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Project spent more than voters approved; board wants an accounting

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FRANK J. SCHULTZ
February 24, 2010
— The Janesville School Board on Tuesday night discussed the fact that the district spent more on the high school referendum project than voters approved.

They were not happy about that, but the thing that stuck in some members’ craws was that they didn’t know about the overage until now.


Board President DuWayne Severson said he was “quite surprised.”


Finance committee chairman Tim Cullen, who calculated the overage at $3.6 million, called it “unacceptable.”


Board member Lori Stottler pronounced herself “infuriated.”


District CFO Keith Pennington noted that voters approved borrowing up to $70.8 million in the 2006 referendum, but that it’s normal for interest earnings to be used on such projects as well. The borrowed money accrues interest until it is needed to pay contractors. About $2 million was earned in interest.


The board in 2007 used $500,000 of those interest earnings to lower the tax levy, Cullen noted.


Pennington told the board that extra spending came out of the district’s operating budget over the past three years, about $390,000 of that in the current fiscal year.


Pennington asked the board to replenish the operating budget by moving up to $400,000 from the Fund 10 balance—the district’s rainy-day fund—into the operating budget.


The board took no action. Stottler said she does not want to have to cut next year’s budget because $400,000 was taken out of Fund 10.


Cullen, who apparently had looked into the matter before the meeting, said by his count, $3.6 million extra was spent on the project.


Cullen said he was told that spending scheduled for other district purchases—including computers for elementary schools—was canceled in order to pay for the high school projects.


Board member Bill Sodemann asked the administration to verify Cullen’s calculations.


“Maybe all this spending made sense. Maybe it was crucial. But to do it without the consent of the board or the knowledge of the board, I find it unacceptable,” Cullen said.


Pennington said he does not know where all the extra money went, but he has an idea about some of it, including:


-- Unexpected asbestos found under floors that had to be removed.


-- Code upgrades that apparently weren’t planned for.


-- Work to make the Craig heating/ventilation system operational.


-- Equipment and furnishings not in original plans.


-- Concrete and other repairs not in original plans.


-- Changes to the wrestling rooms in the two high schools.


The board knew about that last item, but Cullen said the total cost of the wrestling room changes was about $150,000, nowhere near $3.6 million.


A contingency fund of about $2 million was a part of the project, Pennington said. Contingency funds typically pay for unexpected expenses such as surprise asbestos or concrete work.


Cullen said the project included more than 100 change orders over the course of the project, from mid-2007 to completion in August 2009.


“When I hear ‘more than 100 different change orders,’ as a project manager, I go, ‘What went on with that?’” said board member Greg Ardrey, a senior project manager for Alliant Energy.


Ardrey called for an itemized list of the spending.


Stottler said she wants to know who authorized the final payment on the work.


“That will be something I’ll look into,” Pennington said.


Pennington said the referendum money was kept in its own fund, and he can trace the payments leaving that fund, but he has not found an actual project budget.


Cullen said he recalls the board asking more than once how the project was going and being told it was on time or ahead of schedule and at or near budget.


Those questions were most often answered at board meetings by Business Director Doug Bunton, who retired last June.


Stottler told Pennington that even though he was caught in a changing of the guard, it is his job to get to the bottom of this.


The board voted to postpone its final approval of the project—a vote required by board policy—until its meeting March 22.


The main contractor, J.P. Cullen & Sons, was scheduled to give a final report on March 22, but it wasn’t clear that would happen.


In other business

In other business Tuesday, the Janesville School Board:


-- Heard a proposal to expand the Challenge Program for academically talented students to third grade starting next September. Ruth Robinson, coordinator of programs for the talented and gifted, said the administration believes it can make the change without spending more money. The program now comprises fourth through eighth grades. The board asked for more information before making a decision.


-- Heard preliminary options for paying off a liability to the Wisconsin Retirement System. CFO Keith Pennington said he is seeing proposals from lenders and will present those to the board. Board member Tim Cullen said it would bother him if a financing package required a tax increase. Board member Kevin Murray said he could accept a tax increase if it would pay off the liability instead of the current situation, in which the district would continue paying for many decades with no end in sight because payments do not keep up with interest charges.


-- Met in closed session to discuss negotiations with the teachers union. No negotiations have occurred since last fall on a contract that expired July 1, 2009.



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