CAPE SCHOOL CONSTRUCTION OVERRUNS EXPLAINED

School officials said a combination of state funds, interest payments from investments, and low-cost loans from the Department of Natural Resources will allow the Cape Girardeau School District to cover millions in cost overruns on its construction and renovation projects.

"The overage of the costs on the surface is not good news, but the projects should be fundable," said Superintendent Dr. Dan Steska, who is in his first month of the job.

In 1996, the Board of Education estimated in its five-year master plan it would need about $16.7 million to purchase property, renovate seven schools and build two schools. They planned to finance project costs with proceeds from a voter-approved $14 million bond issue, Proposition C rollback waiver and debt service levy.

In addition, Missouri legislators pledged $3.1 million, one-half the estimate, toward construction of a new Vocational Career Center.

In all, some $24 million would be generated, more than enough to cover costs of districtwide building and program improvements.

That was before numerous project delays, additions to construction plans, and higher-than-expected labor and material costs sent all of the district's projects into the red.

Today, with two renovation projects still unplanned, school officials have had to completely rewrite their estimates to include an additional $6.8 million in cost overruns.

"I think it was really a combination of the four factors," said Steska. "It would be nice if you could exactly know your revenue and exactly know your costs, but that's really difficult."

Steska said it wasn't difficult to determine financial committees who assisted in writing the master plan were off in their estimates of construction costs. However, they also were off the mark in estimating the amount of revenue their funding sources would produce.

He pointed to some $1.7 million the district has earned in interest from investments as an example of increased revenues. The interest has accrued largely because of project delays, he said.

"I think it's less of problem when people understand we did conservatively estimate both revenues and expenditures," he said.

Steska anticipates the district will receive about $3 million in additional revenue from several sources. About $250,000 is expected in interest payments, although that number is a "pure guess."

Another $445,000 will likely come in the form of low-cost energy loans issued by the Department of Natural Resources. School districts can apply for the loans if they make building improvements such as wall insulation or high-performance windows that result in better energy efficiency.

More than $2 million of the anticipated revenue is expected from the state to cover construction costs for the Vocational Career Center.

A $600,000 payment is due to meet Missouri's original commitment to the project. However, the state historically has picked up half the cost overruns for other vocational school building projects, which would mean an additional $1.77 million for the Cape Girardeau project, Steska said.

"We're not aware of any exceptions to that," he said.

If the new revenue estimates are accurate, Steska said the district will have an additional $1 million when it asks voters to approve a second $14 million bond issue for construction of a new high school and additional building renovations.

That proposal, which could be submitted to voters in April, does not call for an additional increase to the 69-cent levy voters approved in 1997.

Steska said the school board will decide when to submit the second bond issue to voters after they determine how well current construction projects are progressing.

He doesn't believe there will be any problems in getting the next bond issue approved.

I think when people see new buildings, progressive technology, air-conditioned schools, an outstanding, state-of-the-art vocational program I think they'll be excited," Steska said. "I think people will get excited to see progress being made even though the road has been rocky."