scope-based budgeting

Budget and Schedule Are the Hobgoblins of Small Minds

It started at our WCCUSD CBOC meet­ing in January as this agenda item:

F.2 Budget Adjustments to Bond Program (tabled at December meet­ing)
The Board of Education has just ap­proved $26 mil­lion in bud­get in­creases for bond projects.
Why did this hap­pen and what sort of con­trols are in place to pre­vent this from re­oc­cur­ring.
Submitted as a ques­tion by the CBOC Chair to Bill Fay on 1/​20/​14.

This had ear­lier elicited this brief writ­ten state­ment from Mr. Fay, WCCUSD Chief Operations Officer:

The WCCUSD Bond pro­gram is scope dri­ven that de­liv­ers out­stand­ing fa­cil­i­ties that meets the ex­press needs of each school com­mu­nity.

As such, all projects re­ceive the most cur­rent de­sign stan­dards, tech­nolo­gies, ed­u­ca­tional spec­i­fi­ca­tions and equip­ment with­out re­gard to project tim­ing. The pro­gram also moves for­ward with­out re­gard to con­trac­tor bid­ding cli­mate and does not “value en­gi­neer” any scope. The rem­edy re­quires a change in
the num­ber of projects that can be ac­com­plished.

When the mat­ter came up, Mr. Fay did not de­tail how this phi­los­o­phy led specif­i­cally to the $29M short­fall, but in­stead ex­panded on the phi­los­o­phy of scope-based bud­get­ing at least as used in this dis­trict: spend with­out limit on projects un­til you run out of money -> bump re­main­ing projects to the next bond -> get the next bond.

It’s all in this record­ing of Mr. Fay with some com­ments by Martin Coyne along with com­ments by com­mit­tee mem­bers. It’s only 9 min­utes; it’s worth a lis­ten.

Update (5/​22/​2014):

  • The meet­ing date was January 29th, 2014.
  • The full meet­ing record­ing by dis­trict staff is still on the pod­cast site at this page.

The Endless WCCUSD Bond Debt Cycle

The Contra Costa County Taxpayers’ Association Director asked me re­cently why the West Contra Costa Unified School District needed a 7th school con­struc­tion bond as if there was some care­fully thought-out con­struc­tion-based plan­ning process be­hind it. I chuck­led. I shared with him these steps for how the wheel keeps go­ing ‘round:

  1. Survey/push-poll peo­ple with lead­ing ques­tions late in an odd-num­bered year.
  2. Find a tax rate that will give a com­fort­able mar­gin over 55%.
  3. Calculate a to­tal “bondage” amount based com­pletely on that tax rate.
  4. Attach a per­mis­sive scram­bled “project list” for every­thing and any­thing.
  5. Include front-end bal­lot text lan­guage to stay “within le­gal debt lim­its” along with buried back-end lan­guage that the dis­trict may have to seek a debt ceil­ing waiver. (For the last 2 bonds, the dis­trict has been over the statu­tory debt ceil­ing on waivers.)
  6. Put it on a June or November even-year bal­lot. (These are the only al­lowed dates for WCCUSD Prop. 39 elec­tions.)
  7. Use “scope-based” “bud­get­ing” to burn through the money while hold­ing the tax rate for that spe­cific bond with­ing the pro­jected limit.
  8. Repeat two years later.

The dis­trict pats it­self on the back for stay­ing at tar­get in­di­vid­ual bond tax rates, while a to­tal school bond tax rate that is al­ready the high­est in all of California con­tin­ues to grow more and more.