The Chicago Public Schools closed 50 school buildings this last summer amid valid concerns about the cost of maintaining older buildings and allocating resources to schools that no longer have the neighborhood population to support them. In a publicly embarrassing week of announcements, the Mayor noted that four new schools, renovations or additions will be performed using TIF dollars, and the more cynical among us noted that at least three of them will be executed in time for the Mayor to do a ribbon-cutting while he seeks re-election. Those with experience in facilities management know that the borrowing done through TIF allocation does not overlap with operation funds (although the two have an inextricable link as they both get their value from the property taxes we pay), but watching politicians try to explain to all of us how they can claim they do not have enough money to keep 50 schools open but they have the money to open or renovate four new schools provides theater-of-the-absurd-level entertainment value. That said, in every failure comes an opportunity.
The Mayor can turn this into a revolution in public funding of buildings and their operation that can have a impact long beyond his tenure.
Universities and long-term owners of facilities have begun to approach the funding of new buildings not just focusing on the first-cost of design, development, and construction, but also incorporating long-term facility maintenance. Traditionally, an owning business or entity commissions a new building, raises the money they need to design, develop, and build, then turn the facility over to operations and maintenance with a budget coming from annual revenues. This places the performance of the building at the mercy of annual appropriations, and in the case of municipal buildings, at the whim of politically motivated boards and managers. The new approach raises both the funding for construction and an escrow/endowment to fund long-term maintenance and operation.
This innovative, and more responsible, approach greatly improves the value of the building in several ways. First, with all of this funding raised at the start of the project, the owner immediately has the opportunity to fund project scope that will improve maintenance or create energy efficiency. Think of it this way, if you were able to raise $100,000 to build an addition on your house and set aside money to pay for a child's college education, then realized your child was going to get a scholarship to reduce the cost of college in half, you could increase how much you allocate to build that addition. Second, it draws the attention of everyone to designing, developing, and building a structure that provides maintainable service. This focus alone usually delivers results. Lastly, by putting an immediate monetary focus on the lifetime services the building will provide, the owning entity will not have to worry about politically-motivated annual appropriations to keep the occupants in a comfortable, productive, and high-performing building.
Because the Chicago Public Schools funds future operations out of the future property taxes paid by citizens, and TIF allocations come from a portion of those same property taxes, the opportunity exists to fund both the development of these projects as well as their life-cycle operations. If the Mayor has the courage to propose this action, he can push back against those who have called out the hypocrisy of the closings and new buildings. By noting that through building these new projects, the Mayor sets a standard that he will add no new annual budget needs for facilities operations, and he can present a fiscally responsible plan that completely supports the foundation of the facility closures.
School buildings have stood for 50, 75, up to over 100 years in the Chicago Public Schools. They outlive politicians and provide a foundation to their communities. It is time that our politicians recognized this and approached the long-term funding of operations and maintenance as more important than the first cost.
If he takes this approach, the Mayor just might turn a stumble into big step forward.
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