Inflation sucks air out of ‘discretionary’ cushion for Aspen School District bond spending
Rising project costs mean less dough for ‘nice to haves’
In a bit of economic irony, inflation — plus some significant facilities needs — has sucked the air out of a $20 million cushion of discretionary funds that the Aspen School District had in its back pocket as part of a $114 million bond for facilities work and staff housing.
The bond that voters approved in 2020 was for about $94 million, but thanks to high investor demand, the district’s high rating and good interest rates in 2021, the net project fund ended up in the triple-digit millions.
The extra funds were designated as “discretionary funds,” but the rising cost of both materials and services as well as some major maintenance needs have upped the costs of the district’s existing wants and needs, according to a bond update at Wednesday’s Board of Education meeting.
“Inflation just ate up our cushion and we are continuing to tighten the belt. … We are in flux and we don’t have the cushion we thought we had when we started (budgeting) the bond,” Superintendent David Baugh said. “We thought we had a windfall of $20 million and we’re incredibly grateful for that — we’re still incredibly grateful for that — but it’s going to get consumed in the price of paint, it’s going to get consumed in fixing roofs.”
The district is also finding that deferred maintenance efforts funded by the bond will require a lot more work than initially anticipated, according to Bob Daniel, who is part of the owner representative team for the bond and led the presentation to the board this week.
“As we’ve gotten into things on an investment investigative basis, there’s just more to be done,” Daniel said. “There are more aspects of some of these schools that need attention, because it’s been neglected for years, so we’ve seen a significant increase.”
Originally, the “estimated project costs based on wants” were $93 million at the low end and $106 million at the high end, according to the presentation. The current total estimate rings in at $131.3 million, with the biggest jumps in price coming from deferred maintenance (up to $20.7 million from an original high of $15 million), classroom and learning environments (up to $10.5 million from $5 million), and housing repairs (up to $14.66 million from $5 million).
Some of that housing repair cost estimate applies to new acquisitions, though, and board President Katy Frisch suggested moving that spending to the “housing acquisitions” category for clarity moving forward; that acquisitions category is at a current cost estimate of $47.95 million, up from an original high of $45 million.
New suggested targets split the difference to varying degrees between the original high target and the current estimate: $18.5 million for deferred maintenance, $6 million for classroom and learning environments, $9 million for housing repairs and $46 million for housing.
Safety and security work — now estimated to cost up to $4.5 million from an original high of $3 million — retained the $4.5 million budget in the new suggested target.
Other spending categories with little or no significant increases in cost weren’t subject to the same degree of budget recalibration.
The new suggested spending total is on par with the total project fund of about $114 million and change, Baugh and Daniel confirmed at the meeting.
All of those factors and recalculations mean that those “discretionary funds” that might previously have gone toward what Daniel calls “nice to haves” aren’t very discretionary any more and may need to be spent on the “have to haves” instead.
“Regrettably, what we’re saying is the discretionary projects are now gone,” Baugh said. “We’re trying to stay to the core of … our priorities — you know, the housing, the learning environments, the deferred maintenance.”
The current pace of inflation is also part of the reason the district will be putting the foot on the gas with facilities work and maintenance this summer, given that prices are expected to continue increasing as time goes on.
Much of the district campus will close to give crews the opportunity to get as much work done as possible; the closures are expected to impact some summer school, extended school year and recreational offerings, Baugh and Daniel noted.
“We want to do as much as we can this year because it’s going to cost a lot more in two years,” Baugh said.