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OPINION: With contractors having wrong incentives, school referendums running amuck

State Sen. Duey Stroebel, a Republican from Cedarburg

State Sen. Duey Stroebel

On Oct. 11, Bob Barker of the Associated General Contractors of Wisconsin took exception to comments I made to a Daily Reporter journalist about the statewide spike in proposed referendum spending. I am glad this issue is getting the attention it deserves. I want to set the record straight, both in regards to the statewide scale of this phenomenon and the assertions made by Barker.

Since 2015, there have been $4 billion worth of construction-debt referendums passed in Wisconsin.  There are another $1.4 billion on the ballot this November. In the two state budgets passed covering 2015 to 2019, the total bonding authorized being underwritten by tax receipts totals $2.63 billion. If the lion’s share of referendums pass this November, it is possible Wisconsin will have borrowed twice as much money for school construction as for all other state purposes in roughly the same four-year timeframe.

Put another way, the $4 billion dollars worth of debt already authorized eclipses our current biennial budget’s entire general-purpose-revenue appropriations for the UW System, the Technical College System, Department of Workforce Development, Department of Natural Resources, the Justice Department, district attorneys and our entire judicial system combined. That incredible financial burden, plus the interest, is unsustainable. Just because referendums are passed locally does not mean they are not a matter of tremendous statewide importance.

I have advocated, and will continue to advocate, for reforms to provide greater transparency in the referendum process and to remove policies that incentivize overspending. Among these reforms are:

  • requiring ballot questions to show the total actual cost of referendums with projected debt service
  • requiring borrowed money to be spent on what is listed on the ballot
  • making referendum costs non-shareable, so that one school district’s taxpayers do not subsidize another’s referendum
  • requiring public bidding of school district projects
  • and clarifying what communications are allowable information to voters and what is illegal electioneering with public money.

The size and importance of these expenditures demands no less from our public officials.

Now, regarding the charges Barker made in his commentary last week. He is correct that there is nothing wrong in consulting for technical expertise, but that was never the point of my comments.  Many contractors are surely decent people, but bad systems incentivize bad or careless behavior.

I do not seek to embarrass any single provider, but I would be remiss not to mention that the AGC member Miron Construction was under FBI investigation and, in 2014, entered into a consent decree to pay back $4 million because of overbilling and deceptively trying to extract money from taxpayers.

Incidents like that one would be far less likely to happen if we required open and public bidding for school-district contracts. Competition keeps prices down and makes it much more difficult to invent expenses to bill the taxpayer.

Public bidding is currently required for all other local government projects in excess of $25,000. Under current law, if one particular referendum passes this November, the Wauwatosa School district could award a $125 million contract to demolish and rebuild four schools without the transparent, competitive process that the city of Wauwatosa is required to follow for a $30,000 project to repaint city hall. The high cost and highly technical nature of construction projects make transparency and accountability measures critical if we are to feel assured taxpayer dollars are not being wasted.

I sponsored a bill, SB 236, which would have required public schools to follow the same public bidding requirements as all other local governments. Barker of the AGC wrote “The AGC of Wisconsin supports fairness, transparency and objectivity in public contracting.”

We value transparency in Wisconsin and have an easily accessible website that monitors lobbying activity. A quick check of this website would show you who supported and opposed this push for transparency. The AGC of Wisconsin and Miron Construction are listed as “other.”  The AGC of Greater Milwaukee, an affiliate, is opposed. According to the Ethics Commission, 51 of the 109 total hours spent lobbying on my bill were from the AGC and its members.

During these many hours of lobbying, my office was never approached by the AGC or its members with suggestions that would help see the law changed. With all respect to the AGC and Barker, anyone who examines the evidence knows exactly how the AGC really feels about “fairness, transparency and objectivity in public contracting” when it might affect some bottom lines.

A funny thing started happening around the time of Barker’s piece last week. AGC members started removing passages from their websites bragging about how good they are at getting referendums passed.

On Oct. 9, VJS Construction Services advertised they would “assist in developing a solid campaign that generates voter support.” Now that URL is inactive.  JP Cullen had a whole blog series called “RoadMap to Yes”, in which the company boasted about a “proven, adaptable, and scalable process” to give the school board “the best opportunity for referendum success.” That is now also gone.

CG Schmidt helpfully pointed out their methods “are proven and significantly increase the probability of the referendum passing.”  They are “honored” to have “assisted in the successful referenda and construction of projects totaling over $352 million.”  Those phrases are now scrubbed.

Fortunately the Ethics Commission website is not run by AGC members or those inconvenient facts would also be erased. Before Mr. Barker wants to claim, “Neither AGC officials nor our contractor members promote higher local K-12 school spending,” I’d advise he read his members’ own marketing materials. This practice of school boards hiring de facto political consultants, who masquerade as neutral experts, is even more concerning given the lack of competitive bidding.

Regardless of each voter’s opinion about the buildings needed in school districts, we should all be able to agree on good government. This means transparency, accountability and an effort to gauge public opinion rather than manufacture it. I will redouble my efforts toward these ends in the upcoming legislative session even if some would rather I be silent.

State Sen. Duey Stroebel is a Republican from Saukville who represents the state’s 20th Senate District. 

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