Prop. BB Multiplication Tables

The inspector general of the Los Angeles Unified School District confirms that the district is paying too much for management of the $2.4-billion Proposition BB school construction and repair projects. The fees being charged by the project managers, working under 3D/I-O’Brien Kreitzberg, range from 18% to 20% of actual costs, three times the industry standard, according to Inspector General Don Mullinax. Interim LAUSD Supt. Ramon Cortines and Chief Operating Officer Howard Miller should demand that the firm reduce the fees.

Why shouldn’t the company be fired? The inspector general made a case for why not: The client, the school district, is not blameless. Costs are up in some cases because the district didn’t plan, had the wrong orders, changed design or simply was too slow. Mullinax does recommend that all the major players--the district leadership, the BB committee, the project management firm and individual project managers--sit down and figure out how to reduce the excessive costs and get more schools built and repaired.

The California State Allocation Board guidelines for program management fees allow a maximum range of 4% to 8% of the construction costs of a project for which a local district seeks state funds. The industry standard is from just under 6% to 7%. In San Francisco, fees range from 2% to 6% of actual construction costs. In Chicago, where the school district spent 18 months planning before embarking on a $2.1-billion capital improvement plan, property managers were paid 8.11% to manage work such as air conditioning, plumbing, flooring, roofing, walls, parking lots and landscaping--much like the BB repairs. In New York, the fees ranged from 8% for new construction to 11% for modernization.

In Los Angeles, every 1% increase in construction-management fees amounts to an additional $24 million paid from Proposition BB funds to program and project managers instead of being spent on repairs or new construction.

When the LAUSD’s accusations concerning excessive project fees first arose, the Proposition BB citizens oversight committee and district staff disagreed on how much of the money had been spent on management. Considering the district’s antiquated financial systems, pencil-and-paper record-keeping and high turnover among the facilities staff, the dispute was no surprise. Mullinax’s report takes another jab at district employees, who he says continue to “defend, deflect and deny.” The internal turf battles, lack of communication and stalling must end; they merely feed the perception that the school district is a public trough.

The Mullinax report is the most thorough analysis yet of BB management fees, but it won’t really settle the dispute over the numbers between the district and O’Brien Kreitzberg. The firm went to court Wednesday to block release of the report, but the judge rightly sided with a public that has a right to know how its dollars are being spent--or wasted.

The inspector general’s report also isn’t expected to calm the dissension between the district and the Proposition BB civilian oversight committee. Chairman Steve Soboroff has disputed the overcharge figures and defended 3D/I-O’Brien Kreitzberg. He has plenty of experience in real estate development, which should give credibility to his analysis. But he is running for mayor, and his political ambitions reduce the perception of his objectivity.