Janesville referendum transfers remain a puzzle
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Keith Pennington
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Timothy F. Cullen
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Bill Sodemann
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Both Parker and Craig high schools were undergoing expansion and renovation work. Local voters approved $70.8 million for the projects. This photo was taken Oct. 22, 2007.
JANESVILLE — Janesville school officials are still trying to figure out how hundreds of thousands if not several million dollars got transferred from the district’s operating budget to a referendum project without the school board knowing about it.
While the administration works to determine what happened, one school board member is saying the true amount of unapproved spending may be lower than some believe.
The issue arose at Tuesday’s school board meeting when CFO Keith Pennington asked the board to transfer about $400,000 from a reserve fund to the operating budget.
Pennington said the transfer would make up for money transferred earlier from the operating budget to the recent construction projects at Craig and Parker high schools.
Voters in 2006 approved borrowing $70.8 million for the project. The work was completed last fall. Pennington, who was hired last summer, apparently was closing out the accounts on the project when he discovered the transfer.
School board members said they did not recall being asked to transfer the money to the projects.
Not only that, but Tim Cullen, chairman of the board’s finance committee, said he had information that the total amount spent beyond the $70.8 million was upwards of $3.6 million.
Board member Bill Sodemann said Thursday he thinks the actual amount is less.
“I’m almost positive it’s nowhere near what he is claiming,” Sodemann said.
“Let’s hold our powder, and let’s find out what the numbers really are and then deal with it,” Sodemann said.
Sodemann agreed there appears to be a problem; he’s just not sure how big it is.
Cullen said he got his information from Pennington before the meeting. This is Cullen’s accounting of money spent on the Parker and Craig projects in excess of the $70.8 borrowed through referendum:
-- $1.9 million was interest earned on the borrowed money. Pennington said Monday it’s customary to use interest earnings on a construction project, but Cullen said the board still should have approved the spending.
-- $1 million was taken from the district’s operating budget capital projects fund. Cullen did not know when this amount was moved, and Pennington declined to answer questions about the issue until he has time to investigate further. He said the research would include going through records stored in the basement of the district’s main office.
-- $300,000 was taken from an account and had been intended for the purchase of elementary-school computers.
-- $390,000 is the amount that Pennington said was transferred during the current budget year.
Those amounts add up to $3.59 million, but, as Cullen noted during the meeting, the board in 2007 approved using $500,000 of referendum interest earnings to reduce the tax levy. That leaves $3.09 million spent on the projects above the $70.8 million borrowed through referendum.
Sodemann said he’s not sure it’s even that much.
Pennington said he wanted to complete his review before verifying Cullen’s numbers.
Cullen agreed the referendum simply authorized the board to borrow the $70.8 million—it didn’t stop the district from spending more than that.
However, spending above the referendum limit violates the spirit of the referendum, Cullen said.
“I think if you went around town at the time and asked people what they were voting for, they’d say they were voting for $70.8 million for Parker and Craig,” Cullen said. “I don’t think they would say they were voting for spending nearly $74 million.”
Sodemann said he can’t remember being told the administration intended to spend the interest earnings on the project.
“I had no idea we were over budget,” Sodemann said. “I had the impression we were even a little under budget perhaps.”
Cullen said it’s possible the extra spending was justified; the problem is that the board never got to approve it.
A board policy titled “transfer of funds” states that the board will consider budget-transfer recommendations from the superintendent. Approval is by a two-thirds majority vote.
When members of the school finance staff at the state Department of Public Instruction were told of the situation, they said it does not appear any law was broken, said DPI spokesman Patrick Gasper.
It’s OK to transfer money intended for similar purposes among funds, the state experts said, but it’s good accounting practice for someone in authority—either the board or superintendent—to approve the transfer, Gasper said.
Superintendent Tom Evert retired a year ago, and business director Doug Bunton retired over eight months ago.
Pennington said Tuesday he had not been able to find a budget for the project. Sodemann said he would be shocked and disappointed if there is no way to track the spending.
Feb 28, 2010 at 2:55 p.m.
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Not sure if anything can be done to recover the money - at this point. The money is gone. YOU all voted these people into YOUR city government. Accountability should have been maintained at the get-go.
Now you'll be down to picking up the pieces in a city that is already so pishpoor that taxes will HAVE to go up. Last person out of town, please turn off the lights!
Feb 28, 2010 at 2:27 p.m.
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What a mess! With what the administrators get paid, you'd think they'd know whats going on! We need to clean house down at the ESC!
Feb 28, 2010 at 11:53 a.m.
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I find it unacceptable that the School District and the City do not put their budgets on their web site. The Superintendent's link on the District's web site states that budget information is coming soon. Karen, a word of advice, next week is not soon enough.
Feb 28, 2010 at 12:17 a.m.
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its just one screw up after another with the school board and the administration.if there not passing the buck, their pointing fingers.its time to clean house, from the top down.frusion, hit the nail on the head.
Feb 27, 2010 at 2:53 p.m.
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Back in the Seventies when I took School Finance and Accounting every penny had to be accounted for in the budget and school boards received the results of ongoing regular audits. Also, inter-fund transfers of all balances were to be monitored and reported to the board. Co-mingling of certain fund balances was disallowed. What has changed since then and who was "asleep" at the switch? Further, why is it that whenever we have a building project in this community,and we receive acceptable bids (some that are the lowest) the responsible governing board or agency exceeds the bid by a mere 4 or 5 million dollars. Coming in at 10% over bid consistently is not the way to run responsible government! I would like to get an extra 10% for any job I do. Wouldn't you?
Feb 27, 2010 at 12:52 p.m.
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If there was malfeasance, there needs to be criminal charges against the person/s who transferred the money. Enough of a system with no accountability.
Feb 27, 2010 at 12:51 p.m.
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It is time that all involved stop all the "niceties" and get down to who allowed the expenditures. These expenditures are illegal. Funds are set aside into accounts and only the school board can legally approve moving that money from account to account. If anyone in the administration approved the expendatures, it is illegal and possibly criminal. School board- do your job and run the district and be firm on the spending.
Feb 27, 2010 at 11:10 a.m.
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"Cullen said it’s possible the extra spending was justified; the problem is that the board never got to approve it." Maybe we just disagree on definition--what even comes CLOSE to justifying it if the board was never asked to approve it?
Feb 27, 2010 at 8:11 a.m.
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Janesville = spend it like you stole it.
Feb 27, 2010 at 2:01 a.m.
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My theory is that the person who made the fund transfers is long gone ... either quit, got fired or retired.
Feb 26, 2010 at 11:04 p.m.
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Nancy / Hank ?
http://www.merriam-webster.com/dictionar...
Feb 26, 2010 at 9:43 p.m.
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reader48-SouthsideNancy is Hank. Gazette pulled the plug on Hank so he/she/it became SSNancy. New screen name/same tired posts filled with his version of the truth.
Feb 26, 2010 at 8:35 p.m.
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Where's Hank ???
I'm sure the money was somehow swindled towards the building of a new ice rink!!!
Feb 26, 2010 at 6:41 p.m.
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And, just in case the teachers take my last comment wrong...It's not the teachers I am referring to in the "screw me" scenario..it's the administration...the teachers just happen to be in the middle.
The middle is not a safe place to be....you catch it from both sides.
Feb 26, 2010 at 6:16 p.m.
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My advice to all Janesville teachers...bail out now, because every time the taxpayers even question an expenditure you cry "teacher bashing."
With this latest unaccountability fiasco I can guarantee we the taxpayers will question everything AND if you think another referendum will get anywhere...I have some oceanfront property in Arizona I'd like to sell you.
Screw me once, shame on you....screw me twice, shame on me.
I've learned my lesson.
Feb 26, 2010 at 4:49 p.m.
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This story just gets worse and worse. HOW can nobody not know who wrote checks to who and how much was spent?! Everybody involved looks like fools. How hard is it to figure all of this out?!
A few suggestions: Ask JP Cullen how much they were paid and when they were paid. Also, how about asking the school district's bank for copies of transfers and deposits involving this project? A simple review of the bank statements should clear some of this up.
I don't care that the CFO is new to the job and that some staff have retired. He should know by now what has happened and how much. His comments just show how clueless he is and how poorly managed the school district is.
I smell cover up. Remember, the cover up is worse than the transgression. I hope the CFO and School Board are working all weekend until they get this figured out. Please do your job everyone!!
Feb 26, 2010 at 4:24 p.m.
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Mr. Sodemann, I'm sure glad you are "almost" positive the amount of over-spent money is not what it appears to be. I wouldn't expect you to know for SURE.
Mr. Pennington you are the CFO? That would stand for Chief Financial Officer? WHAT!?! You said on Tuesday you had not been able to find a budget for the project?!? Isn't that a CFO's job to know budgets and where money is going?
Who was the project manager? Call that person on the carpet immediately. Surely there was a project manager? The project manager should be PMI certified so that person should have every detail of variance for the project.
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