Education Funding

School Building Projects Face Fiscal Uncertainty

By Joetta L. Sack — January 15, 2003 4 min read
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Arizona’s school construction problems may get worse before they get better. The state faces a looming court-ordered deadline to repair or replace hundreds of schools identified as structurally inadequate for student learning. But shrinking revenues have left the agency charged with doing that work almost broke.

The Arizona School Facilities Board is hoping the cash-strapped legislature will allow the board to raise enough money through bonds to help it complete the job. Meanwhile, the board is also hoping for state money to sue contractors who left districts with shoddy work and materials.

To finish the repairs ordered by a state superior court as part of a school finance case, the board needs some $330 million. That includes $280 million to finish work on more than 6,000 repair projects, a task that will cost a total of $1.3 billion, about $100 million more than expected. Unrelated to the court order, the board is overseeing 88 new schools to house the state’s fast-growing student population, and may need another $50 million to finish that job.

Created by the legislature nearly five years ago, the facilities board oversees school construction and repairs that are paid for with state funding, including revenue from sales taxes that were increased for the facilities initiative.

Now, the board proposes that the state issue school construction bonds to finish the work, which under the 1998 settlement approved by the court must be contracted for by this June, and then completed by June 2004. The board’s executive director, Edward E. Boot, said he was “95 percent confident” that the legislature would allow the board to authorize the bonds. If not, he acknowledged, the work likely will be halted—and another lawsuit filed.

The board has not been without controversy. Some say it has made great improvements to a school construction system with many flaws. At the local level, though, some district leaders have expressed qualms about giving up so much control over their projects. Others say that the effort was not needed and contend that it has been too expensive.

“We couldn’t afford it” in 1998, said Randall Gnant, a Republican and the outgoing Senate president, who argued for a cheaper way to meet the court order.

In the midst of the current fiscal crisis, which includes a projected budget deficit of about $1 billion for fiscal 2004, the legislature will have an even tougher time finding the funds for the board’s projects.

Building Pressure

But Timothy M. Hogan, the executive director of the Phoenix- based Arizona Center for Law in the Public Interest, who represented the districts that won the original settlement, said the legislature must find a solution, or risk another lawsuit.

“This program is required under the state constitution, and they can’t just decide when they don’t have the money that they’re not going to comply with the state constitution,” Mr. Hogan said. “We’ve got a first lien on the state treasury.”

And those districts that were unable to raise enough property-tax revenue to build and remodel schools appreciate the board’s work.

“We’re happy with what’s going on,” said Gary Knox, superintendent of the 5,800-student Crane Elementary district in Yuma, Ariz., where the board is rebuilding one school, building additions to others, and putting new roofs on its eight facilities.

At the same time, the facilities board is also trying to locate communities in which shoddy work has been performed on schools, and wants the legislature to give it money to hire a lawyer to sue the contractors responsible for the faulty work.

Mr. Boot said the number of targeted construction sites is relatively small—fewer than two dozen out of the more than 6,000 projects—and the repairs mainly deal with leaky roofs, air conditioning and duct problems, and other mechanical issues.

Still, he added, “there are numerous cases where school districts received work that was inferior, and we’re going to try to collect on that.”

All of those jobs were finished five to eight years ago, before the facilities board was formed to oversee such projects. The board does not have an estimate for how much money might be recouped. “We’re asking that the legislature address the issue of funding for the purpose of hiring counsel to bring action against contractors,” said Kathleen English, the board’s spokeswoman.

Some districts have routinely looked to the state to come back and repair contractors’ poor work, rather than take action against the contractors, she said.

The board could run into problems getting districts to cooperate with its proposed lawsuits, Ms. English acknowledged, because many rural districts had only one or two contractors to choose from for their renovation projects. Also, in small towns, school officials are reluctant to bring lawsuits against people they know.

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