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On Aug. 11 the Finance Committee of the District 65 School Board began preliminary discussions about asking the voters to increase the District’s funding for capital projects in a “capital referendum.” While the Committee is a long way from settling on a number, the estimated cost of all projects put on the table exceeds $100 million. It is likely that the number will be chiseled down.
Board President Tracy Quattrocki also raised the prospect that the Board may need to ask voters to approve an increase in property taxes to fund the District’s operations if the State legislature shifts a portion of the pension costs from the State to school districts and if the State revamps the way it funds education.
A. Capital Projects
For the past eight years, the District has funded capital projects, such as classroom additions, cafeteria expansions, secure entrances, roof and masonry work, boiler replacements and technology, through its Debt Service Extension Base (DSEB), which has not required voter approval. Many of these projects were to accommodate increased student enrollment, which has grown from 6,096 in FY’07 to 7,234 in FY’15.
“Despite the number of projects that have been addressed, there are still more capital projects that need to be funded and completed,” said Mary Brown, assistant superintendent for business services. “We don’t have enough in the debt service to really continue at the pace that we feel we need to.”
The total estimated cost of all potential capital projects on the table, including for buildings and technology, is about $106 million. The District’s borrowing capacity under the DSEB is now estimated at about $8 million, and that amount increases at about $2.5 million per year. The DSEB would thus enable the District to borrow about $20 million during the next five years, some of which Board members have said they want to keep as an emergency reserve.
Last Spring, the Finance Committee asked administrators to prioritize the capital projects that had been identified as life/safety work, roofing and masonry work, or that were included in a standardization report. The list of potential projects expanded in conversations with principals, said Dr. Brown.
TMP Architecture, the District’s architects, and Nick-Papanicholas of NEPCO, the District’s construction manager, did sketches and rough cost estimates of the larger projects on the list, said Dr. Brown.
John Castenalla of TMP and the District’s administrators then reviewed the list of potential building projects and sorted them into three priority levels. The total estimated cost to do all of the potential building work is $93 million, with about one-third the cost falling in each of the three priority levels.
• Priority #1 items, with an estimated cost of $31 million, are the most critical and include improving site and building safety; masonry restoration; roof replacements; and other critical infrastructure needs, said Dr. Brown.
• Priority #2 items, with an estimated cost of $29 million, are needed upgrades to existing infrastructure and program spaces to help enhance instruction and include replacing aging unit ventilators and air handler units; adding air conditioning in gymnasiums and middle school auditoriums; ceiling and lighting replacements; converting middle school science classrooms into STEM labs; and building additions to create stand-alone student cafeterias, and other projects, she said.
• Priority #3 items, with an estimated cost of $33 million, continue the infrastructure upgrades such as classroom cabinet, countertop, and sink replacements; updating washrooms and toilet fixtures; along with other instructional enhancements through remodeling and/or space additions.
The building costs do not include the estimated cost for technology for the next four years, which totals $13.4 million.
Board Members’ Reaction
Several Board members were taken aback by the scope of the proposed projects and the costs.
“When I first looked at these numbers, I was quite startled at how high they’ve gotten from what we’d really like to do with our buildings,” said Ms. Quattrocki. “Sometimes when you approach a problem and you have a wish list of what you’d like to accomplish, you’re not thinking of what you can accomplish within a certain budget, which might require cutting costs and a compromise from an optimal solution.
“So my concern is we’re compiling a best case scenario for these issues and we might not be thinking as realistically about where we might want to cap it.”
She added that in the past administrators came to the Board with proposals that had “very expensive” cost estimates, and the Finance Committee “ended up with a much cheaper option.”
The optimal solution “may be beyond what we can ask the public,” she continued. “In most cases, there are cheaper options.”
As an example, Ms. Quattrocki referred to the $ 2.2 million cost for updating intercoms and PA systems in the schools. “Is $2.2 million needed to make them all functional?” she asked.
Don Stevenson, building and grounds coordinator, explained that updating the intercoms was a safety issue and would require rewiring parts of the buildings, many of which are over 100 years old.
Finance Committee Chair Richard Rykhus framed the issue as “optimal versus acceptable,” and said he thought the $2.2 million looked high. He questioned whether there were other options, such as using wireless technology.
Ms. Quattrocki also questioned the estimated cost of $ 21 million for classroom additions, saying, “We thought we dealt with this when we did the expansions at Haven and Nichols. Have we matched them to concrete enrollment issues?”
Dr. Brown said many principals would like to have additional room for overflow and specialist staff who serve the schools. She added that Lincoln was the only school with a need to address increased enrollment.
Mr. Rykhus asked administrators to provide separate cost estimates for 1) schools that needed additional classrooms to accommodate increased student enrollment and 2) schools that desired additional space for other reasons. He also asked staff to provide additional details and alternatives for proposed projects in this category.
Board member Suni Kartha added that the Board should look at other alternatives to address increased enrollment such as by marketing the magnet schools, by increasing class sizes, by implementing cap and transfer, and redistricting.
Ms. Quattrocki said the Board considered many of those alternatives in the past.
Other Board members raised questions about installing a proposed turf field at Chute, the increased cost of addressing the water detention field at Lincoln, whether the proposed STEM labs were aligned with the curriculum, the need for replacing ceilings and installing new lighting, and increasing the priority of converting cafeterias to multipurpose rooms.
Ms. Kartha suggested that the District put together a “Plan B,” which would set out what the District would do if a referendum did not pass.
It is anticipated that administrators will prepare a revised proposal that takes into account the Board’s comments and bring it back to the Finance Committee at a subsequent meeting.
Paul Goren, Superintendent of District 65, said he would at some point make a recommendation on the projects and costs to be included in a capital referendum. He said he would like to do this after additional conversations with the Finance Committee and after obtaining more feedback from stakeholders.
Mr. Rykhus said he hoped the Board could reach a decision on a capital referendum by December. If the Board decides to place a referendum on the April 7, 2015 ballot, it will have to do so by January, he added.
B. An Operating Referendum
The District is projecting mounting operating deficits and the deficits may increase if the State legislature shifts more pension costs to school districts than currently being assumed and if the State revamps the way in which it funds education and cuts funding to District 65. See article on page 23. Under these scenarios, District 65 may be forced either to make substantial reductions in teachers and staff, or to seek voter approval to increase property taxes to fund operations in an operating referendum.
Ms. Quattrocki asked if the Board should consider whether to place an operating referendum on the ballot in the same election it places a capital referendum on the ballot.
“Do we tie this together? Do we put one on the table before the other? I really think we need to have a comprehensive conversation,” she said.
Dr. Goren said, “If we think there may be a need to go forward on an operating referendum, I think we want to bring that forward and talk about the magnitude of that and what would that look like to a typical taxpayer in Evanston/Skokie.