Lindbergh officials confident Prop R ’06 work within budget

No overruns associated with projects, chief financial officer says

By MIKE ANTHONY

Lindbergh School District officials are confident districtwide building improvements being funded by the Proposition R 2006 bond issue will be completed on time and within budget.

Lindbergh voters in November 2006 approved Proposition R, described by administrators as a no-tax-rate-increase $32 million bond issue. Approval of the measure did not increase the district’s debt-service tax rate, which remained unchanged at 38 cents per $100 of assessed valuation. The debt-service tax rate was extended for a six-year period that will end in 2026.

Proposition R 2006 received 16,398 “yes” votes and 7,206 “no” votes. While a four-sevenths majority — 57.14 percent — was needed for approval, the measure garnered 69.47 percent of votes cast.

Projects being funded by the $32 million bond issue include new roofs, the replacement of rooftop HVAC units, classroom doors that lock from the inside for elementary schools, fire alarms and security cameras in most buildings, and renovations and additions to Kennerly and Sappington elementary schools.

Two district officials — Chief Financial Officer Pat Lanane and Executive Director of Planning and Development Karl Guyer — discussed the budget for Proposition R 2006, including the cost of change orders, during an interview last week.

“… We have no overruns,” Lanane said of the Proposition R 2006 projects. “Every job was bid and they’ve come in at that bid … We’ve been very successful in meeting budget and we’re going to meet budget on this project. I can tell you where we sit right now, there’s no doubt in my mind whatsoever about that.

“But the reason that we meet budget so well is that when we bid these jobs, we bid out with a lot of other options. Some are actually part of that. Some are options that we know that we can get. You know, when you got the wall open, yeah, we will put valves on those pipes. Or if we don’t like the way the budget looks at the time that we do that, it’s like: No, we’ve lived without them. We’re going to live without them in the future …,” he added.

Guyer discussed how the contingency amount for the Proposition R 2006 projects was developed, saying, “… We bid a series of projects. I totaled what those bids were, put 10 percent against it and that became our initial contingency … We then obtained some other bids. I then totaled what those were. Took 8 percent of the total. So I actually kind of shaved back from 10 percent … I shaved it back down to 8 percent, took that — less the amount that we had already encumbered — giving me again a starting point …”

Of the total contingency of $1,998,932, change orders that have occurred during construction have left $195,509 in contingency funds remaining with one project left to bid — a wall-strengthening project at Sperreng Middle School. Of the original contingency, $1,306,471 has been spent, $124,281 is committed to change orders to be processed for January, $217,270 is committed to change orders being refined for processing in January and $155,401 is committed for all remaining known issues in various stages of processing.

“In no way, shape or form are we experiencing overruns,” Lanane said. “What we have is pretty much the normal change-order procedure that we have budgeted for and we believe this project will fall well within the adopted budget.”

Those change orders involve such issues as increases or decreases in the scope of a project, unforeseen conditions, additional costs due to scheduling, code issues and overtime. One reason for the number of change orders, Lanane said, is because many of the Proposition R 2006 projects involve renovation work.

Compared to Proposition R bond issues approved in 1995, 2000 and 2003, the percentage of change orders for Proposition R 2006 currently is less than those previous bond issues. Change orders for Proposition R 2006 total 4.08 percent of contracts awarded compared to 6.53 percent in 2003, 6.12 percent in 2000 and 5.16 percent in 1995.

District officials and Board of Education members take change orders seriously, Guyer wrote in a Dec. 19 overview of Proposition R 2006 change orders.

“… The Lindbergh School District and the Board of Education take all change orders seriously. All charge orders are reviewed and the costs are scrutinized in detail. Only those that are deemed to be in the best interest of the students and community are recommended and authorized,” he wrote.

The construction manager for Proposition R 2006, McCarthy Building Cos. Inc., does not profit from change orders, Lanane said.

“… McCarthy has no financial interest in change orders. They don’t get paid any more if there’s change orders or any less …,” he said. “They’re on a percentage of the original scope of work … They’re not making anything on these change orders … Their only motivation is to be sure we get the very best price possible and that’s where having people who are in the construction business tell you what that change order really is worth is very valuable to the public because they’re not getting ripped off as I think some people like to think about on change orders. They’re paying the true cost of that … McCarthy, they’re pricing it as if they had to do it on a job. So I think it’s a very fair way of doing that.”

Lanane and Guyer said the remaining contingency amount of $195,509 actually is a bit “misleading.”

“The other thing that makes us feel very good about where we are, while you see this contingency going down, down, down, it’s very misleading. We know in the total budget, there’s a lot of money that we will be bringing back to this in probably February …,” Lanane said, noting bids still have to be awarded for one project.

“We have not brought any of that money forward. So we’re under budget by some considerable amount and we still have a bid to go, I believe. And so I don’t want to say too much until we get that one, but we are going to be in very good shape on this budget. We’ve been so conservative. We’ve been holding that money back. We could have just stuck it in here and then readjusted it after the next bid … We’ll have a true number after this next round of bids, but there’s a considerable amount of money that is not on any of these pages where we are under budget under our budgeted bid amounts,” he added.

After bids are awarded for the one remaining project, Lanane and Guyer anticipate funding will be available for additional projects that the Board of Education could consider that would fall within the scope of work promised to voters as part of Proposition R 2006.

“… We actually think we’ll be able to get to a second list of items …,” Lanane said.

The bottom line on the budget, Guyer said, is he feels “very comfortable about where we are.”

“… One of the most salient issues is that we are under our bids in total by hundreds of thousands of dollars. So in essence …. when Pat was talking there is some additional funding that we have available, that is true additional funding …,” he said.

Lanane said, “… We’re very pleased where we are right now in terms of the budget of this project and we believe — and I probably shouldn’t say it — but we believe we’re going to be in a position to come back to our board to allow them to authorize some additional work that really will intensify the scope that we originally talked about.”