Kenn Gardner Leter to WCPSS

January 12, 2007

Mr. Del Burns

Superintendent

Wake County Public Schools

3600 Wake Forest Road

Raleigh, NC 27609

RE: Bond CIP Questions

Dear Mr. Burns:

It was noted by Don Hayden after the Jan 8^th Commission meeting, that he had not seen a spreadsheet document I was referencing during the school issues discussion. I had assumed that the document came from WCPSS and so I would like to take this opportunity to apologize to you, Don Hayden and Mike Buriss for using the document. It was in my packet and was stapled together with the WCPSS answers to the questions the Commission had asked. After the meeting I spoke to Don and realizing his frustration, I did apologize to him. I have followed up with the County Manager and I have been assured that even if that particular spreadsheet was not familiar to WCPSS, the numbers used were from the school system.

My intent is to try and understand the material before each meeting and I did not receive any information from the school system regarding answers to the questions raised in the December 4^th and December 20^th meetings until last Friday, Jan 5^th. As I reviewed the material over the weekend, I became concerned by what I perceived to be a shifting of money between line items by the school system without a clear explanation. I am uninterested in the rhetoric that has occurred since the Commission meeting and I would like to focus on the issues that I think need to be clarified.

I am attaching the spreadsheet that was in my Agenda Packet (Page 4) and the Spreadsheet that was on the WCPSS website (Page 5) as the foundation documents. I have attached a combined spreadsheet (Page 6) to more easily highlight the differences between the two documents.

I still have concerns and would like to have them addressed for clarity and to establish one document that we can all refer to as “THE 2006 Bond CIP Spreadsheet”. Currently we do not have that document.

My questions are as follows:

1. PROJECT MANAGEMENT:

I understand that WCPSS takes a portion of the Bond for project management services, which is an operational expense. A 3.5% multiplier was used in the assumptions although I did not realize it was the WCPSS intent to apply it across the entire $1 billion bond.

Former Superintendent Bill McNeil stated to the Blue Ribbon Committee that the cost of construction has doubled in the past several years, yet the cost of employee salaries and benefits has risen modestly over the same period of time. I question the use of a project management multiplier based on fast rising construction costs and see this as a significant issue that, if revisited, could free up additional bond funds immediately for seats or land.

Action Request:

a. New Column:

I would like to see a new column which states what that amount is for each line item. (Much like what has been done for Building Permits).

b. Historical Validation:

I would like some historical validation of what your actual project management expenses are. After review of last year’s Superintendent’s Budget I was unable to see where previous bond funds used for Project Management were identified. Please clarify.

c. Outsourcing:

I would like to know if the WCPSS has thought about outsourcing the Bond Program Project Management. I believe this could be substantially less expensive and free up more money for land or additional schools. I would ask the CFAC Committee to investigate the industry standards to validate the assumption.

2. CONTINGENCY FUNDS:

I understand that a 2% contingency is built into every project. The Agenda spreadsheet shifted this amount from every line item and consolidated it into a new category. I

have concerns that non-building related categories could be harmed by diverting their funding into a single contingency fund.

Action Request:

1. New Column:

I would like to request a new column indicating what each project contingency is.

2. Land Purchase:

It appears that $2,777,109 is being diverted for PM and Contingency fees out of the purchase of land. Taking contingency money away from the purchase of land does not appear to make sense, and the PM multiplier would appear to be excessive. Please clarify.

3. Technology, Life-Cycle Replacement, and Assessments:

These appear to be service contracts that would not require intense PM supervision. Please clarify why $2,309,628 in contingency and PM services are being taken from these contract service items

3. PM / CONTINGENCY COMBINED PERCENTAGE:

When comparing the two documents, there is a difference in the line item project budgets. The Web document has included PM and Contingencies in a total project budget. The Agenda Packet spreadsheet has taken these items out of the project budget, yet there is no consistency or explanation.

I thought I understood that 3.5% was for Project Management and 2% was for Contingency, so each line item should have a 5.5% difference, but they do not.

Action Request:

Why is it not 5.5%? Please clarify.

1. Renovations:

Vary from 1.37% (Smith E.) to 7.29% (Cary H.) and 6.73% (Lacy E). I believe that by adding the new columns for PM and Contingency this will help explain the differences, but I would like a simple clarification.

2. Enloe:

Why did Enloe’s budget increase by $490,250. Please clarify.

3. New:

Varies from 2.15% (E31) to 6.11% (E17). Please clarify assumptions.

4. Mobile Classrooms:

Increased by $3,689,666 (+27.86%)

5. 9^th Grade Centers:

Decreased by $4,562,691 (-26.71%)

These are fair questions that need to be addressed. Let’s put aside the rhetoric, clarify the assumptions, establish the correct figures, and build some schools.

Thank you for you consideration and I look forward to your clarifications.

Sincerely,

Kenn Gardner

Wake County Commissioner

5417 Hunter Hollow Drive

Raleigh, NC 27606

CC: Ms. Billy Redmond Mr. John Mabe Mr. David Cooke

Board of Commissioners Board of Education