Dollar buys less and less school than it used to

Steve Kanigher and Alex Richards

Saturday, Nov. 24, 2007 | 7:27 a.m.

If you think you've got it rough because a dollar doesn't buy what it used to in 1997, try building an elementary school.

If you took the $6.7 million the Clark County School District spent on the average elementary school construction contract from 1997 to 1999 and plugged it into the federal government's Consumer Price Index inflation calculator, you'd expect to pay $8.7 million today.

Over the past two years, however, contracts to build elementary schools have cost the district $18.5 million on average, 174.9 percent higher than what they were 10 years ago, according to a Sun analysis.

Middle school contracts, averaging $34.8 million today, are double what they were a decade ago, and high school base costs are $46.6 million, 41.7 percent higher than in 1997.

That's just for the bricks and mortar. Those amounts do not include change orders or furnishings, the "turnkey" costs that add millions of dollars to the price tag.

The burgeoning cost of building schools will be a major selling point for the district when it approaches voters next year to approve another bond issue in its never-ending quest to keep up with Southern Nevada's population explosion.

Although Clark County voters typically approve school bond issues funded through property taxes, they haven't been asked to do so since 1998.

That bond effort, when completed, will have produced 101 new schools and other district upgrades at a cost to taxpayers of nearly $4.9 billion. The next bond issue, also a 10-year campaign, is expected to cost more than double that.

One major reason school construction prices have far outpaced the inflation rate is the sharp increase in costs for materials such as cement, steel and asphalt. Blame global demand, including China's mushrooming economy, for that predicament.

Rising labor costs also have contributed to the increase. The School District, unlike private sector builders, is required by state law to pay prevailing wages for construction projects.

"The wages that happen on the Strip set the market for the entire valley," said Tony Illia, editor of the monthly publication Nevada Contractor. "All the work on the Strip is union, and union wages and prevailing wages are about the same."

Other reasons for the sharp increases in school construction costs are less obvious.

One is that schools are larger than they were 10 years ago. A decade ago elementary schools averaged 58,000 square feet, then increased to 62,500 to 68,000 square feet. The next generation will average 73,000 square feet, with the increases due mostly to larger and more flexible classrooms and multipurpose rooms.

"When you have overcrowded classrooms you have more fighting and distractions and less focus on the education the students are supposed to be getting," said Paul Gerner, the district's associate superintendent of facilities. "I'm looking for higher levels of efficient functionality and educational effectiveness."

Schools also cost more to build today because they are more energy-efficient.

It costs plenty to install devices such as motion sensors that automatically shut off lights when a classroom is empty and flow controls that restrict water use for toilets, faucets and showers. But the School District will save money on utility bills in the long run. Last year, electricity and water costs were nearly $10 million less than what they would have been had those steps not been taken.

Gerner pointed to the replacement Burkholder Middle School in Henderson, which reopened in August, as an example of the "leading edge" of school design.

Describing it as "a very quiet, well day-lit and exceptionally energy-efficient building," Gerner said the school is expected to operate on half as much energy as other middle schools. And it has a ground-source heat pump - which pulls stored energy from the ground for purposes such as heating water in the winter - that is expected to save on utility costs.

Cost increases also stem from the advanced wiring required to run computers and other high-tech equipment.

"All of our schools have more technical content than they did in 1997," Gerner said. "You might recall that almost no one had even heard of the Internet back then. Now we have ubiquitous broadband access and the ability to ship educational material to classrooms on demand, including streaming video."

Schools today also feature closed-circuit cameras and recording systems for security and safety.

"It is a changed world," Gerner said.

Building code revisions, such as more stringent regulations to address potential earthquakes, have increased some construction costs. But Chuck McQuerry, the School District's director of new construction, said those have been offset in part by the relaxing of some fire standards.

"Additionally, water and sewer connection fees have increased," he said.

Added construction costs in the next generation of schools will include enhancements such as better acoustics aimed at improving the learning environment.

But there also will be some cost-cutting opportunities in the future.

"All four of our elementary school prototype designers have been given a target of a 20 percent reduction in per-square-foot costs," Gerner said. "I believe they will hit that mark."

One way to cut costs is to do away with the painted concrete in front of many schools, he said. Specific construction techniques also can save money, he said.

"It's concentrating more on the meat in the sandwich and less on the froufrou," Gerner said.

Of the 109 contracts awarded to build new or replacement elementary, middle and high schools from 1997 through May 2007, 94 went to five companies. Pace Contracting Co., a 29-year-old Las Vegas public works construction company, led with 31 contracts valued at $522.6 million.

It was followed by Martin-Harris Construction of Las Vegas (27 schools, $434.3 million), CORE Construction Services of Nevada Inc. (18 schools, $364.4 million), Sletten Construction of Nevada Inc. (eight schools, $271.2 million), and Roche Constructors Inc. of Greeley, Colo. (10 schools, $142.7 million).

Nearly three years ago, the School District performed a "massive outreach effort" to ensure that school contracts remained competitive, Gerner said.

The district currently contracts with architects to design schools but is studying possibilities such as design-build concepts that would team construction contractors with architects as a way of encouraging more companies to bid on school projects.

This year, the district attracted a few new bidders for construction projects because of decreased demand for new buildings in the retail, light commercial and office sectors.

"Added competition tightens bid spreads and may lower overall bids by 2 to 4 percent," McQuerry said.

Just ask Sletten Construction Vice President K.C. Errett.

"We just bid a high school and it was $5 million less than the last high school we built," Errett said.

Similarly, Tom Fallon, president of Pace Contracting, said: "Because the School District is bringing in more competition, you have more subcontractors who are bidding prices down.

"Everyone has had to cut their prices to keep their share of the market. Right now it's a war out there for not only contractors but suppliers. Taxpayers are reaping the benefits of this competitive market."

But Frank Martin, president of Martin-Harris Construction, said companies such as his that have built schools in the past have certain advantages over newcomers.

"We know exactly what our costs should be on these schools," Martin said. "A new guy coming in doesn't have that experience."