By Leo Wolfson, State Politics Reporter
The Select Committee on School Facilities is recommending the Wyoming Legislature triple the state’s public school construction budget.
The select committee wants to add $148 million to the supplemental budget to fund inflation and major maintenance work, which includes another $117 million for school construction projects.
The state has $44 million in school projects on the books for the current biennium, so the $117 million more for projects would more than triple this cost to $161 million.
Inflation And Deflation
Inflation continues to be a major factor in the American economy and one of the most impacted sectors is construction.
When it comes to funding school construction projects, the largest question the Legislature’s Appropriation Committee deliberated Tuesday morning was how much additional money to factor in for future inflationary increases.
Although there was a general consensus more money is needed to cover ballooning prices, a few legislators were skeptical that prices will continue drastically increasing into the future.
The School Facilities Division determined its inflationary numbers based on an anticipated 22.5% increase in total price of projects. Based on that figure, the Appropriations Committee recommended a lower $20.5 million budget supplement for inflation Tuesday.
The Appropriations Committee already included an inflationary component on the projects it approved last year, which was not factored into the figures presented Tuesday.
The new inflation funding would cover projects that have already been approved but have not gone out to bid.
This money isn’t intended to be added to the projects but would be used to supplant projects that end up with a winning bid that is over budget. If a project doesn’t over-bid, funding wouldn’t be allocated to it, but saved for other projects that could potentially over-bid.
Jerry Vincent, director of the State Construction Department, said he doesn’t favor putting out bids repeatedly as he said costs tend to increase.
“When you have a project that bids, you have to act very quickly,” he said. “You can’t wait 45 days.”
Vincent said contractors tend to bid high during uncertain economic times because companies are unsure if they can cover inflationary costs.
Suzanne Norton, division administrator for the State Construction Department, is proposing an up to 7.5% overage cost agreement be included in the state’s contracts to be covered by the contractor.
The Wyoming Department of Transportation implemented a similar measure during the 2008 economic downturn and the U.S. Department of Defense has implemented a similar measure in recent months.
Can Be Prudent To Wait
State Sen. Dave Kinskey, R-Sheridan, believes there are many layers to how inflation impacts construction projects.
“Some people say when you’re looking at accelerating costs, ‘It’s not getting any cheaper, let’s just build it now,’” he said. “There’s other that have the view, like myself, that have seen the waxing and the waning of the construction industry, and know that contractors who come in significantly over engineer’s estimate could come in significantly under engineer’s estimate in a year.
“Sometimes, it’s more prudent to wait and let the market cool off.”
Kinskey expressed concern about pandemic-related government-funded projects flooding the private sector and inflating prices for years to come.
Vincent agrees this should be a concern, and said his department is looking at a variety of options to push out projects or lump multiple projects under one contractor to get a lower overall price.
“If we overflow the market all we’re going to do is get bids too high,” he said. “We are looking at unprecedented times.”
Commission vs. Committee
In October, the Committee on School Facilities approved $117 million for school construction projects in Laramie and Teton counties, which makes up the bulk of the requested increase.
Sen. Stephan Pappas, R-Cheyenne, chairman of the select committee, advocated for the projects Tuesday and said inflation could add $9.4 million if they’re put off until the next year.
“This year we have an unprecedented amount of money that we should invest for the future,” he said. “It’s actually saving us money in the long run by putting money in that investment.”
Not Supported By Governor
The committee is recommending $16 million for a bus barn and maintenance facility in Teton County School District No. 1.
Gov. Mark Gordon opposes funding this project, saying it was not requested through the statutorily established process for school districts to apply for money through the State Construction Department.
Rep. Tom Walters, R-Casper, agreed with Gordon, saying valuable information of how the final price for these projects was determined has not been made available to lawmakers.
For similar reasons, Gordon also doesn’t support $79.9 million for construction of new elementary schools in Laramie County School District 1 and $21.8 million for design and construction of projects at Jackson Hole High School.
Pappas said these school districts are still pushing forward with their requests because they believe the School Facilities Commission, a nonpartisan board of officials appointed by the governor and approved by the Legislature, has failed them.
He said there is sympathy for this sentiment on his committee.
“They’re turning to us as an alternative,” he said.
Pappas said he and others feel the commission was biased against these school districts based on statements made by former chairwoman Holly Dabb. He was told by a few members of the commission she didn’t represent the feelings of the entire board.
“For that, she’s been replaced,” Pappas said.
According to the Wyoming Tribune Eagle, when addressing members of the Select Committee on School Facilities in September, Dabb questioned the honesty of Laramie County School District 1 leaders and accused them of gaming the system.
“Figures don’t lie, liars lie,” Dabb testified. “And they’re trying to manipulate it, so their only remedy is a new school, when they went in over budget on … I don’t even remember which school, probably all of them.”
Both Cheyenne and Jackson make up some of the fastest growing areas in the state.
“The potential growth is what drove both of these districts to ask for the money now rather than wait another year,” Pappas said. “They’re expecting to be at 100% (of total costs) in a year or 18 months.”
Pappas said costs will be exponentially larger on these projects in the future. He said LCSD has plans to close six schools, which make up some of the oldest school facilities in the state.
Vincent said 10-11 of the top 20 worst-condition schools in the state are in Laramie County. The six schools would be replaced by three new ones.
“This would resolve their facility concerns as well as take care of a lot of major maintenance at those six schools,” Pappas said.
About $4 million has been spent since 2016 keeping up maintenance on the six schools.
Preparing For Recession
Sen. Larry Hicks, R-Hicks said there is a preponderance of evidence that the United States is about to experience a recession, which he finds a compelling argument to delay some of these construction projects.
“We have to understand what the prospective look is, what’s the likelihood of a recession and what’s that going to do to construction costs,” he said. “We need to really evaluate what happened in the industry, materials, labor, collectively from 2008 and 2009 and try to have a prospective look forward with these construction costs.”
Inflation slowed more than expected in November, rising by 7.1%, seen as an encouraging sign for the Federal Reserve.
Pappas still believes construction costs will be on the increase in the future, recession or not, because of ongoing supply chain issues.
A total of $9 million also is being requested for major school maintenance around the state. This follows a freeze on major maintenance spending from April 2020 through June 2022.
The University of Wyoming did not participate in this freeze.
“Does the university have any particular obligation to spend this on maintenance or can they spend it on anything they want?” asked Rep. Clark Stith, R-Rock Springs.
Norton said the money has to be spent on maintenance. She said preventative maintenance is the best way to keep down overall costs.
The university is now requesting $10 million for major maintenance costs and $120 million for future projects. Vincent mentioned how inflation has significantly affected the school’s projects. He said costs to demolish one dormitory at UW more than doubled because asbestos was found in the building.
Hundreds Of Projects
There are 547 active major maintenance projects among all of the agency facilities in Wyoming affecting about 19.4 million square feet of building space.
There is $213 million in active school maintenance appropriated. This can include work on projects such as roofing, HVAC, fire alarms and other projects.
“Having available funds allows agencies to have less difficulty in scheduling and prioritizing for major maintenance,” Norton said. “It’s kind of like Tetris. You have an immediate need and maybe it lands where you need it to and maybe you have the funding, or maybe you don’t.”
She said the state is doing much better at preserving its assets than in the past.