Dayton Daily News education reporter Scott Elliott writes about schools, kids, teaching and learning.
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Lucas: Reynolds deal paying off
In 2003, Dayton Public Schools shocked a lot of people when it bought the former Reynolds & Reynolds world headquarters on Ludlow Street in downtown and consolidated three administration centers there as a single, central administrative headquarters for the district.
Efforts by the city and other downtown business leaders to talk the school board out of this move — arguing that another corporate client would be better for the location and that the board could find other suitable locations for its administrative home base — did not dissuade the board. So board members signed a deal to spend $15.5 million to buy the building.
Concerns, anger and above all lots of questions were raised about this move in the last month as the district began struggling with tight finances. A couple weeks ago, I asked Dayton’s school Treasurer Stan Lucas if he would be willing to answer a list of 10 questions about the Ludlow buildings and purchase and he agreed to do so.
Most of these questions came from GOTB readers through comments on different posts about the district’s finances. I added in a few additional questions. Here they are, with Lucas’ responses:
1. The reported cost of the Reynolds purchase was $15.5 million. What was the true final purchase cost and how is DPS’ payout for the purchase structured? Is it true DPS faces a balloon payment in 2007 that could be part of the reason for the levy?
Stan Lucas: The total amount financed for purchase of the facilities was $16,323,995 at an interest rate of 5.38 percent for 25 years. There is no balloon payment required. The purchase of the Ludlow property was made with capital funds. These funds are earmarked specifically for district facilities and are separate from operating funds, which are used for expenses like textbooks, salaries and utilities. The financing included the buildings, furniture fixtures and moving costs as shown below:
Buildings and Furniture: $15,570,000
Moving and Improvements: $500,000
Issuance Cost: $252,995
Total Cost: $16,323,995
2. In 2003, the district estimated the Reynolds deal would save nearly $9 million in four years. How much savings have been realized as of today, almost three and a half years after the sale closed?
Stan Lucas: Our analysis shows the purchase of the Reynolds property will have saved the district’s general fund $5.9 million through fiscal year 2007. While we did not realize a $9 million savings in the short term, we will continue to see savings of $2 million a year, at a minimum, from the consolidation of staff that resulted from the move to this location. Our purchase of the Reynolds property is a capital investment for the future; we are here for the long term.
3. In 2004, you told the DDN that administrative consolidation at the Ludlow buildings was saving the district about $2 million a year, which you said was less than the anticipated $2.25 million annual saving you projected but still enough savings to help stabilize the budget. How did you arrive at those figures? Can you demonstrate today that the Ludlow purchase still is a cost saver for DPS?
Stan Lucas: As discussed in the previous answer, our analysis demonstrates the district will save $5.9 million in the general fund through fiscal year 2007. This figure represents the total dollar amount saved from the consolidation of three facilities into one and the reduction of the central office workforce. We will continue to save a minimum of $2 million a year in salary and benefits from the central office positions that were reduced as part of the consolidation when we moved to the Ludlow facility. In addition to a projected $10 million in savings over the next five years, the district will be building millions of dollars in equity in the years to come.
4. You’ve acknowledged to the DDN that it cost more to prepare the Ludlow buildings for move-in than expected. What was the expected cost of retrofitting the Ludlow buildings for DPS use and what was the true cost? What were the additional upgrades that were undertaken and why?
Stan Lucas: We did encounter some issues when we moved in, the most troubling of which was the need to repair the elevators and bring them up to code for a public building. We also encountered a breakdown in the HVAC (heating, ventilation and air conditioning) system that we had anticipated we would be able to upgrade over a long period of time. In order to protect our investment in the building, we moved forward to make all the repairs up front. We financed the improvements without using general fund money, issuing a 10-year long-term note for $3.5 million at 3.3 percent interest. (The balance of the $3.5 million note was used for other district repair needs.) This note will be paid from the permanent improvement fund, which is separate from our operating funds, or general fund. Total improvements were as follows:
HVAC: $1,700,000
Elevator Upgrades: $400,000
Fire Alarm Upgrade: $250,000
Electrical Upgrades: $130,000
Total: $2,480,000
5. Teachers who comment on DDN’s education blog say the Ludlow II building, which is used for some training programs, seems largely empty most of the time. How many people actually work there and what do they do? Is the idea of closing down or selling Ludlow II feasible as a cost saver?
Stan Lucas: Staff training is a vitally important part of the district’s ongoing efforts to improve student achievement. Teacher training, as well as training for all DPS staff takes place throughout the school year for the district’s employees. Prior to our move, Reynolds and Reynolds used the Ludlow II Building as a training facility. The majority of the building is comprised of classrooms, which has made it a good fit for the district’s use as a training facility for staff. In addition to training sessions, building is used for principals meetings and other district meetings. There also are two district departments housed in the Ludlow II facility. We currently have 24 employees at the Ludlow II building. Staff development has 10 and the HR Department has 14.
6. The Ludlow buildings consolidated three former administrative centers, combining workers from Jackson Center, the former Roosevelt High School and the old administration building on First Street. How many total people now work in the downtown buildings and how many worked at those three centers before the move?
Stan Lucas: We are continuing to right-size our district staff, including our central administration office, to be leaner and more efficient. We are not the same school district in 2006 that we were in 2002, when we began this process. We originally moved 276 administrative and support staff to the Ludlow facilities. We have reduced that count further over the last four years and currently have 226 staff , a decrease of 50 positions. (The consolidation effort was originally targeted to central office administrators and support staff and did not include teachers, psychologist, interpreters, and occupational therapy and speech and hearing therapy staff who are assigned to the administration building for payroll processing purposes.)
7. Part of the district’s real estate strategy that figured into the Reynolds purchase was the sale of unused buildings, especially the former First Street administration building, the former Patterson High School and eventually possibly even Patterson Career Center and Roosevelt High School. The district has since decided to demolish Roosevelt in favor of a new school on that site and to keep Patterson Career Center for a new Montessori. What happened with the sale of the other two buildings — the First Street administration building and Patterson High School? What is the fate of those buildings now?
Stan Lucas: In every case, honest efforts have been made to maximize use of facilities and/or to convey structures to potential buyers. However, the sale of unused buildings was never part of the planned savings, because there is no way to predict the market or the final sales price. Efforts continue to sell the First Street Administration Building. Above all it’s important to keep in mind that simply to stand still with outdated facilities carries millions of dollars in annual upkeep costs. The Board feels strongly that those dollars are better spent in the classroom.
8. Teachers sometimes get E-mails from downtown listing the “specials” at the cafeteria inside Ludlow II. Does this cafeteria pay for itself? Why does DPS need a cafeteria in Ludlow II when there are two coffee/sandwich shops literally next door on both sides of the building (Terra Cotta and Kobricks)?
Stan Lucas: Nutrition Services is a self-sustaining profit center which is not supported by the district general fund and, therefore, must develop ways of generating revenue to support its entire food service operation. Chloe’s Café was established to provide a low-cost competitive alternative for nutritious meals for our employees. Many corporations provide food service options for their employees. Chloe’s is a division within Nutrition Services that generates revenue from three different areas—café, catering and vending. All of these are areas that help to supplement and generate revenue to increase the Nutrition Services’ profit margin. According to the Nutrition Services Department, they plan to expand Chloe’s Café to include downtown patrons. Revenue generated will allow them to provide additional services to the students we serve, such as breakfast at no charge for high school students.
9. What is the plan for the former Wilkie bookstore portion of the Ludlow I building? The rumor is work has stopped on a new board room for public meetings and television studio for taping school district TV programs because of the budget crisis.
Stan Lucas: That report about work stopping on converting the space is accurate. It would be irresponsible to proceed given the present financial circumstances of the district. This space will eventually be used for a community meeting room. Administrative meetings will take place there, including Dayton Board of Education meetings. Dayton Public Schools TV will be able to tape board meetings and other events in the facility. The project has taken a back seat to more pressing school building needs at this time.
10. If you could go back, would you still recommend the Ludlow purchase knowing everything you know today?
Stan Lucas: Yes. We were able to consolidate our staff and move them from three separate locations into one centrally-located facility that was a good fit for our employees and our organization’s needs. The move greatly reduced interdepartmental travel to conduct daily business; provided better coordination of services and, as a result, a higher level of service to our customers; and—most important of all—did result in an increase to the district’s general fund budget. We will be making a capital investment for the long term, while avoiding more than $30 million in repairs and upgrades to three separate facilities.
Permalink | Comments (16) | Categories: Dayton Public Schools, My Favorite Posts
Comments
By Joe Lacey
December 12, 2006 10:22 PM | Link to this
Oldprof, “things” doesn’t cut it as a contingent cost of the decision to purchase Ludlow. You’ll have to be more specific. If it’s something that you think should be obvious to me, you’re wrong. This discussion has been going on for over three years and no one has been able to point out the contingent costs or savings that justify the purchase and renovation of the Ludlow properties. Once again, consolidation was clearly not contingent upon the purchase of new property, and consolidation is the center point of the administration’s argument. They clearly don’t have sound financial reasoning behind this decision which leads people to wonder what reasons other than financial reasons were behind it. If it’s really about having a more professional looking office space then the decision should be defended as such, not through some bogus savings. Give Stan Lucas a break from having to defend this decision financially with a straight face.By Karen
December 12, 2006 9:39 PM | Link to this
Oldprof, do you have something specific in mind that Mr. Lacey is missing?By Oldprof
December 12, 2006 8:46 AM | Link to this
Yes Joe, you’re missing things.By Joe Lacey
December 11, 2006 5:15 PM | Link to this
Oldprof, as a board member, I request information from administration on our accounts. I would not rummage through them and open records law does not require DPS to rummage through them. Records requests must be more specific, identifiable. With regard to the Ludlow decision, I would be happy to request the costs contingent upon that decision. Maintenance costs are contingent only to a degree since DPS continued to maintain Roosevelt for years after the decision. Transportation is not a contingent cost, both sites are within the district and both are reasonably close to the center of the district, a point northwest of downtown. Salary reduction through staff attrition is not a contingent cost because, as I have said in my post above, consolidation could have taken place at either location. The only other contingent cost I can think of is the cost of the Ludlow facilities, originally reported at $15.5 million plus renovation costs, and the cost to move offices from Roosevelt to Ludlow. Am I missing anything?By Mary
December 11, 2006 3:17 PM | Link to this
DPS teacher, I do not know if you are right or wrong, but I just want to say I found the tone of your comments honestly refreshing. Gee, a real live teacher who’s not afraid to think and express herself/himself.By Oldprof
December 11, 2006 3:12 PM | Link to this
Thanks for that offer, Joe. I must have misunderstood when, in the broadcast of board candidates, you mentioned that you wanted to go through the books. But I’m confused; Stan Lucas has to open the books to any reasonable person who requests them—they’re public records in Ohio. As a public employee myself, I see my salary regularly published in a nearby regional newspaper—there are no secrets. Sure, I could get Lucas to open the books, but you as a board member would have an easier time—after all, Stan Lucas works for you. So let us know what you find about all those maintenance costs, transportation, salary reduction through staff attrition, and all of the other contingent factors in the Ludlow decision. I’m confident you’ll miss nothing.By dps teacher
December 11, 2006 2:25 PM | Link to this
To DPS parent: How do you know I am not one of your children’s teachers? As professionals, teachers are not about to voice our displeasure to our parents. I am only part of the union because of the Ohio revised code AKA “fair share”. I was happy with the last contract agreement and voted YES to accepting it. Percy is at his best when dealing with parents but he is full of hot air and obviously he has blinded you with his pearly whites. Ask your teachers in the new buildings where they store everything. Ask them how the new cafeteria/auditorium is working out. Ask them if all of the unified arts teachers have a place to teach. Ask them about inclusion. I am sure you don’t hear about the problems and the mismanagement of DPS from the teachers and that’s why you think that since I am voicing my concerns, I am an unhappy teacher. I am concerned with the direction in which this district is going and you should be also. Dr. Mack can whitewash with the best of them and he sure has you fooled. If he is so good, why have so many families left the district for charters? I don’t need DEA to tell me what I think; I can form my own opinions without their help and believe me I do.By Joe Lacey
December 11, 2006 1:03 PM | Link to this
No architect or engineer, from the state facilities board or anywhere, ever indicated in any way that the cost of maintaining Roosevelt would be higher than the money put into the purchase, renovation and upkeep of the new offices at Ludlow. Oldprof’s opinion does not rely on experts. I never said that I would personally perform an audit of DPS. I have said that as a certified public accountant, I can look at the information provided to the board by the administration through the eyes of an experienced auditor and I have regularly pointed out problems with accountability, materiality and other fiscal matters that DPS faces. I would be more than happy to perform audit procedures, sample and test transactions at DPS if Oldprof feels that this would benefit our schools. Just ask Stan Lucas to open the books and I’ll start rummaging through them to see what I can find.By DPSParent
December 11, 2006 12:18 PM | Link to this
WOW DPS Teacher! If you are that un happy May I suggest you leave the district ASAP!!!! My Kids attend Kiser and we LOVE the new building!!!! Every teacher I have spoken with also love the buildings… Sounds to me like you are a Union hack pandering for a new better contract. Please leave DPS ASAP!!! You are part of the problem!!! Parents like Dr. Mack! I love my children’s teachers glad you are not one of them.By dps teacher
December 11, 2006 11:38 AM | Link to this
While I understand the need to consolidate the central office staff into a central location, I believe there was a more sensible way to do so. I can’t believe that the old Patterson building could not have been used in some way, but I don’t think Roosevelt would have been a viable alternative, too old, too much refurbishment, not centrally located, etc. Nothing that happens in this district surprises me. The new buildings are already too small, with not enough room for all the classes and staff. They look nice but they are poorly designed with very little thought put into education. We are finding that adding seventh and eighth grades to the elementary buildings was a poor idea. These students are poorly behaved, disruptive, and bad examples for our young students. Discipline and morale are low and the district continues to ignore staff and parental concerns, so much so that parents are moving their children to charter schools because of these concerns and lack of action by the district. Once again Dr. Mack and the board sold the Dayton community a bill of goods in building these new schools and it won’t be long before someone else will have to clean up his mess. His promises aren’t worth the air they pollute.By Oldprof
December 10, 2006 9:55 PM | Link to this
Well Joe, I am not an old prof of architecture or engineering. I am therefore going to rely on the experts at the state facilities board. I am of the opinion that the costs of maintaining those old, crumbling facilities had to have been higher than the costs at Ludlow. But you’re the accountant, and I recall your campaign promise that you’d audit the district’s books and see what you could find—so I’ll trust you on that point like I trust the state’s architects and engineers in their area. What have you found about costs and savings in the books?By Joe Lacey
December 10, 2006 10:55 AM | Link to this
From a cost accounting standpoint, the overriding error in Mr. Lucas’ argument is his assertion that the benefits of consolidation can only be attained from the purchase of and moving to the Ludlow facilities. The savings from consolidation could also have come from consolidating in Roosevelt, the building they were using at the time of the purchase. I’ve brought this point up in numerous meetings and no one has been able to provide me with a good reason why Roosevelt could not have been used. People have claimed some completely ridiculous estimates of the cost of using Roosevelt such as quoting the $30 million or so estimate from the Ohio School Facilities Commission, but their claims ignore the simple facts that this estimate was to essentially gut the building and build a new high school inside that meets OSFC guidelines and that the building, building, at the time of the decision was already operational as an administrative building. I’ll let Oldprof proof this for me if that’s his contribution to school policy discussion.By Charterschool Hater
December 9, 2006 9:46 PM | Link to this
I have many friends who work in DPS that keep telling me that the Operations Department is putting in many hours of OT working on the Ludlow buiilding. They have since it was acquired. Scott, could Lucas be asked about this? I have haed it from so many different people, it seems to have some validity. Thank You.By Oldprof
December 9, 2006 7:32 PM | Link to this
Ladies—or should I address you both by the higher title, teachers? Take a deep breath and remember that a plural doesn’t get an apostrophe. Those numbers are real; administrative staff has really been reduced, not just moved. Cost savings in upkeep and efficiency are real, not invented. This building came before school buildings because (a) opportunity to save money was there in 2002, but might not have been in 2003 (b) the school rebuilding process required a levy—16 million dollars would not have rebuilt the district—the schools ARE being rebuilt, and the extra 2 million per year will help ensure their continued upkeep. Sure, this isn’t perfect—the comment about training on the teachers’ site after class hours is valid, if all the trainees are from that one school—but the numbers say that Ludlow was decided for the right reasons.By Barb
December 9, 2006 12:27 PM | Link to this
Mr. Lucas thanks for dancing around the questions. I feel I know absolutely no more than before you answered the questions. You said you cut staff at one building but did not say if you just moved staff to another building. How many empty rooms are in Ludlow l? Could those rooms be used as training rooms? How about empty classrooms in regular school buildings? How many administrative positions have you moved out of Ludlow and just put on the payroll somewhere else so that no actual administrative jobs have been cut? I hear people in the real estated community comment that this purchase was a fiasco yet you are still unwilling to admit any error in the decision. Shouldn’t there have been inspections that would have told you these additional repairs would be necessary before the purchase or were you in too much of a hurry? An lastly if the monies were earmarked for district facilities doesn’t that mean that money did not go directly to the school buildings in which the students are attending and went to these buildings for administrators. Kid’s First?By Terri
December 9, 2006 11:50 AM | Link to this
RE Ludlow II. Why can’t teacher training and meetings be held in school buildings? The training and meetings I have attended began after school hours so space would have been available. The new Kiser building would be an ideal site. RE the upgrades. Were the upgrades unexpected? If so, why. Were the elevators/HVAC/electral not inspected prior to the purchase? RE the cost of moving to Ludlow. Furniture was lumped in with the purchase price. Why? What furniture was purchased and why? Why couldn’t they take what they had at the previous locations? I know the cost was probably small in comparison to some of the items in the list, so why lump it together with the real estate purchase? And even if it was small, it could have been spent on new student furniture instead. LAst comment (for now) Is Ludlow at capacity? Every office used? If not, is there enough room to put the Ludlow II people there?