Most expensive school building in the United States goes over budget…

… before the first concrete has been poured.

Yeoman suburbanites west of Boston voted overwhelming to build themselves the most expensive, on a per-student basis, school ever constructed in the United States (see betterlincolnschools.wordpress.com ). It will be 2.5X the cost, per town-resident student, of Newton North, a nearby high school that was formerly the high-water mark for lavish government spending.

At $600/square foot for a combination of renovation and new construction, I figured that it was set up so that there was no possibility of a cost-overrun. Here’s an email from the school superintendent:

Last night, the Lincoln School Building Committee met to review the outcomes of going out to bid for the construction portion of the Lincoln School project that is slated to begin in June. As construction bids have come in for the school building project, the total bid value has exceeded our budget for the project by 3.5 million dollars. This is forcing us to make some significant cuts from the 100% design to remove elements from the project. These cuts are going to be hard and feel frustrating, and perhaps dispiriting, at this juncture in the project. However, this is the process working – we are confronting the real costs of the project now, before work has begun, so we are sure we are building within the budget the community has provided. This is not unlike what would happen if a homeowner was planning a big kitchen remodeling project, and when they received quotes from contractors, the quotes were all higher than what the homeowner had budgeted. Tough choices to cut some aspects of the project would need to be made. Maybe the counters will be Corian instead of quartz, the island will be 10 sq./ft. smaller, and the old refrigerator will be kept until it needs to be replaced. While it is disappointing to have to make these decisions, the homeowner will still be getting a wonderful new kitchen.

They already took $15-20 million out of the construction budget via an Enron-style accounting maneuver (letting a third party company buy the solar panels in exchange for an agreement to purchase power at above-market prices for 30 years). This was necessary because state law limits the amount that a town can borrow as a percentage of property value and Lincoln was trying to go over the limit. Somehow this off-books borrowing from the solar panel vendor doesn’t count and the town therefore managed to move forward as the most indebted town in the state, but not over the limit.

The town committee volunteers/experts predicted that property prices would rise once people heard about the fancy new school building and they’d be able to borrow more. Instead, however, property prices have fallen since the vote to approve the school (i.e., the market may value the new school building at $0). So the town can’t borrow more for what the school superintendent compares to a Whole Foods heater-uppers new kitchen.

I think this is of more than local interest because of the human psychology involved. First, there is the faith that an upgraded building housing the same teachers and students using the same curriculum will yield superior academic outcomes. Then, there was the in-person town meeting Vote of the Righteous in which retirees who had no chance of ever sending a child to the Palazzo of Education enthusiastically voiced their support for saving Planet Earth by bulldozing the existing school (sections that were 25-year-olds and sections that had been renovated 25 years earlier) and creating a Net Zero structure in its place.

What is most interesting for explaining decisions in the rest of the country was that people were able to come together to agree to spend the money, but later fought amongst themselves regarding how to pay for the spending. Massachusetts enables towns to use a progressive property tax structure such that owners of lower-value property pay a lower rate. Would a town of self-described “progressives” vote for progressive property tax? It turned out to be a tougher question than Hillary v. Trump and depended quite a bit on whether one occupied a higher-than-median-value home!

Another passionate discussion ensued regarding approving the construction of more housing and commercial structures in the town. This was now vital to increase the property tax base since (a) the density of the town wasn’t sufficient to support a $110 million (with solar panels) school building, and (b) the property values of the existing houses had fallen (“Lincoln home values have declined -0.1% over the past year and Zillow predicts they will fall -0.7% within the next year.”; compare to nearby “Cambridge home values have gone up 1.7% over the past year and Zillow predicts they will rise 1.2% within the next year.”).

What happens when people who enthusiastically support U.S. population increase via migration ponder the prospect of population growth within their own town? At a minimum, any project needs to be built far away from their own homes. And, they wonder, without quoting any numbers, if the per-pupil spending at the school is $25,000/year plus capital costs of $250,000 per student, how can they make sure that the occupants of the new housing don’t breed additional children that might further drive up school spending? As the average property tax per household will settle in at about $20,000 per year, if there is even one school-age child in a household, the result is a net drain on the town treasury.

A great example of the fiscal outcomes of democracy in action!