Date: 10/18/2006 10:18:59 PM PDT

Resource: Daily Herald

LAUSD building cash may fall short

Los Angeles Unified's massive school-construction project faces an estimated $2 billion shortfall fueled by soaring building costs, Superintendent Roy Romer warned Wednesday.

Despite four bond measures and state support totaling nearly $19.2 billion over the past decade, Romer told the bond oversight committee that more steps need to be taken to shore up the program and fill the looming gap.

While Romer said he didn't believe another bond would be needed, committee chairwoman Connie Rice said that if costs continue to escalate at this pace all options will be on the table - including a possible fifth bond measure.

Romer, who has made the project a linchpin of his tenure, said the district was hit with a "tsunami" of increased costs - dramatic increases in land values and the price of construction material. Still, the district should continue its aggressive construction pace because costs are expected to continue to increase in coming years.

"We in the next 60 days have to go out to the community with phase four. How do we complete the program of building schools? I've told my staff, `You don't blink, you don't hesitate one step,"' Romer said.

The news of the shortfall comes as a new superintendent, retired Navy admiral David Brewer III, is set to take office and Mayor Antonio Villaraigosa gears up to take more control of the district under recently signed legislation.

The Mayor's Office said Wednesday it wants to see more details about the shortfall and the proposals to address it.

"What we heard today is a potential for a significant shortfall and that's something we'll stay on top of and monitor," said spokesman Joe Ramallo.

The district has already built 65 schools but has about 100 left to go in a construction program that began six years ago to address a shortage of 160,000 seats.

About $13 billion of the $19.2 billion program has been earmarked for building new schools, with the rest for modernization and renovations.

Of the construction program's $19.2 billion, $12.5 billion comes from local taxpayer dollars through the four bonds, and the rest from state matching funds.

Strapped for cash

School officials said the projected shortfall would trim to $1.3 billion if voters approve Proposition 1D on the state ballot in November. The measure would give LAUSD about $475 million for new school construction and about $500 million for renovation and modernization.

If it doesn't pass, however, officials will be forced to weigh other options to meet its construction goals.

"The public should understand that we're trying to plan for some contingencies we didn't have in our original estimate. ... It could mean we'd have to, with the mayor, go after another bond. That could also be put on the table," Rice said.

The biggest strain on the program, the largest public works program in the country, has been a 167 percent increase in construction costs in the past four years.

The state's matching-fund program also has dropped from 42 cents on the dollar to 30 cents.

Meanwhile, the district also will fail to qualify for some construction funding because of its declining enrollment.

Official enrollment figures released Wednesday showed the district at 708,461 students this school year - 4,000 fewer than projected and about 19,000 fewer than last year.

A couple options

Romer said the district has taken steps to cut costs - including only building schools when needed. It also has paid down $500 million in debt, allowing it the option of re-borrowing that money in the event Proposition 1D does not pass.

Romer proposed using $1.3 billion from the bond voters approved last November to create a reserve fund to cover rising construction costs. Those bond funds have not yet been allocated and will not be needed for some time.

"Because of some uncertainty of the remedies of 1D and of improving the match, I'm recommending to the board we create a reserve of roughly $1.3 billion so that money is there in a reserve in case we don't get a legislative relief totally or we don't get all that we need out of 1D," Romer said.

The bond oversight committee took no action Wednesday but is scheduled to discuss the proposals in detail in future meetings.

The committee took the opportunity of Romer's last appearance at the meeting to laud his accomplishments on the construction project.

Rice called Romer the district's "praetorian guard" for allowing the program to move forward efficiently and professionally.

Rice also underscored the urgency of building new schools, noting that in 2015 the district will still have 70 middle schools with over 1,500 students and 13 high schools with more than 3,000 students.

Barely keeping up

Also, thousands of students will still be in portable classrooms. The state average is about 900 students for each, said Jim Cowell director of construction.

"Even when we're successful in building all of these phases on our drawing boards, there will be thousands of Los Angeles schoolchildren in portables, and our committee does not accept that as acceptable housing," Rice said.

"We are not overbuilding. We're barely building enough to say to Los Angeles' children, `You don't have to wake up at 5 a.m. to get on a diesel bus and go to a school in the Valley because there's no school in your neighborhood."'

Fellow committee member Scott Folsom echoed Rice's sentiment that the district will carry out the program.

"This is not necessarily good news, but the good news is we're going ahead," Folsom said. "The first and most important promise we made to voters is we'll continue to a traditional two-semester calendar ... and that is the mission and that's what we're going to do. We're going to do a little zigzagging, but that's where we're going."