Published Online: October 30, 2006
Published in Print: November 1, 2006, as L.A. Building Program Faces Possible $2.5 Billion Shortfall

L.A. Building Program Faces Possible $2.5 Billion Shortfall

Escalating costs and loss of state aid could drive price tag up.

Managers of the Los Angeles school district’s massive program to build 160 new schools and expand and repair hundreds of existing campuses are forecasting a possible funding shortfall as high as $2.5 billion, just as the multiyear project approaches its halfway point.

Escalating construction costs, along with a steady decline in enrollment that means a loss of state aid, could drive the price tag for the entire building program beyond its $19.2 billion budget, said Guy Mehula, the chief facilities executive for the Los Angeles Unified School District. The facilities project is the largest ever undertaken by a U.S. public school system.

“We have seen bid increases go up as much as 167 percent,” Mr. Mehula said. “There is insufficient capacity in the contractor market in Southern California, and that is really driving costs up.”

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Los Angeles voters have approved four bond measures, totaling $12.5 billion since 1997, to build new schools and repair old ones in the overcrowded district, which has had to rely on year-round scheduling for about half its 800 schools. Matching funds from the state make up the balance of the construction project’s budget and are based on a formula that is tied to student enrollment.

“So as the price goes up, the state formula only gives us a per-pupil grant, so all of a sudden, instead of getting half a new school’s costs covered by the matching funds, it will be more like 28 percent,” Mr. Mehula said.

Enrollment has dropped for the last three years, Mr. Mehula said, with this year’s official count expected to be about 708,000 students, compared with 747,000 in 2003-04. That’s 4,000 fewer students than had been projected, he said, and about 19,000 fewer than last school year. Rising housing costs in the Los Angeles area have driven many families with children outside the school district’s boundaries in recent years, he said.

A Warning

Superintendent Roy Romer, who will soon retire after six years, is widely credited with shepherding the school construction boom in Los Angeles Unified. He was the one who delivered the news late last month of a possible shortfall to the citizens’ committee that oversees the building program.

Mr. Romer offered strategies for minimizing the shortfall, including using other bond money not yet earmarked to build up a reserve, and pushing California legislators to change the state formula used to determine matching funds.

The superintendent told the bond oversight committee that scaling back the program should not be a consideration.

His warning comes just before a new superintendent, retired U.S. Navy Vice Adm. David L. Brewer III, takes over, and Los Angeles Mayor Antonio Villaraigosa prepares to assume a large role in running the sprawling school district.

Since 2000, the district has built and opened 65 new schools; 12 are currently under construction, and 29 projects will be put out for construction bids over the next several months, said Mr. Mehula.

By 2012, the completed building campaign will have added 170,000 additional seats.

“The goal is to get every student back to a traditional, two-semester calendar and back to a school in their neighborhood,” Mr. Mehula said.

Still, roughly 200,000 students will attend school in portable classroom buildings even when the project is complete, he said. Some middle schools will still have as many as 2,500 students, he said, while some high schools will remain as large as 3,000 students, though many are designed to house small learning communities.

PHOTO: Los Angeles schools superintendent Roy Romer, shown above in 2005, talks while at the site of an elementary school that was under construction.
—File Photo by Ric Francis/AP

Vol. 26, Issue 10, Pages 18-19

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