How inflation is impacting West Linn-Wilsonville's capital bond work
West Linn-Wilsonville School District officials are looking forward to renovating campuses and opening new schools in the next few years thanks to bond funding approved by voters.
Rising inflation, however, has caused these officials to reconsider original budget estimates.
The cost of just about everything has spiked over the past year due to inflation, and school districts like West Linn-Wilsonville are not exempt from this national trend. With the current inflation rate hovering at 8.3% as of September — a significant jump from last year's 5.4% — as well as rising fuel prices, ongoing supply chain disruption and labor shortages, costs to build district facilities have skyrocketed.
But officials say that the work will get done regardless.
How did this happen?
In 2019, citizens voted to pass a $206.8 million capital bond that will help the district complete seven major projects across the district — one of which is a new elementary school, middle school and new facilities at both high schools.
Due to Oregon laws and regulations, school districts like West Linn-Wilsonville get their budgets approved every couple of years before they send out applications for contracting companies to bid.
The construction site most impacted by rising costs is the new primary school on the Frog Pond Park property, where the CREST farm was previously located in Wilsonville. The school is set to open in the fall of 2024 and will welcome roughly 350 students. The school may act as a solution to account for rising population due to housing development.
The original budget estimated the district would spend $39 million from the capital bond building the new school. As of Sept. 2022, the district's estimate of completion amount is hovering just over $52 million — about $13 million over the original figure.
A shortage of workers within construction companies and delays in the delivery of materials due to supply chain issues are additional challenges faced by the bond team. The main reason for the increased budget at Frog Pond is the rise in prices for material goods.
"The availability of labor and material is stretching out. We're now beginning to see it getting worse, not better, as we had hoped, in January," bond program manager Remo Douglas told Pamplin Media Group.
Fuel costs are also driving prices upward. The district primarily uses diesel to fuel machinery for each project, and diesel prices are up nearly 80% according to the U.S Energy and Information Administration.
Douglas said other projects the district is working on, such as the auditorium at Wilsonville High School, are less impacted by rising costs due to contracts being locked in for those initiatives — meaning, for the most part, labor costs cannot change due to inflation.
"So there's a lot of work that we're doing to counteract (inflation impacts). But it can't be ignored; inflation in construction — we refer to it as escalation — is very real," Douglas said. "We are just holding tight for the moment, because 10 months from now we don't know what will happen. We need to be cautious and conversative with our financial planning for projects."
District officials reiterated that the bidding process for the primary school project has not started, allowing them time to make budget adjustments.
What are they doing?
Douglas said the bond team does not plan to pull funds from any other construction budget, and particularly safeguards projects related to safety and security improvements. The district is currently in the process of moving money around.
During the Monday, Sept. 12, board meeting, the bond team outlined some of the upcoming plans for capital projects happening this year. Kim Jordan, long-term planning committee head, said the district is also reevaluating how it scales each project and what plans can be changed in order to battle against fluctuating inflation.
"There's some discussion about the scale of projects. How do we change the scale? How do we adjust scale? How do we use creative architecture to maybe solve some problems and save some money?" Jordan said.
For instance, Boeckman Creek Primary School needs a new roof at some point, and the district planned to distribute money in the near future for these improvements. Now, the bond team plans to post postpone the project to free up money for more pressing initiatives.
The district also receives reimbursements from lumber and energy that it used while building Athey Creek Middle School.
The bond team has ordered and locked in prices for furniture needed in the new schools. These purchases are a bit premature but will hopefully allow the district to beat any future inflation waves.
"We are just making sure that things are being done in the most efficient and cost-effective way possible — just really analyzing everything. How can we still build (a) school up to district standards and equitably to match the quality of our other schools, while also making sure that we're using the space as efficiently as possible?" Jordan said to the board on Sept. 12.
But the bond projects continue onward, and officials are confident that work will conclude and students and staff will enjoy the fruits of that labor at some point.
"We are not in a crisis point right now. We still feel really good about these numbers and there's a lot of change happening and coming forward that you would still consider these (to be) very viable projects based on our demographics and our overcrowding and our population numbers in schools," Jordan said.
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