Janesville referendum transfers remain a puzzle

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Friday, February 26, 2010
— 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.

Last updated: 12:48 pm Thursday, December 13, 2012

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