The school building scam

In 1963, 75 cents of every public education dollar was spent on ’student services’ - teacher salaries, books, classroom materials - and the remaining 25 cents was spent on ’administration, facilities, support services’. Fifty years later, that ratio is reversed. 75 cents of every public education dollar is spent on just about everything else but the education of our kids. Where does the money go? The list is long and full of surprises. The usual suspects are present - unions, government contractors, school board insiders, lobbyists. They have the political and administrative muscle to ram through spending plans that run counter to the students’ best interests. The spending snowball usually begins with “Let’s build a new high school” - a surefire way to load up the gravy train and get the parasites circling like vultures.

Today’s high schools rival college campuses for size, facilities, construction quality and materials, electronic and lighting technologies, operating costs and maintenance. Many have Olympic swimming pools, Broadway-style theaters, collegiate-level athletic facilities and cafeterias that rival those of the Fortune 500. All of these facilities are overpriced, overbuilt and extraordinarily expensive to operate. Everyone involved in the process benefits from this except, of course, the taxpayer. The students are for the most part oblivious to their surroundings. So, who exactly benefits from this state of affairs?

Let’s begin with the school board. It’s usually packed with people predisposed to favor public employee unions, government contractors or public financiers, either through outright ignorance or because they were voted in with their support. There is no real oversight of school boards, and no legal means to compel them to be circumspect with taxpayer money.

School construction is very expensive. In fact, it’s the most expensive type of building in the US except for nuclear power plants. And no one knows why. But, because that local high school is going to cost $100 million (how did they know that going in?), bond underwriters are flying in from all over the country to shock and awe the school board with their financial prowess. Obviously, no school district can afford to build a high school with available cash. So, they will issue bonds, guaranteed by the local taxpayer, to create a 30-year mortgage. The firm that creates those bonds and sells them to investors will pocket nearly $10 million for its efforts. Not bad for 90 days work. And yes, the local taxpayer will be on the hook for it.

Schools take up lots of real estate. Usually, it’s very expensive real estate located on a main thoroughfare. That means brokers, developers, landowners, insurers and yes, teacher pension funds, vie for the opportunity to sell land to the school district, simply because the sale price will be above market, and will have traded hands several times before the sale. It’s an opportunity to play favorites, broker influence and who knows what else.

Then there’s the planning and architectural work. Once again, engineering firms, architects, interior designers, furniture companies, consultants, technologists and a whole gang of specialists buzz around trying to get a piece of the work. There are hearings, planning sessions, bidding, re-bidding and awarding the contracts - all of it an opportunity to waste money and peddle influence.

Moving along, there’s the construction itself. Savvy government contractors are adept at padding the bill, running up change orders and working the price variance in commodities like gypsum and concrete to their advantage. They are committed to using union contractors wherever possible, which also adds to the cost and pads the build schedule. But hey, what’s the problem? It’s free money.

And finally, after all the computers are installed, the refrigerators are humming and the desks have been unpacked and arranged, the students file into their new school. Is the education they’re getting any better? No. Have the teachers gotten any smarter? No. Has the curriculum improved, has the selection of books been carefully vetted? Of course not. So, $100 million later, our kids are as poorly served as they were in the previous facility. The only difference is that lots of people made lots of money off the backs of the taxpayer.