DPS plans early use of bond premium as 2 school projects exceed budgets by $28 million

Denver Public Schools plans to use bond reserves and 2024 bond premium earlier than usual after district officials told the Finance and Audit Committee on June 1 that the new Gateway E-5 school and the Paul Sandoval campus auditorium and health clinic are together about $28 million over their original project budgets.

The district’s June 1 finance packet says staff recommended covering the gap with $11.9 million in remaining 2020 bond reserves and $16.1 million in 2024 bond premium, leaving $67.1 million in 2024 premium unallocated after this first round. The same packet says the recommendation was headed to the Board of Education on the June consent agenda. DPS’s board meeting page shows the next regular board meeting was June 8. Badger could not independently confirm from a signed June 8 vote record whether the board gave final approval or what the vote tally was, so this story does not characterize the board action beyond the committee recommendation.

According to the committee presentation materials, Gateway E-5’s total project budget rose from $62.2 million to $80.6 million, an $18.4 million increase. The Sandoval auditorium and health clinic rose from $19.5 million to $29.1 million, a $9.6 million increase.

Construction chief Troy Garner told the committee the overruns reflect both broad construction inflation and project-specific issues. For Gateway, officials cited a larger-than-expected site, poorer soil conditions, and delays tied to developer permitting and infrastructure work. For Sandoval, officials cited a larger auditorium footprint, added parking, underground utility relocation, and construction inflation. The finance packet also points to tariff volatility, labor competition on the Front Range, code changes, and rising equipment costs.

The timing drew concern. Committee members said during the June 1 meeting they do not usually open the premium-allocation process this early in a bond cycle, and Interim Deputy Superintendent Chuck Carpenter called it concerning that the district was doing so at the start of year two. At the same meeting, bond oversight participants said DPS had gone through a similar early-overrun process during the 2020 bond program for Montbello and Denver School of the Arts projects.

That leaves the significance of this development somewhat narrow for now: it is an early warning sign, not proof that the full 2024 bond program will need to be cut back. In the June 1 discussion, bond oversight leaders and staff said most 2024 bond projects are still on or below budget, while the biggest pressure so far is in mechanical, electrical and plumbing work and ground-up construction. Officials also said they are not adding new premium-funded projects at this stage and are holding possible add-on work until late in the bond cycle, if money remains.

What remains unclear is whether DPS can complete the full 2024 bond program without trimming later work. The district’s premium-allocation principles say premium should first be used to fulfill voter-approved commitments and should not be committed to new projects until there is “a high degree of certainty” those initial commitments can be delivered. Officials said in the meeting the district still had $275 million in authorized 2024 bond debt left to issue, and board members noted that later bond issuances may generate less premium than in prior cycles.

The broader financial backdrop adds another caution flag. Finance staff said in the same meeting DPS’s property-tax receipts were trending lower than in prior years, driven for now by weaker commercial property taxes. Board members and staff said that if commercial values fall substantially, it could affect future assessed value growth and put pressure on the district’s broader budget and bond-planning assumptions.

For now, the public record supports a limited conclusion: DPS is moving to use bond reserves and premium early to keep two promised 2024 bond projects moving, while officials say they are still prioritizing voter-approved work before considering any extras. The same June 1 record also shows district and bond oversight leaders warning that construction costs, potentially lower future premium, and weaker commercial-property tax performance could make the rest of the bond program harder to deliver than recent cycles.