Capital Facilities Recommendations By Interim Superintendent Dr. Arthur O. Jarvis October 11, 2018
To first state, the obvious – capital planning in Peninsula is one of the more complex tasks I have undertaken! I would first like to take a minute to honor the work that has been done previously. The materials and research conducted over these past fifteen years are astounding. From the notebooks, files, and record, it is evident that staff, community members, Board members, and consultants have invested hundreds, if not thousands, of hours looking for solutions. To those of you who have participated in the past, I salute you and thank you. The data is there and the pictures are clear – daunting, but clear. I would also express my appreciation to the Board of Directors for giving me the opportunity to independently study the issue and prepare my recommendations.
Because of the investments of others over the years, I have been able to sharply focus this presentation and my recommendations. The volume of information available provides a fount of background that assisted me greatly in my search to understand the present situation. As the newcomer with “outside eyes”, I have been able to access existing materials and hear from a variety of people who have been party to previous planning. I have also tried to become educated regarding the election losses. I have listened to citizens with differing opinions regarding prior elections and capital proposals and reviewed historical documents containing challenges and oppositional statements.
From this trove of facts, figures, plans, and proposals has come insight and clarity. What especially has come is the sense of urgency to find a solution. Decades of facility needs have accumulated to create an extraordinarily unhealthy status. In this case, the word “urgent” is not even adequate – crisis may be a better descriptor. I would also note to anyone who might wish to find blame, that adversarial elections have not only delayed solutions, but they have made it progressively more expensive and more difficult. I would state unequivocally that the community and the school district are being damaged by delay. It is imperative that this community and school district move forward to successfully address our facilities shortfalls.
I am proposing an unusually sharp focus to our efforts. While broadly acknowledging the mass of work needed, the intent is to define the “most-needed” and offer a plan to begin decades of recovery. Without reservation, I am proposing that the Peninsula School District move quickly to simply provide adequate classrooms for our children. In that spirit, I submit this report to the Board of Directors for your consideration.
Superintendent’s Analysis on Enrollment
A look at historical enrollment reports provides ample evidence of some of the issues facing the Peninsula School District at this time. Enrollment highs in the early 2000’s were interrupted by the “great recession” years beginning in 2008. Among the issues were significant drops in home values and the resultant stifling effect on the housing market. The recession effect on school district enrollment was to continue for over seven years.
Continuing total annual enrollment losses eventually exceeded seven percent. Live births fell precipitously and the subsequent kindergarten enrollments during the period from 2013-2015 reflect that decline. That three-year period marked a significant low in the number of entering kindergartners. Those losses during a fifteen-year period of bond and levy failures partially blunted the effect of the district’s inability to add schools or classrooms.
The subsequent three-year period (2016, 2017, and 2018) demonstrates recovery and sharp change. Of particular note, there are three items. First is the arrival of three consecutive large kindergarten classes. If taken alone, the significance of back-to-back classes indicates that the elementary schools will be stressed to house the new classes moving through the system. A large kindergarten alone obviously portends year-by-year increases, but consecutive classes result in compounded classroom requirements.
The second note of interest is the combination of three small kindergartens followed by three large entering classes – the latest of which is the largest in thirty years. A quick look at enrollment growth figures could miss the extent of the recent growth. The three smaller classes moving through the system partially mask the impact of the arrival of the large groups. The small class that entered in 2013 will now be leaving the elementary schools and the offset will disappear.
The final note here is that the classes that started small gained immensely as they moved through the system. The group of 510 children who entered kindergarten in 2013 grew by 150 students (thirty percent) by the fifth grade. If the same growth pattern is to be seen for the class most recently entered, they will number 800 fifth graders in six years. Combined, those three latest kindergarten classes alone will necessitate an additional elementary school by the time they depart fifth grade.
Superintendent’s Analysis on Projected Growth
There are a variety of attempts made to project growth in communities, towns, and cities, and all can be subjected to a certain amount of skepticism. With that disclaimer, the following is presented as evidence that some growth will continue in our community.
A population estimate based on census data suggests that Gig Harbor, WA is experiencing a growth rate of approximately 5% annually. If it were true that all segments of the community are growing in proportion to each other, one could suggest that our school district population, currently just under 9,000, is growing at an average rate of 450 students per year. A proportionate elementary school growth would result in an estimated growth of 193 students per year.
The six-year capital facilities plan for PSD for 2018-2024 utilizes two factors or estimates that project headcount over the six-year period. Utilizing intentionally conservative estimates, the Washington State Office of Superintendent of Public Instruction (OSPI) projects growth projection totals at 4.9% and PSD with 5% for the entire six-year span. That estimate would suggest an increase of 90 students by 2024.
Based upon reviews of short and long range housing unit assumptions done in 2017, projections reveal an increase of 1,786 single family units in addition to another 147 family units in this area of Pierce County by 2020. Utilizing a “generation” factor of .27 elementary school children from each unit, those 1,933 units would generate an additional 522 children by 2020. That translates to an estimated 173 elementary age children each year.
Lastly, based on recent three years’ experience in the PSD, projections generate an average cohort of 1.065. Applied against the 2018 enrollment, that would generate 253 additional elementary-age children each year.
Rather than lose faith in the art of forecasting, it is noted that an old metaphor would suggest we examine “which part of the elephant” each of the above projections represents. Ours is a complex community that draws new members for a variety of reasons and at varying ages. As was suggested elsewhere, the recovery from the recession is still happening and provides a basis for overlapping growths and declines. Perhaps the best contribution from the varying projections is to remind us that we have already stretched our grace period handling growth through the acquisition of additional portables. Simply put, any and all growth will press us to find classrooms which do not exist – and yes, growth is happening all around us.
Superintendent’s Analysis on Facilities
An analysis of current elementary school classroom spaces is revealing. A total of 148 permanent classrooms are available to serve eight schools needing 214 spaces. As everyone knows, that gap is filled by the use of 66 portable classrooms – a 45% shortfall. Acknowledging the fact that many districts utilize portables to fill gaps and provide student housing in the interim before schools can be built or expanded, the usage in PSD far exceeds temporary measures or planned reserves.
Additionally, the level of current portable use can only provide the classroom space and totally misses the mark of core spaces in the school. Common gathering spaces are normally structured to provide areas such as cafeterias, administration, and support staff in the schools. When portable classrooms are added, the school falls victim to imbalances and significant shortfalls throughout the building and grounds. Playgrounds are often cannibalized to provide a pad for the portables and parking at the schools is so limited as to discourage parents and visitors from participating. All of these shortfalls are evident in PSD.
Particularly noteworthy is the combination of portable classrooms and enrollment growth. PSD has been forced to utilize an increasing number of portables during this period of relatively mild growth. As noted in the enrollment analysis, that mild growth has shifted significantly to become significant expansion. Unfortunately, that comes at the very time the district has literally exhausted their ability to erect more portables. The prospects of major growth without the escape route of adding more portables leaves an ominous certainty that goes well beyond “overcrowding.” When three of eight elementary schools exhibit 10 to fourteen portable classrooms, it is evident to the most casual observer that PSD is critically behind.
Measures sometimes necessitated by such a shortage of classrooms are now being brought into the conversation. Double-shifting of students, program reductions, undesirable boundary alterations, and a host of dramatic measures must be considered if the simple housing of children and teachers cannot be accomplished.
Further evidence of the current plight of the PSD goes beyond the shortfall of classrooms. Purdy Elementary School, modernized thirteen years ago, is the only exception to the reality that PSD schools are significantly aged and getting notably behind in their most basic condition. No amount of routine maintenance can offset system failures in roofing, heating, and mechanical systems. Facilities constructed thirty to forty years prior to current codes cannot match those which have been modernized or constructed within the last decade, regardless of whether one is addressing pedagogy, electronics, or security. Happenings such as failing roofs necessitate dire budget shifts which further exacerbate program and staff reductions
Another aspect of overcrowded and aging facilities is that most residents and prospective residents are keenly aware that communities are routinely judged by the quality of their schools. Housing values are enhanced by quality schools and adversely affected by negative circumstances and poor schools. It is by no means unusual for parents to relocate to provide more positive experiences for their children. A community is judged by the care it takes of its schools and children.
Capital Projects Recommendations
- Construct two additional elementary schools immediately.
- Elementary School #9 to be constructed on the Harbor Hills North site; bidding before March 2020.
- Elementary School #10 to be constructed on the Bujacich site; bidding before March 2021.
Note: In the event that early permitting process reveal the Bujacich site to be problematic and thereby causing significant delay and/or unacceptable site costs, it is recommended that the district immediately purchase an appropriate elementary site.
- Modernize two existing elementary schools by replacing the current structures.
- Evergreen Elementary School is recommended for total replacement and increased capacity; bidding before March 2021.
- Artondale Elementary School is recommended for total replacement and increased capacity; bidding before March 2020.
- Provide resources within the Capital Funding to meet capital needs which will emerge within the next five years due to the aged facilities.
- Such needs include, but are not limited to, mechanical and electrical system failures, roofing failures, plumbing failures, and safety and security improvements. Normal maintenance budgets will continue to be utilized, and the additional capital funding will be utilized for major system repairs and replacements.
Capital Projects Impact of Recommended Projects:
- Total elementary school permanent classrooms will increase from 148 to 225, an increase of 77 permanent classrooms to house elementary school children.
- The current housing of children in portables is the equivalent of more than two large elementary schools. This dependence is eliminated, although portable classrooms remain available capacity for growth.
- Replacement of Evergreen Elementary School will provide a total of eighteen permanent classrooms in lieu of the 1955 construction of eight rooms.
- Replacement of Artondale Elementary School will provide a total of thirty permanent classrooms in lieu of the twenty-three classrooms of 1952, 1961, 1964, 1967, 1988, and 1991 vintage.
- Providing resource funding for repair of failed and failing systems avoids school shutdowns and subsequent general fund budget crises.
Capital Projects Recommendations: Finance
- The amount required to fund the recommended projects is $198,550,000.
- The recommended funding mechanism for the identified Capital Projects is a bond issue. Bond calculations, issuance, and redemption schedule are included in the Appendixes.
- The 2020 tax rate to fund this bond issue is estimated to be $0.79 per thousand.
Background tax rate information:
- The assessed valuation of the school district will increase in 2019, thereby decreasing the tax rate per thousand. The new total assessed valuation will be $14,149,017,046 billion;
- The 2018 total school tax rate for PSD is $2.32 per thousand;
- The Enrichment Levy that replaces the present M&O Levy will be $1.50 per thousand beginning in 2019;
- The final 2019 payments will be made on the 2003 Bonds and the tax rate of $0.31 per thousand will be completed;
- The 2019 total school rate for PSD is $1.81 per thousand ($1.50 + $0.31); and
- The 2020 combined tax rate for the Enrichment Levy and the newly proposed bond would be $2.29 per thousand ($1.50 + $0.79).
Impact on taxpayer(s):
- The following demonstrates the impact of the proposed bond levy on local taxpayers:
- For a home valued at $250,000:
- Tax rate of $0.79 per thousand would equal $197.50 per year;
- Estimated cost per month equals $16.46.
- For a home valued at $400,000:
- Tax rate of $0.79 per thousand would equal $316.00 per year;
- Estimated cost per month equals $26.33.
- For a home valued at $600,000:
- Tax rate of $0.79 per thousand would equal $474.00 per year;
- Estimated cost per month equals $39.50.
2019 Election Dates:
Special Election(s) Dates:
- February 12, 2019 Resolution due Dec. 14, 2018
- April 23, 2019 Resolution due Feb. 22, 2019
Primary Election Date:
- August 6, 2019 Resolution due May 10, 2019
General Election Date:
- November 5, 2019 Resolution due August 6, 2019
Recommended Date: February 12, 2019
- Best serves preconstruction and design:
- February special election provides safe construction timeline
- Preliminary work in spring
- Bidding by 3/20
- Completion 8/21
- April special election
- Preliminary work in summer
- Bidding by May 2020
- Completion late fall (?)
- Historically most successful for school issues
- Other districts will be running elections
- No drawn-out election
- Avoids confusion emanating from post-McCleary tax statement
- Avoids legislative session confusion and partisanship
- Allows resubmittal in April
- Shorter election preparation and support
- Post-McCleary levy rate reduction unknown
Alternative Election Date: April 23, 2019
- Takes advantage of post-McCleary tax statement reductions
- Legislative actions known
- Longer election campaign
- No opportunity for resubmitting
- Tax statements may impact
- Few other districts with elections
- Tuesday election following spring break is problematic
- Post-April 15 federal taxes
Dates not considered viable for school district election: August 6, 2019; November 5, 2019
- Dates will delay projects an additional year and increase costs because of delay.
Capital Projects Alternatives Considered and Not Recommended
Fewer new schools and more additions to existing schools?
As an alternative to constructing additional new schools could consist of additions and modernization to existing schools. Several elements of such an alternative combine to reduce the attractiveness of that option:
- Additions to existing schools are more expensive per square foot;
- The core areas of our elementary schools do not support adding more and more classrooms;
- The resultant schools become too large; and
- The expanded schools continue to be hybrids of some new classrooms mixed with aged and deteriorating rooms and systems throughout the building.
Modernize existing schools instead of building new schools?
The aging systems in the schools are eligible for modernization. Because almost all are beyond the thirty-year mark, they are even eligible for state assistance. Work could be done to replace all major mechanical systems and upgrade the facilities to last for another thirty years or more.
Unfortunately, that option continues to leave the district with 148 elementary classrooms to serve 214 classes. Further, it leaves the district unable to accommodate any growth. The focus of this capital proposal is to provide rooms and it leaves numerable other needs at a lower priority.
Larger bond request and do more work?
The aggregate school district capital project needs are staggering. The recommended projects primarily focus upon the current shortage of classrooms in the elementary schools. Additional elements include the inability to handle expected growth and the aging of those schools. Thus, these recommendations address immediate concerns.
The larger picture, however, reflects major issues at all grades. The aged and deteriorating condition of Peninsula High School alone will necessitate significant capital funding in the future. Projects previously identified throughout the district combine to a level of capital funding not previously experienced by this community.
Consideration was given to a larger bond issue to address more of those needs, but that option was not recommended, primarily because the tax rate would increase beyond that considered viable at this time. A $350 million bond issue would require a bond levy tax in excess of $1.40 per thousand.
Smaller amount and do less work?
A capital request small enough that it could be financed through a capital levy instead of a bond issue was considered and rejected. The underlying reason, while such option might be attractive because of the smaller amount, was that it fell far short of meeting even the most rudimentary needs while postponing virtually all of the remaining issues. While it is tempting to reach for funding for one school and ignore all of the rest, the brutal truth is that the community cannot further push solutions into the future. Almost one-third of the elementary students are now in portables and more growth will occur each year.
Capital levy Instead of bond?
A capital levy provides a guaranteed stream of revenue for six consecutive years. Under current regulations at the state level, it has a singular advantage over bond levies for the simple fact that it can be approved by a simple majority (50% plus one) of the voters instead of the supermajority (60%) required for a bond issue.
Unfortunately, the structure of a capital levy does not lend itself to funding the type of projects recommended. A six-year levy stream of financing generally does not provide the front funding required to build new schools. An exception can be found in the Seattle School District, where two large capital levies overlap and are renewed every three years. Other districts simply do not have the wealth to raise that much capital through the levy system.