
Fairfax County Public Schools is spending what amounts to two full elementary school renovations per year on unexpected increases in construction costs.
Ahead of a school board meeting on the fiscal year 2024-2028 capital improvements program (CIP) tonight (Thursday), one of the major talking points has been the dramatic impact those increases in construction costs have had on the school system’s construction and renovation plans.
At a work session last month, FCPS staff opened up about how badly the construction costs have affected the district’s reserve funding — specifically a “facilities reserve” used to help fund projects.
“At the start of 2022, that balance was $31 million,” interim assistant superintendent Chuck Fanshaw said. “The current reserve balance is at $16 million…There’s an unprecedented amount of escalation [in costs] over the last year that was anticipated by no one.”
Fanshaw said upcoming construction costs are coming in at around 30% over what had been budgeted, totaling around $28 million across four projects. There will be more specific numbers, Fanshaw said, once those projects go to bid in March.
Providence District School Board Representative Karl Frisch laid out the trouble FCPS is facing with the current construction cost crisis.
“In layman’s terms: we’ve spent half of the reserve and Falls Church High School still needs another $33 million in addition to what it was bonded for, even though we only have $16 million left in the reserve, and to address this, you’re thinking of including something to address this in the next bond,” he said.
Frisch said FCPS has spent more than $50 million in unanticipated construction costs — enough to finance two school renovations.
“Typically an elementary school renovation costs $25 million,” Frisch said. “We’re talking about the ability to renovate two elementary schools that we’ve had in additional costs, not to mention the money from the reserve that was spent.”
Frisch suggested FCPS may want to slow down its construction timeline to see if the construction materials market evens out, citing reports of declining lumber prices as a sign that some relief may be ahead.
“No one wants to slow things down, but we’re shooting ourselves in the foot by pouring this money out the window instead of waiting, perhaps a year, to see if prices stabilize for construction materials,” Frisch said. “There’s not a lot we can do about prevailing wages, but where we can do something is the cost of materials for construction.”
Frisch argued that the worst-case scenario is construction slows down, but the best-case scenario is that FCPS saves $40-50 million that would have been spent on overpriced construction materials.
Fanshaw said the rate of increase will likely go down from the current spike, but it’s unlikely the cost of construction will go back to pre-pandemic levels.
“The rate will go down, so it won’t be increasing as much, but nobody sees a retreat at this point in time to the previous level,” Fanshaw said. “It’s worth monitoring and it’s going to have a huge impact. Every school system I’ve talked to is wrestling with the same question at this point in time. The reality is the dollars are what they are, we can build up to the dollars we have, which means it’s going to take longer.”
Chief Operating Officer Marty Smith said the idea of holding off on purchasing to see where the market goes holds true for school real estate as well:
The logic you’re using for brick and mortar also holds true for real estate. When you think about the environment we’re currently in for real estate, when you think about interest rates, it might be prudent for us to come together with recommendations for us to think about the timing on certain purchases so we can maximize our spending power for major land purchases down the road.
The proposed FY 2024-2028 CIP identifies funding for 25 renovation projects over the next five years, along with the Justice High School expansion and new construction on Dunn Loring and Silver Line elementary schools.
Photo via Josh Olalde on Unsplash
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