Doubts and Questions about $100 Million Administrative Building Continue to Grow

Last month, Superintendent Dale presented his school budget for FY 2010 and stated that any further cuts in the budget would compromise the top-quality education provided by Fairfax County Public Schools (FCPS) and require decades to recover.  Now, on the eve of his presentation to the Board of Supervisors of a revised proposal to purchase the Gatehouse II administrative office building, the Superintendent has announced that he has found $8 million in additional administrative savings that are unrelated to the Gatehouse II proposal and is attempting to use these savings to win support for the Gatehouse II purchase.

While we applaud the Superintendent for taking another look at his budget and finding the additional $8 million in administrative savings, and we encourage him and his staff to continue to look for administrative savings that will preserve resources for school-based uses, these savings should not be used to help sell a fiscally irresponsible proposal to borrow $100 million to purchase and renovate an administrative office building.

Superintendent Dale claims there is a lot of misinformation in the community about Gatehouse II, but the fact is the more FCPS attempts to justify Gatehouse II, the more the questions and doubts in the community continue to grow.  For instance:

• FCPS bases most of the savings in its revised proposal for Gatehouse II on the elimination of an additional 10 positions, bringing the total reduction in positions to 28.  In fact, the proposed position cuts represent $54.9 million (about 90 percent) of the overall promised savings.  The school system has not provided details, however, on the specific positions being eliminated.  Presumably, the first proposal on Gatehouse II eliminated all positions that would have been redundant as a result of the proposed consolidation, which raises the question whether the savings from these additional position cuts are possible solely due to consolidation or could be realized without borrowing $100 million to purchase Gatehouse II.  Further, FCPS does not specify whether all or some of the position cuts will represent an actual reduction in staff or the elimination of positions that are authorized or budgeted, but not filled.  If any of these proposed position eliminations are not actual staff reductions, it raises questions about whether the assumed savings from such eliminations are real savings and whether they are simply “paper” savings.
• The FCPS business model ignores key costs that significantly drive up the cost estimates for Gatehouse II.  Examples of items not included in the Gatehouse II cost estimates include:
  • Costs associated with 7 of the 10 buildings currently owned by school system will be retained in whole or in part by FCPS after the purchase of Gatehouse II. The pro-rated costs of these properties could add in the neighborhood of $22.9 million in net present value costs.
  • Non-bond funded major maintenance and base maintenance costs are not included in the business model for Gatehouse II.  Although Gatehouse II will be newly renovated when FCPS moves into the building, FCPS already plans parking and traffic improvements.  These costs will run into the many millions of dollars.
  • The Gatehouse II proposal includes no travel costs even though status quo travel cost estimates would total about $2 million in net present value.  Given that FCPS claims a majority of the people moving to Gatehouse II fill school-based positions, it seems likely that travel costs will go up, not down, when FCPS moves into Gatehouse II.
• Superintendent Dale admits that FCPS is spending millions per year on rent for old buildings at the end of their life cycle, but fails to acknowledge that many of its leases are up for renewal in the next year and that FCPS can obtain much more favorable rates given the current state of the commercial real estate market.  As Supervisor Herrity points out in a recent article (see link below), the alleged savings in the Gatehouse II proposal are distorted because the numbers assume FCPS would have to continue leasing office space at the same prices as its current leases if it does not purchase Gatehouse II.
• Superintendent Dale continues to assert that Gatehouse II will have no negative impact on school renovations or school construction, but ignores the fact that Economic Development Authority (EDA) bonds like those that would be used to fund the purchase of Gatehouse II have been used in the past for school construction.  The current Capital Improvement Program (CIP) adopted by the school board limits new construction and new renovations in order to focus resources on capacity issues.  EDA bonds could be used for new school construction in order to make up for the limitations in the current CIP.

Fairfax County is in the midst of one of its most difficult budget cycles in decades.  Our focus should be on finding administrative savings in the school budget in order to preserve resources that directly impact our students, teachers and schools, not to justify the purchase of an administrative office building for a price considerably above market value and even above the $43.5 million paid by the current owner in late 2006 — at the height of the real estate market.

See the link below to an editorial opposing the Gatehouse II proposal:
http://www.connectionnewspapers.com/article.asp?article=325649&paper=73&cat=110

See the link below to an article on the Gatehouse II proposal:
http://www.connectionnewspapers.com/article.asp?article=325915&paper=63&cat=104