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Prop P budget focus of workshop session

Mehlville School District Board of Education members and administrators will conduct a budget workshop today — Sept. 11 — on the district's Proposition P districtwide building improvement program.

The Proposition P budget workshop will begin at noon in the boardroom of the Administration Building, 3120 Lemay Ferry Road.

The board has been discussing a proposed revised Proposition P budget totaling more than $86 million since June. In July, the Board of Education referred the proposed revised Proposition P budget to the Proposition P Oversight Committee. During a July 30 meeting, Oversight Committee members said they wanted to be apprised of all expenditures relating to the Proposition P program. Oversight Committee members also recommended the Board of Education establish a firm budget for the districtwide building improvement program.

The Board of Education was scheduled to consider final approval of the proposed revised Proposition P budget last month, but took no action, instead deciding to have board members meet with administrators and hammer out formatting of the revised budget during a workshop session.

The proposed revised Proposition P budget presented to the board Aug. 25 by Randy Charles, assistant superintendent for finance and the district's chief financial officer, included an additional $1 million in uncommitted contingency funds that would have brought the cost of Prop-osition P to more than $87 million through mid-2008. However, board members re-quested the additional $1 million be eliminated from the budget, according to Superintendent Tim Ricker.

"So now I think the emphasis is for us to get a small group of the board together with Randy and I and just finalize it,'' Ricker said of the revised Proposition P budget during a recent interview with the Call. "Some of the areas that they told us they wanted removed were in the areas of contingency, where Randy had entered in a million dollars because he knew that we may be using it. They thought that was not particularly what they wanted, so that was going to be eliminated ...''

District voters in November 2000 approved Proposition P, a nearly $68.4 million districtwide building improvement program funded by a 49-cent tax-rate in-crease. Under the proposed revised Proposition P budget, the total cost of the districtwide building improvement program and related projects would be $86,090,548 through June 30, 2008.

Meanwhile, current district projections indicate the 49-cent tax-rate increase will generate nearly $26 million more over 20 years than what is required to retire bond-like certificates of participation issued to fund the Proposition P improvements.

In October 2001, the Board of Education voted to approve a $72.4 million budget for Proposition P. Interest on the bond-like certificates of participation issued to fund Proposition P allowed the construction budget to increase to $72.4 million, which included a nearly $3.5 million master contingency.

Current estimates indicate the 49-cent tax-rate increase will generate $170,165,506 through 2022, while the amount needed to retire the certificates of participation is projected at $144,346,224 — leaving a surplus of $25,819,282 in district capital funds.

The proposed revised Proposition P budget of $86,090,548 includes the board-approved budget of $72.4 million, plus another $13,690,548 in district capital funds. To date, a total of $4,898,567 of district capital funds has been spent on Proposition P-related projects.

Ricker said the bottom line of the revised budget will not change during the workshop session.

"It's just formatting stuff,'' he said. "The thing that I know that's not going to change is, one, it's not $68 million, OK? Right? We all are clear on that, that it is $72.4 million, which was the original budget. That the $72.4 million on projected final costs with increased proportional dollar figures for projects yet to be completed runs it to the $86.09 million.''

Charles has cited three reasons for the use of district capital funds, including code requirements, hidden conditions and original budget estimates that were lacking in detail. Those code issues and hidden conditions that have resulted in extra cost to the district also have resulted in extra work for the project's construction manager, the McCarthy Construction Co., and the architectural firm for the project, Dickinson Hussman Architects, according to Charles.

Under the board-approved original Proposition P budget, McCarthy's fee for serving as construction manager for the project was $2,835,000. However, in the cost of Prop P-related projects presented to the board, McCarthy is projected to be paid an additional $3,321,212 for "general conditions.'' To date, the company has been paid $2,534,331 for general conditions.

Similarly, under the board-approved Proposition P budget, the final costs of fees paid to Dickinson Hussman Architects is projected at $4,491,039. To date, however, the district has paid $4,198,957 to Dickinson Hussman Architects.

In addition, in the cost of Prop P-related items presented to the board, Dickinson Hussman Architects is projected to be paid an additional $200,000 for "general conditions.'' To date, the company has been paid $148,261 for general conditions.

During the Aug. 25 meeting, board Vice President Matthew Chellis said, "If you look at the projected final cost, a total of $87 million, it looks like we're $14.7 million over budget. Now we've known for some time, we've been told by Dwight (Dickinson of Dickinson Hussman Architects) from early on that when they got into the roofs, which is the biggest line item here, when they got into the roofs that they were in far worse condition than they had thought and that it would cost a lot more than the $2.6 million that was originally budgeted to fix the roofs. We know that we have to do the roofs right ...

"The question that I have is about the second largest item and that's McCarthy's fees and general conditions. Why is it that we're $3.3 million over our original projections on the fees and general conditions?'' Chellis asked

Charles said, "Back when we first encountered the problems with the sprinklers and we encountered unexpected overages on some other projects, but primarily the sprinkler systems, we made a conscious decision to pay for the sprinklers with the COP funds ... and let's pull McCarthy's general conditions and also Dickinson Hussman's general conditions, pull those out of the COP side of the equation and pay for those with the capital funds ...''

Board member Rita Diekemper asked, "What was their original budget total?''

Charles said, "(The) original budget total for McCarthy was $2,835,000.''

Diekemper said, "No, I'm talking about total.''

Charles said, "Total? Well, the fees for McCarthy I think were originally $2,850,000 and general conditions $2,835,000, so the total's going to be $5,685,000 ... But again you can see I'm already including a projection larger than that ...''

Given Charles' comment, Chellis remarked that McCarthy's total cost was projected at $2.85 million more than the amount included in the original Proposition P budget.

Charles said, "To be honest with you ... I don't know how that was originally going into the original budget.''

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