ELY – The ISD 696 school building project is facing a budget shortfall and school board members last week agreed to approve only some of the bids received for a third bid package. Project officials recommended approving about $2.6 million in bids, instead of the $3.6 million received earlier this month, and to reconsider priorities.
The unanimous decision allows officials from Kraus Anderson and Architectural Resources Inc. more time to re-establish priorities for the $20 million building and renovation project and to allow for some money to remain to complete most of the work slated for a fourth bid package that will go to contractors early next year.
The project is seven months into a 16-month schedule, or 38 percent complete. On Nov. 1, the project was 30 percent complete with $6,125,138 spent and $14,309,304 remaining, according to Todd Erickson of Kraus Anderson.
At a school board project facilities meeting at the beginning of December, construction managers were tasked to create a budget for Bid Package 4 priorities from recommended reductions in the scope of work in Bid Package 3.
“As we look at priorities for Bid Package 4, we have, in no particular order, the boys and girls lockers rooms, special education areas, Memorial building doors and locks, science labs, additional classroom remodeling and restroom upgrades,” Erickson said. KA is looking at having the final bid package ready to release sometime in January.
“There’s a significant shortfall, and that’s why we want to make changes,” he said. “If the board were to approve all the Bid Package 3 bids, there would be no funding for the work in Bid Package 4.”
Even with potential adjustments, including about $640,000 to complete the window replacements, a shortfall of more than $800,000 remains if just four of the eight priorities in the fourth bid package, boys and girls lockers room, special education area and high school doors and locks, were completed.
Superintendent Erik Erie said earlier this month that the window replacement project could still be completed using the district’s long-term facilities maintenance fund.
The school board’s approval of about $2.6 million in Bid Package 3 last week included heating and ventilation mechanical work, fire suppression system, building controls, electrical and low voltage and data wiring.
“We have an HVAC unit lead time of about six months and need the units by about May 1,” Erickson said.
The Project Advisory Team met last week to consider potential revenue sources and reallocation. Letters were developed and sent to the Minnesota Department of Iron Range Resources and Rehabilitation and to St. Louis County, highlighting the cost increases and shortages of building materials for the school project due to the COVID-19 pandemic.
The district’s financial advisor, Ehler’s Inc., is also reviewing potential revenue sources, according to Erickson.
Construction officials are considering “value engineering” on various facets of the project, including cabinets, sprinkler design, window treatments, clocks, flooring, landscaping, sidewalks, and parking lot design to reduce costs.
“There are ways we can do that,” Erickson. “And we can circle back later with maintenance budgets,” he said.
School levy
Following a Truth in Taxation public hearing last week, the school board approved a 2022 property tax levy of $2,085,911, a decrease of $287,564, or 12.1 percent, from the 2021 levy of $2,373,475.
In September, school board members set a maximum levy showing a 6.6-percent decrease. Adjustments and refinements to the budget, particularly in student enrollment figures, were considered in setting the levy, according to the district’s business manager, Spencer Aune.
A portion of what the school district collects from property owners is attributed to student enrollment. A decline of approximately $100,000 in local property taxes is directly connected to the recent drop in enrollment, from 573 students at the start of the 2019-20 school year, to 531 students at the start of the 2021-22 school year.
Lower expenditures for post-employment benefits to school district retirees ($285,233 to $108,235) also contributed to the decreased levy, Aune said.
With the voter-approved $10 million bond for the school facilities building and renovation project contributing, debt service ($757,648) and long term facility maintenance ($162,399) make up a large portion of the levy, he added.
Other business
In other business at the Dec. 14 business meeting, the school board:
• Approved hiring Laurel Kaercher and Aaron Kaercher as paraprofessionals.
• Approved Carter Manning as volunteer assistant hockey coach.
• Adopted the U.S. General Services Administration maximum per diem reimbursement rates for meal and lodging rates for all district employees.
Interim superintendent
The Ely school board was scheduled to meet on Thursday, Dec. 23, to interview John Klarich for the interim superintendent position, and to discuss steps necessary for the hiring process to fill the upcoming vacancy in ISD 696’s top administrator position. Eric Erie recently submitted his resignation and would like to leave his post by Jan. 30, 2022.