'Mistakes in past,' district in good position for capital projects

'Mistakes in past,' district in good position for capital projects

CHAMPAIGN – Gene Logas and other Champaign school administrators know they must restore their credibility to sell a $66 million building bond proposal to voters March 21.

Logas, chief financial officer for the district since May 2005, said administration and school board members laid the groundwork for the referendum by taking financial actions that include:

– Cutting $2 million from this year's budget to address a shortfall discovered in 2004 that exceeded $4 million.

– Restructuring existing debt, generating upfront money and saving interest costs.

– Issuing $6.25 million in working cash bonds to get through the next three years without making drastic cuts to education programs.

– Improving tracking for free and reduced lunch eligibility, a move that's resulting in $200,000 more in federal funding.

The efforts already have paid off, Logas said, citing the recent news that the district's current bond issue earned a AA rating from Standard & Poor, which means savings in interest money.

"The district should be congratulated because it's taken some bold steps in light of issues that have come up," Mary Kane, who's affiliated with bond underwriter Stifel Nicolaus – which stands to make about $268,000 if voters approve the ballot question next month – told board members. "You're one of only 24 districts in the state with a AA rating, and that's a result of plans you've put in place. Plus you have considerable capacity to issue additional debt."

"S&P gave the district the same rating when it issued bonds back in 1997 to build schools," Logas said. "That means they looked at our financial situation and our ability to make payments and found it good enough to rate a AA. That means even though we made mistakes in the past, they're looking at our plan for the future."

The mistake that undermined credibility came to light in 2004 as a shortfall that amounted to more than $4 million that accumulated for years as business managers turned over frequently and board members and administrators focused on extra revenue coming in rather than their overspending.

Logas said the district is making progress on academic fronts, and officials must begin to address the long-neglected infrastructure, to build three new schools – one to replace Dr. Howard, one north of University Avenue and one in Savoy – and make major upgrades at all other elementary schools except the newest (Stratton and Barkstall) and buy land for a high school, which could be built after a future ballot question.

"Educators can't control a child's home life, parental involvement or socioeconomic status, but we can control whether or not students are in a safe, functional and efficient building," Logas said.

Adding it up

He has calculated costs of opening two new facilities both as two- and three-strand schools to make sure the district won't run short of operational money and won't have to go back to voters for more money. He said the calculations are intentionally conservative; they include only money from the state – which increases as the number of students increases – not revenue generated by the healthy recent increases in district assessed valuation.

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Logas said both new schools likely will open as two-strand schools. With 292 students in a school, the district would receive $1.508 million in general state aid, now $5,164 a student. His calculations don't include extra revenue or expenses for special education students and some other programs.

He said moving 92 students out of Robeson to enlarge available space there and moving another 92 students out of mobile classrooms would fill one school. Demographic projections by architects and by city and village officials suggest there will be enough new students by the time the second school is available to fill it.

Officials are talking about shifting students from schools where extensive work is being done into one of the new schools so neither contractors' nor students' work is disrupted. Dr. Howard students also would have to be put in temporary quarters while their school is rebuilt.

Logas said expenses related to the new two-strand schools would include almost $1 million for new teachers, about $187,500 for books and supplies and about $120,000 for annual utility costs, which totals about $1.3 million.

Operating a three-strand school with 438 students is more efficient, with state aid revenue that totals about $2.3 million and estimated basic expenses that would add up to about $1.6 million.

Logas said additional utility costs for operating heating and cooling systems at the eight retrofitted schools would be about $38,400, but anticipated new revenue still would exceed expenses by more than $150,000 at a two-strand school and by more than $600,000 at a three-strand school.

"We haven't included things like computers, desks, filing cabinets and other furnishings," Logas said. "How will we pay for them? We would get the building bond money upfront, and the money goes out slowly. I would hope we could build the two new elementaries the first year and I think we can make enough on the invested money to pay for furnishings.

He said at any given time during the three-year construction period the district would have $30 million in the bank. Invested at 4.5 percent, it would be making about $4 million in interest.

Time for change

Champaign Federation of Teachers President Greg Novak said teachers welcome plans to modernize their schools, plans that include air conditioning for all elementaries that don't have it and extensive renovations and construction to add teaching and office space, upgrade wiring and replace windows at some elementaries.

"When you think about it, we're teaching in some buildings built in the 1940s and '50s," Novak said. "Those classrooms were built with two electrical outlets, one in the back for a projector and one in the front for overheads. You can't expect them to be adequate for this electronic age."

He also said crowded space at some schools means psychologists and social workers, who need to work with children confidentially, are working out of closets or sometimes in corners of classrooms.

Washington social worker Jesus Yepez said two years ago he, Gail Groff and their intern worked with children in a small storage area between two kindergarten classes, an area with little of the privacy social workers need to deal with children's difficulties.

"After it became apparent that wasn't a very good idea, the district moved one of the two portables at Centennial to Washington and gave it to us to use," Yepez said. "They set it up on the blacktop, and it's spacious and accessible. But for the kids and staff members to go back and forth to the main building is very cumbersome."

There's also not a lot of privacy in the portable, which has dividers that don't reach the ceiling.

"There's a space on the other side of the wall a PE teacher uses for equipment, and the psychologist who comes in once a week uses the space next to the PE equipment," Yepez said. "She's worse off than we are.

 The proposed tax increase for Champaign Schools

"It's about time the district thought about space and improving it for students."

Uncertainties

Novak said there are issues to consider.

"The bottom line is it all centers on the assumption that if we build schools, students will fill them," he said. "The gamble is, will we pick up the extra kids? You have to look at the assumption that new buildings attract new kids. Which building in our district has 150 empty seats? And which are overcrowded?"

Novak said it doesn't make sense to install air conditioning and upgraded climate controls at Bottenfield, Carrie Busey, Garden Hills and South Side schools without replacing the windows, something to be done at the other elementaries.

"What's the point?" he said. "They're all single-paned, not thermal windows."

Logas said architects who surveyed the buildings decided windows in those schools were in better shape than those in the schools where windows would be replaced.

And Novak has questions about the location of the Savoy school on a lot donated by developer Randy Peiffer, a location he worries could create problems and additional expenses.

"The site's available, and it's always been an issue whether the district could get a referendum passed," Peiffer said. "We're developing 275 acres just across the street to the south, so there's no question about a school being needed. A school is great for a neighborhood."

Said Novak: "It's on the east side of Neil Street and the railroad tracks where expansion to the east is blocked by University of Illinois land. What about the Savoy kids who live west of Neil? They can't walk across a four-lane highway.

"I think the district will have to bus them. And the situation would be the same if they built the school on the west side of Neil. The devil's in the details."

Julia Connor Johnson, a Savoy resident who served on the facilities committee, has pointed out a demographic factor she thinks village residents haven't given much thought to: Only 4 percent of village residents are black, and the district's consent decree requires schools' populations to mirror district demographics plus or minus 15 percent.

That means at least 20 percent of the students in the Savoy school must be black – and that means a lot of busing.

"I'm concerned about how a Savoy school would impact busing of African-American kids on the north side," Connor said.

Like Logas, Novak thinks the district needs to plan ahead so it doesn't run into the same situation it encountered when Stratton and Barkstall were built and will encounter if the ballot proposal is approved: acquiring land at the last minute.

"They need to look at buying a site at Staley and Curtis roads," he said, near where an Interstate 57 interchange is planned.

Logas said school district financial decisions can't focus solely on the bottom line.

"If we were running these schools like a business, I might decide to cut costs by increasing class size to 50 students," Logas said. "Teachers would lose their jobs, and taxes and expenses would go down dramatically. But so would the quality of education – and parents would flee in droves, with implications for property values and new investment. Public education would be a last resort.

"We have to make decisions that have nothing to do with the bottom line, to address achievement, discipline, programs, and we need an efficient physical plant to be competitive. We're making progress on the first three, and the physical plant is where we are right now, investing in the physical plant to remain competitive."

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