like Anaheim and suddenly pass a bond, they don't have a construction culture in the district," said John Perry of San Juan Capistrano, who was director of school design for an architectural firm in San Diego County.

Rising costs for concrete and steel have made projects such as freeways and new homes more expensive. But school construction is even pricier because of the high demand for a limited number of companies with school-building expertise. Schools also face a lack of in-house knowledge and layers of bureaucracy.

"They don't have any memory, no knowledge," Perry said. "Building schools is a damn hard thing to do."

PROMISES TO VOTERS

Some of the districts with the most ambitious promises, such as Santa Ana Unified and Anaheim Union, fell shortest.

In both districts, cost overruns and mismanagement forced officials to drastically scale down plans.

Santa Ana Unified planned 13 schools and 11 renovations, but a January 2003 Register investigation found that district employees and the former school board miscalculated land costs and construction expenses.

The district hired a consultant with no experience in school construction to oversee the program.

Trustee Nativo Lopez was later recalled, in part because critics said his micromanaging kept the program from building schools - an accusation Lopez has denied.

Anaheim officials promised an aggressive timetable that would get Anaheim High School spruced up by September 2004. Today, portables are still there. And parent Joe Diaz can't stand them.

"It's like living in a motel instead of having your own home," he said. "It's the flagship school. It should be the gem of the district."

Districts that fulfilled or exceeded expectations started strong from the beginning. They promised enough to excite voters while keeping expectations realistic.

Fullerton Joint Union High School District officials said their $67 million bond would pay for a new classroom building at each of six schools.

As it turns out, the district is set to receive $102 million in state funds, allowing it to exceed expectations. The district is adding a building at Troy High School for students with developmental disabilities.

"We planned for a worst-case scenario," said George Giokaris, the district's superintendent. "We didn't want to make promises that we could not keep."

COSTS SKYROCKET

Nearly every district that has built schools in the past few years has been hit with unexpectedly soaring construction costs, peaking in 2004.

Some of the most successful districts bid projects ahead of the price increases.

Fullerton Joint Union locked in low prices by using the same prefabricated building designs for most of its six school expansions - designs that were approved quickly. Anaheim Union, like Fullerton, passed its bond in 2002, but community groups and administrators kept changing school designs, delaying construction and driving up costs.

Districts that prioritized were able to complete the most important projects and cut back on nonessential upgrades.

After Centralia School District's bond passed in 2003, officials were shocked by a 25 percent increase in costs, said Assistant Superintendent Marc Forgy. They cut back significantly, slashing roofing upgrades, lunch shelters and window replacements.

"They used the priorities that they had already had in place, and then that was how they cut it," said Helene Kisner, whose four children attended Centralia schools. She served on the district's citizens oversight committee. "With all the input, once they told (community members) that had to happen, they knew. They understood."

OTHER PROBLEMS

On top of higher construction costs, Saddleback Valley Unified was slammed by an unexpected enrollment dip that drained $23 million in state funds, forcing the district to revise its project list. The district had principals trim plans by 30 percent.

New plans released in January allow for some smaller multipurpose rooms and curtail efforts to expand parking or move buildings used for after-school programs.

Declining enrollment hit other districts, too. It was one of many problems leeching away money that officials say they couldn't have anticipated.

In Newport-Mesa, higher prices were the No. 1 problem. But the district ran into other difficulties, including earthquake safety issues at some campuses. Newport Harbor High's Robins-Loats Hall, for example, was ordered shut even as workers arrived to begin renovations.

Officials had budgeted less than $1 million for seismic improvements to the historic building, home to more than a dozen classrooms, and the school's library and theater. But inspectors said the building would have to be demolished.

Now, the district has budgeted $36 million to replace Robins-Loats in Measure F, the $282 million bond passed by voters last year. The district also tacked on dozens of other projects that were scrapped from Measure A because of the rising costs.

In Capistrano, a plan to convert two elementary schools to kindergarten-through-eighth-grade campuses died after officials ran into permit problems. At Ambuehl Elementary, soil testing delayed construction. At San Juan Elementary, officials halted planning because of uncertainty over nearby Caltrans work.

The result: No money is left to convert either school.

LESSONS LEARNED

The lessons of Anaheim Union and Santa Ana Unified have prompted districts to be more careful in their monitoring.

Anaheim Union has a new leadership team, including a superintendent, facilities chief, assistant superintendent of business and director of construction.

Chief Facilities Officer Tim Holcomb, Construction Controls Group President Lisa Sachs and one of the district's lawyers spoke at a national school construction summit Thursday about the district's shortcomings and how it's getting back on track.

"I'm sure there are occurrences very similar to Anaheim's all over the country," said Bruce D'Agostino, executive director of the Construction Management Association of America, which ran the conference.

"These 'unsophisticated owners' - they're great administrators, teachers, but they're not in the school-building business, so they need help."

And news of problems at Anaheim Union prompted Anaheim City School District Trustee Jerry Silverman to request a detailed report from the district's staff.

Silverman asked for a board session on how Anaheim City deals with change orders and a report showing how much money had been spent and how much was left.

"We felt good about it," Silverman said. "Not only are we in good stead with our current bond money, but we have processes there. We'd catch it very early in the game."

Anaheim Union's independent audit found the district had no procedures to contain and manage costs, although its change orders were within the industry standard.

Former facilities officials tried to stretch dollars by moving quickly. They leased portables at Anaheim High School right away. But they hadn't done enough planning and needed several design changes.

Construction still hadn't started by 2005, when independent auditors revealed the district's management problems. The portable leases at Anaheim alone had wasted $421,000.

Sachs said other districts' vigilance is a good sign.

"I've seen a difference just as a result of Anaheim where people are more cautious," she said. "I hope it wakes folks up."