Central-office real estate: can you upgrade your headquarters without looking self-serving?

School Administrator, August, 2003 by Priscilla Pardini

When he outlined his goals for the Harford County, Md., Public Schools in 1970, incoming superintendent A. A. Roberty declared that replacing the district's 90-year-old administration building was his No. 1 priority. More than 30 years and three superintendents later, with the building pretty much falling down around them, school officials are still trying to get the job done.

Meanwhile, in Charleston, S.C., school officials were able to upgrade their administrative headquarters 10 years ago, moving from a Civil War-era fort infested with rodents to a new, three-story, $12 million building downtown. In addition to providing employees with a decent place to work, the decision also saved the district money. Nevertheless, the move proved controversial, and the new building was quickly dubbed the "Taj Mahal."

The situation in the Green Bay, Wis., Public Schools is admittedly less extreme. Its central-office building is only 70 years old. Yet the debate over moving ahead with a short and modest list of improvements--repairing the elevator and replacing a sound system and set of decrepit chairs in the boardroom--droned on for more than a year.

Saddled with aging schools, overcrowded classrooms, squeezed budgets and mounting pressure to meet academic standards, school officials in districts across the country say replacing or upgrading central-office facilities--never a high priority--has become increasingly difficult. "Administrators have become tainted," says Phil Geiger, president of the Eastridge Companies, a Phoenix-based real estate development company that works with school districts and colleges. "They're viewed as an unnecessary evil, something we want fewer of, and none at all if we can help it."

Geiger, a former superintendent in New Jersey, also points out that even though more and more states are funding school construction, most won't fund or reimburse districts for non-instructional buildings such as central administrative headquarters. That puts the burden for funding such projects on local taxpayers, a scenario school officials most often choose not to pursue.

Politically Unpopular

David Jennings, chief executive officer of the Minneapolis Public Schools, can't even remember the last time the subject came up in his district--despite the fact that its central offices are located in a square brick building that formerly housed a light bulb factory where employees still trudge up and down clanky metal industrial staircases. "I'm certain, given the age of many of the facilities in urban settings that there are some horror stories out there," says Jennings. "But ours is not at the point where it's dangerous. Ours is more like amusing. We kind of chuckle about it."

Jennings, a former state legislator who came to public school administration after working in the food service industry and as CEO of the Greater Minneapolis Chamber of Commerce, says school officials view the issue of administrative office space differently than those in the corporate sector. "In the business world, a company's headquarters can make an important statement about the company," says Jennings. "But given the resources available in the public schools, where I'm sure people would like to have a nice space to work in, the fact is, it's not a high priority and often never gets done."

In Green Bay, Superintendent Daniel Nerad says board members had "extensive discussions" before making any improvements to the central-office building, which once housed a vocational-technical school. "No one thinks twice when corporations spend millions to renovate their facilities," says Nerad, whose district serves more than 20,000 students. "But when you're using taxpayer money, you think long and hard about how you're spending it."

In the end, Green Bay's board members opted for only those improvements deemed absolutely necessary. "We have these long lists of school projects that need to be done, and that's where we've focused," he says.

Indeed, most districts do exactly what Minneapolis and Green Bay have done--allocate virtually all capital spending directly to schools. Since 1990, Minneapolis has spent $236 million to build 18 new schools and $92 million on major renovations at 26 others. Another $280 million was spent on deferred maintenance projects, such as roof replacements and sprinkler system upgrades throughout the district. By comparison, only $3 million was spent on the former light bulb factory, officially known as the Educational Service Center, all of which was earmarked to improve handicapped accessibility or meet building code requirements.

That comes as no surprise to Michael Hall, chief marketing officer for Fanning/Howey Associates, an architectural, engineering and planning firm in Celina, Ohio, that works exclusively on school projects. "Everyone is very sensitive to voter and taxpayer backlash," says Hall. "And with the [U.S. Government Accounting Office) talking about the need for $112 billion to fix schools in this country, spending money on administrative facilities is politically a very bad move.