School Renovations: The Once and Future of the DC Auditor’s Report

In June, the DC auditor released a scathing report on modernizations of DCPS schools, noting that two mayors and DGS (the city agency overseeing DCPS modernizations) failed to comply with the School Modernization Financing Act of 2006 in a variety of ways, including best practices, cost savings, and value.

In July, DC’s city council held a hearing on the report, wherein DGS was roundly condemned (even by councilmembers who had annually approved its school renovation budgets).

Amidst the angry voices, one held out hope for a better future rooted in the past: Michael Siegel.

A DCPS parent and financial consultant, Siegel was a member of DC’s Public Education Finance Reform Commission, providing fiscal analysis for the original Modernization Act, which designated a pathway toward modernizing all DCPS schools by 2021.

Today, 24 schools remain untouched by significant work and will not be done by the original deadline of 2021. Moreover, because the debt cap is looming, the remaining unrenovated schools will not enjoy the financing available for already renovated ones.

It didn’t have to be this way.

As Siegel pointed out in his testimony, modernization advocates in 2006 sought bond financing for modernizations to DCPS schools, most of which had languished for 50 years without substantive upgrades. That bond financing was supposed to be backed by a dedicated revenue stream of inflation-adjusted, incremental sales tax revenues. The council passed the act with those provisions, with a budgeted time frame of 15 years to renovate all DCPS schools. Overseeing the work was a review committee consisting of parents, teachers, and city officials, providing critical oversight and accountability.

But shortly after mayoral control of schools, the review committee was disbanded and the dedicated revenue stream stopped. Funding for modernizations reverted to ad-hoc bond financing without compressing the schedule as needed or adjusting for cost inflation.

Among other things, the June 2015 auditor’s report made clear what transpired since: very little oversight and accountability for modernizations, including prioritization; cost estimates and overruns; and quality.

In his testimony in July (Recommendations for Improvements to Administration), Siegel highlighted the difficulty of adequately funding school renovations when current evaluations of modernization costs per square foot are greatly underestimated. He noted that construction costs in DC are higher than average due to the fact that most school renovations are of existing buildings with deep, long-ignored needs, often with constraints imposed by historic districts or environmental remediation.

Siegel also highlighted how double-counting of charter facilities allocations means less money overall for DCPS facilities. Instead of having renovations overseen by DGS, charters undertake their own, using an annual per pupil facility allocation of $3000, which amounts to about $100 million per year for all charters.

That per pupil facilities amount is determined, Siegel noted, by separating out principal payments and depreciation expenses. But those costs are neither separate nor distinct, with best accounting practices calling for only one or the other to be charged, since both are a charge for recovery of capital. Siegel estimated that the double counting results in about $30 million that might otherwise be available for DCPS modernizations.

The hearing was filled with great ideas for the future, including a recommendation by Siegel that the council accelerate modernizations to complete all DCPS schools within four years, while calling for clawback provisions backed by a performance bond in contracts to ensure compliance with required documentation.

And, as others testified, Siegel recommended that the council restore the review committee, along with the services of a value-engineering firm, to ensure a politically neutral body of oversight.

Going a step further in her council testimony, Nancy Huvendick, DC Program Director at the 21st Century School Fund called for a master education plan that would go beyond looking at DCPS’s facilities’ needs to see what public schools exist, where, and how they are enrolled, since DCPS itself enroll a little more than half of all public students in the city.

In fact, a master education plan sounds like something the task force for charter and DCPS coordination just started by the deputy mayor for education should tackle right away.

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