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On The Money: School Construction Costs

The Impact of Project Labor Agreements
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By Mike Luery

Project Labor Agreements (PLAs) may be costing taxpayers millions of dollars. That’s what researchers from the National University Institute for Policy Research are saying about school construction done under the premises of a PLA.

National University’s study showed California taxpayers may be shelling out up to 15% more to build new schools. It happens they say, when independent contractors are forced to hire union labor – or pay into the union’s health care fund – under the terms of a PLA.

“That’s an additional $29 to $32 per square foot higher when you build under a PLA then if you did not,” stated Vince Vasquez, a Senior Policy Analyst with National University’s Institute for Policy Research.

The higher expenditures add to up $250 million in additional costs, Vasquez told CBS 13. The National University Institute for Policy Research is a non-partisan group that examined 551 school construction projects in California – including 65 built using project labor agreements.

“There is in fact a statistically significant relationship between higher construction costs and project labor agreements,” Vasquez told CBS 13.

The Sacramento City Unified School District had two PLA construction projects in the study –
one involving the School of Engineering and Sciences and the other at the George Washington Carver School of Arts and Sciences.

Researchers say those PLAs cost taxpayers $5 million more than under traditional competitive bidding.

Some prominent non-union firms, like Rex Moore, the largest electrical contractor in the Sacramento region, have stopped bidding altogether on jobs that require project labor agreements.

“Anytime that the public doesn’t have a right to get the best construction at the best price and you limit the public’s ability to get that, I think it’s bad public policy,” said Greg Anderson, Human Resources Director for Rex Moore.

Governor Jerry Brown just signed a bill outlawing local bans on project labor agreements.
SB 922 was pushed by the building trade unions. They argue that PLAs protect the public from shoddy contractors. Labor Coalition Chair David Low told CBS 13, “When schools go with these other organizations, they don’t have the same experience and reputation and journeymen labor – they often end up paying more on the back end by having to do repair orders, change orders and it costs them more in the long run.”

Senate President Darrell Steinberg and Assembly Speaker John Perez put out a news release defending PLAs, arguing they are a way for taxpayers to save money.

Project Labor Agreements remain controversial, but in California they are here to stay. The new law signed by Governor Brown doesn’t mandate that PLAs be used – but it does mean they can’t be banned outright. In signing the bill, Brown said it “preserves the rights of all sides to debate what is obviously a hotly contested issue.”

If you examples of government waste, send us an e-mail to onthemoney@kovr.com. You can also follow On The Money stories in progress via Twitter at http://twitter.com/#!/mikeluery and via Facebook at http://www.facebook.com/CBS13OnTheMoney.

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