Posted on Thu, Oct. 04, 2007
Cost of Harlan school criticized
STATE BOARD CALLS FOR MORE OVERSIGHT
By Art Jester
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Members of the Kentucky Board of Education called yesterday for tougher state policies to keep the cost of new schools from spiraling out of control -- and taxpayers from losing faith in public education.

The calls came after state auditors presented a report to a board committee detailing how the cost of the new Harlan County High School has doubled -- in a district losing both students and population.

John Cubine, director of the financial audit division for State Auditor Crit Luallen, said there were no indications of fraud or illegalities. But the report questioned the oversight of the Harlan County schools, the state education department and the state education board.

Harlan County High School, with some 1,300 students, will consolidate the county's three public high schools -- Evarts, Cumberland and James A. Cawood. The original cost estimate in 2003 was $23 million, using $13.6 million from a special state fund. When the school opens next fall, the total cost could be $48 million to $53 million, according to the state auditor's report.

The high school's site on U.S. 119 is "very strategic ... probably the best property between Harlan and Cumberland," said Mark Ryles, director of facilities management for the state education department.

The Harlan County school board paid more than $1 million for 105 acres. This site was part of 488 acres of farmland with an assessed value of only $90,350, the state auditor's report said.

Gary Hensley, the county school district's assistant financial officer, said the new high school will open next fall at a cost of $41 million, which will be covered by available funds. But he said it will take an additional $7 million not currently available to pay for athletics fields and vocational-agricultural facilities.

Although state board members expressed grave concerns about cost overruns and the need for new measures to stop them, the committee did not propose specific new policies.

Instead, board members asked acting Education Commissioner Kevin Noland to make sure the project's cost does not climb further.

"We are going to monitor this very closely," Noland said. "You've got my assurance."

Board member Keith Travis of Benton, the board's former chairman, warned that if the state continues to move toward new high schools costing $50 million, "The public will no longer support public education with these expenditures. We are treading on some very difficult ground."

Travis, the audit committee's chairman, said the board and the state Department of Education needed to "invoke some more aggressive controls." Architects don't have an incentive to control costs because they get fees equal to 1 percent of a project's total cost, he said.

Travis described the need for tougher controls as urgent, because the state has $2 billion in unmet needs for school facilities.

Board member Doug Hubbard of Bardstown said new management procedures to halt cost overruns should have "bells ringing and lights flashing, so we don't get burned again."

The Harlan County issue is on the agenda when the full board meets at 9 a.m. today.

The auditor's report blamed the Harlan County overrun on a series of factors:

"? The original $23 million cost was "underestimated" because it did not include the cost of property and the architects' fees.

"? During a three-year delay between the original estimate and the start of construction, the construction industry was hit with 15 percent annual inflation, partly because of Hurricane Katrina in 2005. The delay was partly because of the 2004 General Assembly's failure to approve a state budget.

"? A routine form used to compare available revenue with projected cost failed to reflect the project's total cost.

"? The school's size was increased nearly 50,000 square feet to 220,000 square feet.

The report said the facilities management division monitors more than 1,000 projects with only four employees, implying that the office is understaffed.

Ryles, the division's director, said he took personal responsibility for the state's approval of the Harlan County project at all stages. But in a review of the events, he explained why all actions were within existing standards and regulations.

Reach Art Jester at (859) 231-3489 or 1-800-950-6397, Ext. 3489.