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Study Finds Prop. S Labor Agreement Good for Taxpayers, Local Jobs

An independent study commissioned by the San Diego Unified School District has shown that the $2.1 billion construction bond's Project Stabilization Agreement (PSA) has produced the benefits promised without impact on cost or quality of the construction.

The study, completed by consultant Rea & Parker Research, found:

-- Local hire goals are on track;

-- There was no change in project cost between PSA and non-PSA projects;

-- The number of bidders is lower (an average of six per project), but with no impact on cost or quality;

-- PSA projects are on average completing faster than non-PSA projects.

"The results prove that the school board made the right decision in approving this agreement," said Richard Barrera, Board President. "It's good for our students and teachers and good for our local economy by providing jobs for local workers."

The report finds that overall construction costs have not been affected by the agreement.School Board Member Scott Barnett, who represents Subdistrict C, said he is convinced that the agreement has had a positive impact.

"I admit I was highly skeptical of the PSA," said Barnett, a former head of the San Diego County Taxpayers Association who joined the school board after approval of the agreement. "That's why I pushed for an independent review of the Prop. S projects by a trusted source."

At Barnett's suggestion SDUSD retained Rea & Parker Research, who completed many studies for the San Diego Taxpayers Association.

"The facts are clear, the PSA is good for taxpayers," said Barnett.

On November 4, 2008, nearly 69 percent of San Diego voters passed the $2.1 billion general-obligation bond measure, Proposition S to repair, renovate and revitalize our neighborhood schools.

The Project Stabilization Agreement is designed to ensure a sufficient supply of skilled craft workers and to eliminate work disruptions on Prop. S projects. It also includes sections that promote the hiring of skilled craftspeople living within the San Diego Unified boundaries and encourages individuals living within district boundaries, including students, to become apprentices.

The following are highlights from the Rea & Parker Research Report.

-- There has been no increase in the cost of the winning bids for school construction projects under the San Diego Unified School District (SDUSD) Project Stabilization Agreement (PSA) than were the winning bids for non-PSA projects under Proposition S that was approved in November, 2008.

-- The number of general contractor bidders and participating subcontractors per project has declined for PSA projects; however, this decline is not reflected in any increase in cost to SDUSD.

-- Profit margins for contractors have declined under the PSA, but these contractors appear to be absorbing these increased costs rather than increasing their bids—thereby imposing no additional cost upon SDUSD taxpayers.

-- Project completion time is faster under the PSA than for Proposition S projects that pre-dated the PSA. Faster completion allows for the District to experience less overhead per project and for the more efficient replacement school improvements to be in operation more quickly.

-- Quality of construction, as indicated by contractor and construction manager interviews and by survey responses, is unchanged between projects constructed under the PSA and those that were contracted prior to the PSA.

-- Workers from targeted zip codes (economically disadvantaged portions of the District) have increased during the past six months and are presently close to achieving the very ambitious target of 35 percent that was set in the PSA.

-- The achievement of the high level of workers from targeted zip codes is due predominantly to union referrals that are focused upon obtaining workers from these zip codes. This increase in targeted area workers is not re-flected among non-union core workers or existing workers for union signatory contractors.

-- There has been an increase in reporting violations and deficiencies pertaining to labor compliance since the PSA was adopted; however, there is no discernible or perceived impact on construction quality or duration of construction caused by these deficiencies. Furthermore, it can be interpreted that this increase is due to increased attention to worker payroll and benefits under the PSA than before, which is beneficial to the payment of prevailing wages to the working population.

-- The Los Angeles Unified School District PSA required approximately 5 years to achieve operational efficiency. SDUSD’s PSA has been in effect for only 2 years and, by the measures included in this report, is significantly ahead of the LAUSD schedule.