What Doesn’t Kill You Will Make You Stronger: How to Make Program Adjustments Mid-Stream

1. What Doesn’t Kill You Will Make You Stronger: How to Make Program Adjustments Mid-Stream Moderator Lyn Gruber, Principal, Koppel & Gruber Public Finance Panelists Rob Ball, Deputy Superintendent, Woodland Joint Unified School District George Durnay, Director of Maintenance and Operations, Vacaville Unified School District Mark Rosson, Principal, Capital Program Management

2. How Did We Get Here? • Unprecedented Construction Cost Inflation • Past (2004 & 2005) • Future (2006 ~ 2009+) • Insufficient OPSC/SAB Annual Cost Index Adjustments • Declining Enrollment • Enrollment Shift • Demographic Changes • State Eligibility Changes

3. So What? • By the fact that you are sitting in this room, you have a vested interest in ensuring the financial success of your district’s, or your client’s capital outlay program. • Planning, developing, explaining, maintaining, calibrating, and administering project budgets within a changing capital outlay program is a required skill.

4. Rob BallDeputy Superintendent Woodland Joint Unified School District • K-12 school district located mostly in Yolo County west of Sacramento. • 10,500 enrollment • 22 schools • District-wide construction program • New construction • Modernization • Reconfiguration • State and local GO Bond funded • Changing Demographics

5. Woodland JUSDCurrent Environment • Some schools are underperforming • Residential development slowing down, but mitigation agreement requires the District to build two elementary schools • Significant capacity is present at existing schools • Ongoing liability of District Office lease • Recent changes in Administration

6. Woodland JUSDFacility Issues • The WJUSD passed Measure T ($40 million) in 1999. • Pioneer High School • Multi-purpose rooms at four schools • Woodland High School second gym • Modernization of existing schools • Enrollment stable or declining in the western portion of the District • A 4,000 unit development has broken ground in the eastern portion of the District • The District Office is located in a leased commercial building • New educational program proposals will impact facilities

7. Woodland JUSDNew Construction • Eligibility to build one new high school and qualify for State construction funds • 1998 HS construction estimate = $45,000,000 • Build 3 Multi-purpose rooms = $3,036,836 • Build 1 Media Center = $986,147 • Total needs = $44,022,983 • Total State match = $19,845,486 for high school only

8. Woodland JUSDModernization • 14 schools qualify for matching funds in State Modernization Program • Needs at 10 Elementary = $26,067,794 • Needs at 2 Junior High = $11,841,163 • Needs at 2 High Schools = $13,796,824 • Total needs = $51,705,781 • Total State match = $21,845,106

9. Woodland JUSDThe New Reality • New Construction • Original Budget = $45,000,000 • High School Phase I & II = $43,694,011 • 2 Multi-Purpose Rooms = $3,698,668 • Did not build: • High School Phase III = $8,500,000 • 1 Multi-purpose Room = $2,000,000 • 1 Media Center = $1,750,000 • Total Costs $59,642,679

10. Woodland JUSDThe New Reality • Modernization • Original Budget = $24,000,000 • 13 schools modernized = $36,928,478 • Did not modernize • Continuation High School = $2,000,000 • Reduced scope on all other projects • Total Costs = $38,928,478 • Grand Total Shortfall = $14,880,565

11. Woodland JUSDChange in Course • Prepare comprehensive Strategic Facilities Master Plan • Capacity analysis • Development projections • Student projections • Facility options and costs • Public input process • School closures and/or reconstitutions possible • Consolidation of District support facilities • Relocation of District Office

12. George DurnayDirector of Maintenance and OperationsVacaville Unified School District • K-12 school district located in Solano County (between Sacramento and the Bay Area) • 15,000 enrollment • 17 schools • District-wide construction program ($120 million) • Modernization • New High School • State and local GO Bond funded

13. Summary of Measure V $101.3 million bond passed by 2/3 vote in 2001 • For renovating existing schools & new High School construction • Goals were to modernize, upgrade & ease classroom overcrowding • Designed to leverage local funding to secure state funding available for school construction • Citizens’ Oversight Committee has met frequently since January, 2002 to monitor progress • Receive detailed reports on every project, every expense

14. Accomplishments to Date • Renovations complete at eight older schools Alamo, Ulatis, Vacaville HS, Jepson Middle, Markham, Hemlock, Sierra Vista and Padan • Renovations still to do on seven schools Will C. Wood, Fairmont, Orchard, Vaca Pena, Callison, Cooper and Browns Valley • Renovation program is more than halfway completed. District worked on the oldest and most distressed facilities first. Still following the original phasing on projects.

15. THEN In 2000, annual inflation rate of 4% was used to project costs for Measure V This was the standard for all public and private sector planning Inflation for schools is higher because we have to build to higher standards than residential and commercial building NOW In 2004, inflation on building costs was as much as 25% in one year In 2005, the inflation rate was at least 20% Annual inflation is projected at 12% - 18% over next 5 years Construction Cost Inflation

16. Impact of Inflation on VUSD Projected cost of new high school Funding sources for new high school (Source: Murray & Downs Architects) Current funding sources are not enough to build a new comprehensive high school even at reduced enrollment. We are short at least $5 million for a smaller comprehensive high school

17. Delay Erodes Buying Power

18. THEN In 2000, new home starts and subdivisions were projected to take place soon North Village to start in 2001 East of Leisure Town Road to start in 2010 Almost 500 homes projected in Rice/McMurtry area Lagoon Valley to be built by 2010 We thought this would add about 2500 new students to VUSD NOW In 2005, housing growth is much slower than anticipated In 2005, 322 single-family building permits pulled within VUSD area(Source: City of Vacaville Building Division) 45 were for North Village 156 were for Reynolds Ranch (mostly planned executive homes) Residential Development

19. NOW In 2005, three elementary schools have closed. Over $10 million in general fund budget cuts have been made. VUSD continues to make cuts in staffing as long as enrollment continues to decline. School District Finances THEN In 2000, the district budget was healthy and growing

20. This Raises Key Questions • Is the original plan for using Measure V bond funds still prudent and appropriate for today? • If not, how can we best use remaining bond funds, developer fees and state monies to improve school facilities for all students? • How do we engage the community in helping the District answer these questions?

21. Measure V Sounding Board Public awareness, outreach and an opportunity for people to share their views and ideas about future facilities planning for Vacaville USD

22. Goals & Objectives • Build broad-based public awareness about new challenges facing VUSD building program • Offer opportunities for individuals and groups to share perspectives, concerns, options and ideas • Determine public priorities and support for future uses of Measure V bond funds • Enable the governing board to make the most prudent decision for the future

23. Community Engagement Process • Joint meeting of Citizens’ Oversight Committee and Measure V Campaign Committee (Friends of Vacaville Schools) • Citizens’ Oversight Committee discussion since 2004 • Letters to every family with secondary students • Handouts at all elementary schools and departments

24. Community Engagement Process • Civic group/service club/individual meetings • Staff briefings/input sessions at most schools • Met with editors and reporters, issued news releases • District website and Spanish translations available • Five study circles with over 250 participants

25. Analysis of Decision Options Do not issue more Measure V bonds Measure V Decision Alternative Plans Build a new high school Invest Measure V funds in current schools: issue full or partial bonds Use Measure V to enhance Vaca High and Will C. Wood Restore Phase 3-4 scoped projects to escalate for inflation Plan A Plan B

26. Plan A

27. Plan B

28. What was the Final Outcome? • February 9th – Special Board Meeting / Public Forum: • February 16th – Board Meeting:

29. Mark RossonPrincipalCapital Program Management, Inc. • Capital Outlay Program Manager • 20 years of experience • $1 billion of construction value managed • Helps many school districts with implementation and adjustments to capital outlay programs

30. Communication is Key • Board of Education • Bond Oversight Committee • Civic Groups • City Council • Mayor’s Office • Community Study Circles • The Press • District Website

31. What is a Capital Outlay Program ? • Development of a comprehensive program for the design, development and implementation of a large scale multi-project facilities program, generally occurring over several years

32. ProgramLevel Budget Components Program Budget: • Project Budgets • Escalation • Program-Wide Expenses • Loss Reserve • Program Contingency

33. Site Costs District and Agency Costs DSA, CDE, DTSC, LCP, CEQA, Utility providers Consultant Costs A/E Legal Community Outreach Hazmat Bid Costs Printing and Distribution Advertising Construction Costs Construction Support Inspection Special Testing Construction Management Security Furniture and Equipment Miscellaneous Project Costs Interim Housing Moving and storage Training/Commissioning Contingencies Construction Contingency Project Contingency Owner Contingency Typical Project Budget

34. Capital Outlay Program PROGRAM BUDGET Loss Reserve Project Budgets Escalation Program-Wide Expenses Program Contingency Project C, D, E... Project B Project A 100.00000 Site Costs 200.00000 District and Agency Costs 300.00000 Consultant Costs 400.00000 Bid Costs 500.00000 Construction Costs 600.00000 Construction Support Costs 700.00000 Furniture & Equipment Costs 800.00000 Miscellaneous Project Costs 900.00000 Contingency Costs 100.00000 Site Costs 200.00000 District and Agency Costs 300.00000 Consultant Costs 400.00000 Bid Costs 500.00000 Construction Costs 600.00000 Construction Support Costs 700.00000 Furniture & Equipment Costs 800.00000 Miscellaneous Project Costs 900.00000 Contingency Costs

35. Solutions • Establish Program and Project budgets • Continuously update budgets • Identify funding shortfalls early • Identify and maximize alternative funding sources • Develop scope based priorities • Prepare an implementation plan (Roadmap)

36. Solutions • Program Acceleration • Bridge Financing (COPs) • Community Facilities Districts (CFDs) • Negotiated with Developer • Be prepared for change • Communicate, communicate, communicate

37. Communication Does Work!!! • From the Vacaville Reporter: “The District has done a phenomenal job of gathering opinions on the matter. Since November, officials have held five forums and more than 30 meeting with public groups and organizations to solicit input. The options featured in Plans A and B reflect the preponderant feedback gathered.”

38. Questions?