FMP External Review - Frequently Asked Questions

  • Updated on August 21, 2019

    Saint Paul Public Schools (SPPS) operates and maintains 73 buildings, many of which are older and in need of repairs and updates. All of our facilities must provide safe, efficient and accessible environments for students, staff, families and community members.

    From 2014 to 2015, SPPS conducted an extensive planning process to develop a 10-year Facilities Master Plan (FMP) to modernize its school buildings and ensure learning environments support the needs of teachers and students.

    To ensure the best FMP financial and construction management procedures and practices are in place, the District announced on May 21, 2019, that it would convene an external committee of advisors to review and assess its systems. Advisors have expertise in facility financing and construction management; see the members of the FMP External Review Team.

    The FMP External Review Team will gather data and information over the summer of 2019 and then assess this information in order to produce a report on its findings and recommendations. A final report is anticipated to be presented to the Board of Education in the fall of 2019.  The District remains diligent in our commitment to build the quality facilities our students deserve, while being responsible to the taxpayers of Saint Paul.
     
    The following frequently asked questions are organized under the following sections:


    FMP Background

    1. What is the Facilities Master Plan?

    SPPS’ Facilities Department manages 73 facilities, 7.5 million square feet of space and over 500 acres of land. A key component of proactively managing these assets is through the development of a Facilities Master Plan (FMP) which is a strategic plan that helps districts better manage and maintain its school and administrative buildings, and grounds. An FMP provides long-term guidance on how to prioritize construction and remodeling projects in a fair, timely and cost-effective way.

    In 2014, the District’s Facilities Department launched the development of a comprehensive, data-driven plan for updating its facilities in a manner that would be equitable, efficient and sustainable while supporting the evolving learning needs of students. The FMP is based on information and data such as the:

    • District’s strategic plan for providing students with a premier education.
    • District-wide baseline facility needs.
    • Facility gaps and inequities across the district.
    • Demographic and enrollment trends like influxes of new residents into certain areas of the city or decreases in birth rates.
    • Building capacities for comfortably serving the student population at each school.
    • Criteria to prioritize and complete projects fairly and efficiently.

    The District’s FMP was produced through an award-winning engagement process that involved more than a thousand people in order to help the District put in place the systems and procedures necessary to implement the critical work to improve the learning environment of students.

    2. How have school communities been involved in the facility improvements of their buildings and grounds?
     
    As part of the FMP’s developmental, every school community took part in at least two engagement sessions focused on documenting the vision each school had for its eventual remodeling. This information provided the initial qualitative data that went into the development of each school’s work scope, which is a conceptual document that informs the more robust design phase that accounts for a thorough assessment of the building conditions and limits to expansions (e.g., boxed in by residences). During the design phase, each school forms a committee to provide more in-depth information on the functional needs of their school to Facilities Department staff and consultant architects.

    3. What is the process for renovating a school building?

    To ensure a school’s remodeling is completed as efficiently as possible, the following steps are taken to fully determine the scope, budget and timeline of the project:

    a) The pre-design phase is the process that deepens the knowledge and specificity of the conceptual, baseline work scopes for building improvements from the master planning phase to produce a more robust design phase that accounts for broader and deeper aspects of the facility conditions and parameters. Working with building staff, families and students, Facilities Department project managers and consultant architects explore and define how a building is used or needs to be used into the future. Gaining a solid understanding of how the building and grounds have to serve the evolving teaching and learning needs of the school is critical for providing responsive updates such as flexible learning spaces, while anticipating the unforeseen, such as technological advances. This work is complemented with a thorough investigation of the building’s facility infrastructure and systems to account for any complications such as the discovery of asbestos; soil contamination left by the previous land owners; or systemic problems with old plumbing. Based on this more detailed information, the initial project work scope and budgets are updated.

    b) In the design phase, specific and detailed designs are created and finalized.  Building staff, families and students continue to be active participants in this phase as complex design solutions are evaluated in their ability to meet the overall goals of the project and the FMP.  Additionally, highly technical explorations and  decisions regarding improvements to existing systems and infrastructure are finalized. During this phase, any final adjustments to project budgets based on the specific design solution(s) are made. Based on the finalized design and budgets, competitive bids are then released to potential contractors.

    c) Typically, the construction phase lasts from one to four years depending on the scope of the facility-improvement project. Construction activity and schedules are coordinated with school administrators and communicated to staff, families and students to minimize the impact on the learning environment. During the school year, construction activity is cordoned off from areas where students and staff are housed; students and staff are moved to different areas of the building when construction needs to begin in a particular area previously occupied. Once students and staff depart for summer break, this becomes the busiest time for construction as the entire building and grounds are now open to contractors to complete their work. Construction activity that would be too disruptive to conduct when students and staff are present is completed at this time; such work might include demolition; work that causes structure-born vibrations; or work that impacts emergency exiting or safety.

    d) The close-out phase begins once a construction project has been substantially completed and final preparations are made by contractors to orient Facilities Department staff to the new features and systems of the building. This process involves reviewing a punch list to ensure all aspects of the project has been completed to specifications; conducting training on HVAC systems and technology equipment; and reviewing warranty information and operation and maintenance manuals, among other things.

    FMP Budgeting

    4. What is the Five-Year Facilities Maintenance and Capital Implementation Plan?

    The Five-Year Facilities Maintenance and Capital Implementation Plan (also known as the Five-Year Plan) is the FMP’s implementation plan that provides a list of improvements scheduled for each building in the District. The Five-Year Plan includes a brief description of the planned updates and improvements for each building, along with the project budget and timeline. (See the current Five-Year Plan for fiscal years 2019-23.)

    The plan is reviewed, revised, and approved by the Board of Education annually. The Five-Year Plan provides the District with a five-year schedule for which projects will be prioritized to be improved. However, each year, the plan is adjusted slightly to take into account new circumstances or priorities in the District that might change how projects have been prioritized.

    5. Why is the FMP/Five-Year Plan referred to as a “rolling plan?

    The FMP’s Five-Year Plan spans five years of scheduled projects and accompanying construction budgets. The Five-Year Plan is referred to as a “rolling plan,” which means the first plan that was released with its list of projects spanned from 2017 to 2021; then the next year spanned from 2018 to 2022; and the year after from 2019 to 2023--with each new iteration of the Five-Year Plan, certain projects either ended or entered a new phase of construction and other new building projects were added, which is where the term “rolling” comes into play.

    Because SPPS is a large, dynamic, urban district, having a rolling plan provides flexibility to be responsive and adaptable to changes from inside or outside the District that may make it prudent to change when certain buildings are scheduled for remodeling. Factors that might impact scheduled projects might be changes in the economy; shifting District enrollment; leadership changes; or changes to the District’s strategic plan, among other factors.

    6. Why does the total budget for the Five-Year Plan change each year?

    The Five-Year Plan covers five years of planned building improvement projects and a total budget is assigned to span the five years of projects. As each construction year goes by and is completed, another year is added to the plan to ensure the District is planning well into the future. This means that as some projects are completed or enter different phases of their construction, or other projects are scheduled, the overarching Five-Year Plan budget shifts. For example, the following table shows how the annual budget for the Five-Year Plan changed from year to year:

    Total construction budgets summary
     
    7. How is the Five-Year Plan budget determined and approved each year?

    As a rolling plan, the Five-Year Plan means that the District does not simply proceed with last year’s plan; there is due diligence to help ensure adherence to annual budgets with projects changed and/or delayed as needed. Using industry standards, each year, the Facilities Department determines how much it will cost to modernize its buildings scheduled for the next five years with updates made accordingly to its Five-Year Facilities Maintenance and Capital Implementation Plan (see the Five-Year Plans for FY2019-23, FY2018-22 and FY2017-21).

    On an annual basis, the Five-Year Plan and budget is presented to the Board of Education which then votes to approve or not approve the budget; the board approved these Five-Year Plans accordingly:  

    1. FY2017-21 = $484M; BOE-approved May 2016
    2. FY2018-22 = $587M; BOE-approved October 2017
    3. FY2019-23 = $522M; BOE-approved October 2018

    8. What factors impact project budgets and changes to those budgets?

    Each project and building comes with its own unique challenges. During each year of the Five-Year Plan, the scope of any given project may change. For example, the District may discover previously-unknown soil contamination, or after opening a ceiling to repair a leaking pipe we may find that the entire plumbing system of a facility needs to be replaced. This is the reality of making updates to older buildings.
     
    In addition, construction costs generally do not go down; this is supported by the chart below outlining the rising construction costs in the Twin Cities over the past ten years. Materials, including rebar and concrete, are more expensive today than ever before. This is something SPPS takes into consideration when projecting costs to the best of our ability.We also budget for inflation.

    As with any large project, the District builds contingency funding into the projections—typically five to ten percent of the total project cost. From time to time, actual project costs exceed the project’s contingency funding causing the District to delay, or reevaluate, the scope of other projects or project phases included in the Five-Year Plan whenever possible.
     
    The inclusion of a project in the Five-Year Plan is not the same as formally bidding or awarding a contract. All projects in the Five-Year Plan are reviewed and adjusted before contracts are awarded.

    Construction costs have risen in Twin Cities

    9. Why did the District budget for updating school buildings go from $30 million a year in 2016 to over $100 million a year since then?

    The increase in the facilities budget is directly related to the development and implementation of the Facilities Master Plan (FMP); without an increased budget, meaningful facility updates affecting teaching and learning would not be possible.

    In 2016, the annual budget for the very first Five-Year Facilities Maintenance and Capital Implementation Plan for FY2017-21 was approximately $100 million. Since then, 8,925 students’ learning environments were substantially improved between the summer of 2017 and May 2019 at 12 schools: Adams, Como Park Sr., Highland Ele., Horace Mann, Humboldt, Jie Ming, Johnson Sr., Linwood, Monroe, RiverEast (new building), Rondo, and St. Anthony Park.

    Up until the FMP was produced, the annual budget dedicated to building construction for District facilities was between $26-30 million, but this amount was not enough to keep pace with the substantial improvements needed to meet the evolving teaching and learning needs of students of today and into the future.

    10. For the first year the FMP was implemented, why did project costs for particular school remodels change so much from the initial estimate to the actual cost?

    The FMP was a monumental change in the way the District modernizes, maintains and manages its 73 buildings, 7.5 million square feet, and over 500 acres of land.
     
    Developing accurate estimates based on a portfolio of buildings that range between 1 and 129 years of age (see graph below) is dependent on budget and scoping models that take into account the complications of an aging portfolio of buildings, as well as unforeseen and unknowable factors such as soil contamination; finding asbestos; and systemic plumbing and electric replacement needs, among other possibilities. It should be pointed out that it is impossible to completely anticipate unforeseen conditions of a building; many conditions can only be discovered once construction has started and the inner workings of a building are completely revealed.

    Within the first seven months of the first year (2016) of implementing the FMP, Facilities Department staff realized the budget model fell short of providing accurate estimates for buildings in this age range. A course correction was put in place: The budget model was updated accordingly to account for more accurate cost models and a greater breadth of unknowns given the age of our buildings. Since then, actual construction costs have fluctuated from the original bids by only 5.52% (current as of February 2019) which is well within the industry standard. The facilities plan is reviewed by the Board of Education and contracts (as well as any change orders over $175,000) are voted on at each board meeting under the open meeting law.

    Building age by square feet from 1890 to 2010

    FMP Project Management & Communications

    11. How has the District communicated changes related to the Five-Year Plan’s budget and management?
     
    Throughout the process of implementing the FMP, the Facilities Department has been transparent about the challenges that come with building a comprehensive building-improvement program from the ground up—including tripling the number of staff needed to oversee and implement construction projects in a timely manner—and the learning curve that comes with it. Staff members have worked to balance costs and have put new procedures in place to manage cash flow and program controls since the first seven months of the FMP’s implementation.

    SPPS has learned through this process and is always striving to be diligent, accountable and responsible to the taxpayers of Saint Paul. SPPS is committed to spending resources wisely; with thoughtful review, attention to detail, cost control and transparency. Saint Paul students and residents deserve nothing less.

    12. What time of year does SPPS seek construction bids?
     
    Because of its school-year calendar, districts’ construction timelines look differently than other organizations as it does not have free range of a building to do construction while schools are in session. While often the preferred time to solicit construction bids is in the fall, it is not uncommon for districts to send bids out in the spring.

    As a point of practice, Saint Paul Public Schools does seek construction bids in the fall whenever possible. In the first year when the FMP was implemented (FY2017), the timeline for getting construction bids was tight due to various factors and systems needing to be put in place before bids could be released to contractors—implementing a new way of doing business, especially at this scale, means adopting new practices and procedures that take time to set up.

    During that first year, we had a truncated timeline to get our first set of projects out for bids. Waiting for the fall to send out bids during the first year would have meant missing a critical construction start during summer break and losing 5% of the budget due to inflation, and enduring increased construction costs due to the parallel construction boom across the state and nation which was finally coming out of a recession (2007-2009).


    FMP Financing

    A version of the information provided below is also provided in a handout format.

    13. How are building improvements funded at Saint Paul Public Schools?

    When SPPS schools need building-system replacements, renovations, additions or a new building, construction projects are mainly funded through the property taxes (tax levy) of Saint Paul residents. Taxes are used to pay for construction projects in two ways:

    1. Pay-as-you-go/PAYGO: Paying for projects using today’s dollars, similar to paying for the purchase of a house with cash to avoid paying the interest on the principal of a loan. This payment method is referred to as “PAYGO.”

    2. Debt repayment over time: Paying a debt/loan plus the interest over a period of years, similar to paying off a mortgage of a house (principal plus interest). These loans are called “bonds” or “capital leases” depending on the funding source; in either case, investors provide the money at the front end while property taxes are used to pay investors back over time.

    As shown by the image below, there are four ways to structure the funding of and paying off the debt on building improvements (also known as capital improvements). The state of Minnesota regulates each of these funding structures. Each year, the Board of Education approves the funding sources and related levied and bonded amounts. The graphic below shows how funds raised through the tax levy functions with these four funding/payment structures.

    Capital Funding Structure and Option: Tax levy pays through PAYGO or pays debt over time

    1. Long Term Facilities Maintenance (LTFM) (Minnesota Statute 123B.595)

    A ten-year capital plan (including health and safety projects) must be approved annually by the Board of Education and submitted to the Commissioner of the Minnesota Department of Education by July 31.

    A. LTFM PAYGO: The District determines how much will be needed for projects in the next fiscal year and then property taxes are collected (levied) that calendar year to cover the needed amounts. (LTFM aid is also provided by the State with this funding source.) Funds are available to pay for projects up front. PAYGO has the highest, immediate impact to taxpayers, but avoids long-term debt for a district.

    B. LTFM Bond: A bond is essentially a loan agreement between an investor (lender) and the District. The bond is rated by rating agencies and sold to investors—think of a bond rating like a credit score which can be strong or weak depending on overall financial health. If a district has strong credit, the bond is worth more and is highly sought after, leading to potentially lower interest rates over the term of the bond. SPPS pays back payments over 20 years by using the annual tax levy to pay the principal (amount borrowed from the lender) plus interest. This method lowers the yearly tax impact on taxpayers but adds long-term debt to the district.

    2. Certificates Of Participation (COP) (Minnesota Statute 126C.40)

    COPs are “leases” but treated similar to traditional bonds and are rated by rating agencies. An application to and approval from the Commissioner of Education is required for a COP lease to be issued. SPPS pays back payments over 20 years by using the annual tax levy to pay the principal (amount borrowed from the lender) plus interest. This method lowers the yearly tax impact on taxpayers but adds long-term debt to the district.

    3. Capital Bonds (Minnesota Session Law 2013 , Chapter 116, Article 6, Section 8)

    Capital bonds are specifically used for building improvement projects. Bonds are used to borrow money with the promise to repay the money within a specified time and interest rate; this option has the lowest interest rate. SPPS has state authority to issue up to $15M worth of bonds annually. SPPS pays back payments over 20 years by using the annual tax levy to pay the principal (amount borrowed from the lender) plus interest. This method lowers the yearly tax impact on taxpayers but adds long-term debt to the district.

    14. Do funding streams pay for specific types of projects?

    Yes, the funding options available to Saint Paul Public Schools have different requirements in how the money can be used to pay for specific types of projects; see the list below for details:

    Long Term Facilities Maintenance:

    1. Projects under $100,000: Physical Hazards; Other Hazardous Materials; Environmental Health and Safety Management; Asbestos Removal and Encapsulation; Fire Safety; Indoor Air Quality
    2. Projects over $100,000: Asbestos Removal and Encapsulation; Fire Safety; Indoor Air Quality
    3. Prekindergarten: Remodeling for prekindergarten (Pre-K) instruction approved by the commissioner of education
    4. Accessibility: Americans with Disabilities Act (ADA)
    5. Deferred Capital Expenditures and Maintenance Projects: Building Envelope; Hardware/Equipment; Electrical; Plumbing; Interior Surfaces; Mechanical Systems; Professional Services/Salary; Roof Systems; Site Projects

    Certifications of Participation: Used to buy or build a new building, or to renovate an existing building.

    Capital Bonds: Used for “Betterment Purposes” to improve existing facilities and grounds.