Chairman says full disclosure not provided on Prop P costs

The chairman of the Mehlville School District’s Proposition P Oversight Committee recently contended administrators had not provided full disclosure to the panel of the total estimated cost of the districtwide building improvement program and related projects.

Oversight Committee Chairman Chuck Van Gronigen contended last week that he was unaware of an additional $13.6 million that is projected to be spent on Proposition P-related projects. That additional $13.6 million could bring the total cost of the building improvement program to more than $86 million through mid-2008.

The comments by Van Gronigen, a former Board of Education member who was board president when voters approved Proposition P in November 2000, were made June 11 during a meeting of the Oversight Committee at Trautwein Accelerated School.

However, Mehlville administrators and the district’s director of school/community relations, Patrick Wallace, countered that Oversight Committee members were fully aware that additional district capital funds are being spent and the total cost of the Proposition P improvements and related projects will be more than $72.4 million. But district officials conceded that committee members may not have been fully aware that the additional district capital funds being used are being generated by the 49-cent tax-rate increase authorized by voters when Proposition P was approved.

When voters approved the 49-cent tax-rate to fund Proposition P, the cost of the districtwide improvements recommended by the Citizens’ Advisory Committee for Facilities was estimated at $68.4 million. Interest on the bond-like certificates of participation issued to fund Proposition P allowed the construction budget to increase to $72.4 million.

Current estimates indicate the 49-cent tax-rate increase will generate $170,165,506 through 2022, while the amount needed to retire the certificates of participation is projected at $144,346,224 — leaving a surplus of $25,819,282 in district capital funds.

One scenario for funding Proposition P cost overruns and the costs of related projects estimates that more than $13.6 million of that nearly $26 million would be spent by mid-2008. Under that scenario, presented to the Oversight Committee last week, the total cost of Proposition P and related projects would be $86,090,548 — an increase of $22,057 from the scenario that Randy Charles, assistant superintendent for finance and the district’s chief finance officer, presented to the Board of Education May 12.

That includes the board-approved budget of $72.4 million, plus another $13,690,548 in district capital funds. To date, more than $5 million of district capital funds has been spent on Proposition P-related projects.

Van Gronigen contended he was unaware of the additional $13.6 million that is proposed to be spent.

“Here’s my question and maybe I’m looking at this all wrong, but if the math is that you’re going to spend $72.4 million and you know you’re going to spend $13.6 million in addition to that and some already has been spent, where is it accounted for vs. Prop P?” Van Gronigen asked. “You know, I’ve been looking at these reports since this whole thing began and they all say we spend $72.4 million. But it sounds as if not only will we spend $72.4 million, we’re going to be at ($)85 (million), $86 million.”

Charles said, ” … I guess define what you mean ‘accounted for.”’

Earlier in the meeting, Charles had distributed a Proposition P budget that projected total expenditures of $72.4 million with a current contingency of $649,230. Referring to that budget, Van Gronigen said, “… I see a little thing here saying we’re as flat as a pancake … We even got a little bonus. We got $649,000 laying around just waiting to be spent in contingency.”

Charles said, “Right. The way we separate those, anything you see on that first page … that is specifically Prop P-identified items. If it wasn’t specifically identified in Prop P, then it’s being paid for with these other funds.”

The administrator noted that he will present a revised Proposition P budget to the board June 23 and he hopes to receive some direction from the board about how to report future expenditures. “… It has been difficult and it is confusing when you start talking what’s Prop P, what’s not Prop P, and it’s all coming from the same 49-cent levy, you know, where do you separate it, where do you merge it and maybe the direction that we get from the board is it’s all coming from the 49 cents, let’s put it all together and make it simpler for everyone to understand …,” he said.

Van Gronigen later said, “Let me put it into perspective what my concerns are because I really do have a couple very specific points. One is, it seems like this is you went to cash a check at Schnucks and they give you an extra hundred bucks. You’re walking through and you find the extra hundred bucks and you’re in the store, you’re buying stuff anyway, why (not) just spend the rest of it? It’s there. So you pick up other stuff. The ethical dilemma is do you pick the other stuff up? I won’t tell them, take the extra hundred bucks and spend it. That’s sort of what’s going on here …

“The ethical dilemma that you’re facing is that the voters of the district identified, worked together collaboratively to identify priorities and said we’re going to spend $68 million to do certain things in these buildings and we’re willing to invest a 49-cent levy in order to make that happen. We found out shortly thereafter that we were going to have more money than what we’d counted on. How soon did we know that the 49-cent levy was going to overfund the redemption of those bonds?” he asked.

Charles replied, “We began to see that as we started to issue the certificates, and, again, that was, the first issue was in 2001. The second issue was in ’02, and then we entered into the repurchase agreement after that, so it would have been spring of ’02 when it started to really come forward.”

Van Gronigen said, “So spring of ’02? For a year we’ve known it that we’re going to overfund it and for some time we’ve known that we’re spending basically what amounts to a contingency of $13.6 million in addition to the contingency (about $3.5 million) that was budgeted …”

Charles said, “And again, if you start talking about the details of what’s in that $13 million, that’s all been very public from the beginning. I did some checking on that and of the items that are in that $13 million, first of all only that’s what we’re projecting to spend through 2008. Of that amount, about 95 percent of that $13 million has been or will be presented to the board in open session. So that’s not new. That’s not anything that’s been hidden.

“I want to go back to your analogy, Chuck, that you used of going to Schnucks with a check. I think there’s a little more to it than that because the voters, yeah, they gave us ‘X’ amount of money. But they also gave us a clear directive of what we were supposed to accomplish. So if my mom sent me to the store with a $20 check and I go into Schnucks and I cash it and they give me $40 and she said while you’re there you’ve got to buy all these items. And so I got an extra 20 bucks when I cash the check. Well you know what, these items added up to 40 bucks and I spent it. I’m doing what — you get into the dilemma of if, if you make financially sound decisions and it generates extra money and thank goodness because that allows you to deliver on the promise you made to the voters of building a new elementary building and remodeling these high schools and putting good, sound roofs on these buildings, then you could actually argue either way. If you decided not to spend the money, then you can say …”

Wallace cut off Charles saying, “… Say that you bought, you took the 20 (dollars) and had two-for-one coupons and you got $40. They didn’t give you $40 …”

Van Gronigen said, “… My concern is that you had knowledge of the extra funding, (you) had knowledge of $13.6 million in additional expenditures that I haven’t seen and I don’t get board books and I’m not sure that I am necessarily privy to the same information.

“This doesn’t show that $13.6 million,” Van Gronigen said, referring to the Proposition P construction budget Charles had distributed earlier in the meeting. The document, dated June 11, was titled: “Proposition P Construction — Contracts, Costs to Date and Projected Final Cost.”

Charles said, “No, it does not. That’s correct. And my understanding was that the direction the board gave was for this committee to oversee the Prop P funds.”

Four board members — President Cindy Christopher, Vice President Matthew Chellis, Secretary Marea Kluth-Hoppe and Rita Diekemper — were present and Van Gronigen said, “Is the board unaware of the $13.6 million? You feel like you were informed about the extra funds that were being expended above and beyond the $72.4 million that was in Prop P?”

Chellis said, “I think we need more information about this.”

Charles interjected, “Well and that’s what’s probably going to be presented at the meeting Monday night (June 23) …”

Van Gronigen asked Diekemper, “Rita, do you think, do you feel like you know it was there?”

Diekemper replied, “Well, yeah, we went over that in our first of the budgeting after the certificates were released and also, I mean, they’re in these reports and I think that the committee determined that their focus was going to be on briefer reports and I think the committee voted on that.”

Van Gronigen said, “… I don’t know that it’s briefer reports, but if briefer reports means that $13.6 million in contingency was spent without accounting for it in front of the Oversight Committee …”

Diekemper interjected, “Well it hasn’t been spent, yet — only what, $3 million?”

Charles said, “No, about ($)5 (million) has been spent so far.”

After further discussion, Oversight Committee member Mike Levine said, “… I understand the decisions were made, they were made with the best interests of the school district and I trust the decision makers in keeping the best interest of the district, but as part of the Oversight Committee, if there’s money being spent on the Prop P initiatives, I guess my expectation is that I would have visibility to it. And that right now that would be the first thing I want to see is, OK, if the expenditures aren’t going to add up to ($)72.4 (million), can I see what those total expenditures are going to be?”

Some committee members expressed concerns about the public’s perception over the potential for an additional $13.6 million being spent.

“Well, information has been provided through the press, in the Call …,” Christopher said.

Oversight Committee member Jo Ann Cornish interjected, “I’m on the committee and I read everything every day and I had no idea we were that far ahead.”

At one point, Wallace noted that Oversight Committee members had sought — both successfully and unsuccessfully — enhancements to some of the projects they had considered.

“Would you have made different decisions had you known that it would have went above $72.4 million, but the money was there from what we’re getting from the 49 cents?” Wallace asked. “Would this committee would have chosen to, say, no, let’s don’t put new roofs on, let’s just patch it?”

Van Gronigen replied, “You know what, that’s a great question. That is a great question and not that you asked me, (but) I’ll give you my response. I don’t know if I would change any decision that this committee made.

“I don’t know that I would change any decision that the board has (made), any contract that they’ve approved and let, I don’t know that I would change any of that — that the issue is not about whether it was right or wrong to spend the money to do the right thing for our buildings and our community and for the kids and for all the rest of it, that’s not the issue I’m bringing up. In terms of transparency of this money, there is an issue of where is the money being accounted for? I’m walking around like I’m sure some of these members of this committee are walking around, saying, ‘Yeah, sure we’re going to be on (budget), I don’t know what they’re talking about in the paper. We’re going to be on budget. It’s ($)72.4 (million). We keep getting reports saying ($)72.4 (million). No sweat. And they keep telling us they got the money to do it.’

“And then today I find out — and not that it’s a bad thing — but I find out that we’ve got more that we’ve spent that is not reflected in this and we’ve got more money that we could conceivably decide to spend on Prop P. So that’s the issue,” Van Gronigen said.

Kluth-Hoppe later said, “… In this meeting, a number of times it was said at the oversight meeting and before I was on the board that … capital monies had to cover some of it. And then I do think sometimes until you get into it a little further some of the terminology is a little bit vague of ‘OK, it’s capital money, not’ — but you need to learn a little more as you’re going along or you all of a sudden get a few more reports, you do learn where capital monies come from, so I could see from Mike’s (Levine’s) point, he said it just needs more knowledge.”

North Area Superintendent Jane Reed remarked, “It wasn’t a failure to disclose, it was a failure to connect that statement about capital funds with the 49 cents.”

Van Gronigen said, “You can phrase it that way for Mike and for whoever, but I think it’s a failure to disclose, so I’m on record that way.”

Charles later said, “You can look at it a million different ways. Really it all boils down to the responsibility for all this comes down to my office. It really does. And I think the assumption that I made was an assumption about the scope of this committee and what my understanding about what the scope of this committee was and my assumption was probably, at least based upon on what I’m hearing tonight, was overly narrow. And again, this is something that we’ll be looking for input from board and based upon the direction they give us is very easily fixed.

“I’ve been very happy with, I think the information that we’ve been able to put in front of the board. I’ve been very happy with the information that Mike, Mike Anthony, has put in the Call. I think his articles are very factual. I read those. I look at the numbers and sometimes I look at these numbers and it reminds me of things, but it’s been very helpful. But whatever’s happened up to this point, I’m going to take responsibility for it because that’s my job is not only to manage these funds, but to communicate to people what they want to know, and what you guys have told us tonight is very helpful and, again, after we get some additional direction from the board, we’ll do what needs to be done.”

After further discussion, Diekemper said, “… We did talk about expanding these reports at one time and I think that the committee didn’t want, I think it was even voted on, that that was more numbers than people wanted to see and so I think now that it’s in the middle of the process, you’re saying that you really do need more numbers.”

Van Gronigen said, “No, we need the factual numbers is what I’m saying and I don’t want to get away from the fact that we’re spending $13 million more than we expected. We raised $15 million more than we expected. It is reality. It’s fact. We’re lucky to have the money to spend. We did it right. It just seems like there wasn’t disclosure. No matter how you want to package it, we didn’t have disclosure.”

Charles attempted to address Van Gronigen’s comments, but Wallace interjected, “You keep saying factual and I know that’s going to appear in the paper. What you’re saying is not true. What you’re saying is not true. You’re saying that you’re not seeing factual numbers. You were told, from my understanding and I’ve sat in on most of these meetings, that money was going to be coming, there was more money being spent than $72.4 million.”

Van Gronigen said, “The question was raised, Patrick, about where’s the money coming from …”

Wallace interjected, “And it’s coming out of capital budget.”

Van Gronigen asked for a show of hands, saying when he was told capital funds were being expended, he believed they were generated by the district’s operating levy and not Proposition P’s 49-cent tax rate.

“I thought normal operating levy. Anybody else think that as it went on?,” he asked.

“Yes,” Van Gronigen noted, as most committee members indicated their agreement with his comments.

Wallace said, “That’s fine, but you keep saying and I just want to be clear about that because you’re saying that you’re not seeing factual numbers …”

Van Gronigen said, “I said disclosure.”

Both Charles and Wallace interjected, with Charles saying, “You said factual.”

Wallace said, “… No, you said these numbers are not factual as if something is being hidden and something isn’t there. You’ve been told all along, again, and I agree with you that you may not have thought that that’s 49 cents. I probably didn’t think that myself either. This is enlightening for me as well as a taxpayer in the district, but I don’t want it put out in front of everybody that these numbers are not factual as if something is being hidden because that’s not the case.”

Van Gronigen said, “You can call it whatever you like, I just know that there’s $13.6 million that I didn’t know about.”

Wallace said, “And that’s already been reported.”

Charles interjected, “And my statement is, you know, again, I assume responsibility for that and if wasn’t disclosed to you, again it’s because I had an assumption about what the scope of this committee was. I don’t want anyone to imply that it was an intentional act upon anyone from the school district or to hide information from anyone.

“If there was some confusion about the scope of this group, the function of this group, that’s easily corrected and it’s not something that’s been hidden because it’s been spoken about openly in board meetings, it’s been reported in the Call for quite some time and in great extent three weeks ago, very great detail … I hope that people will understand why the decisions were made, that they were not made in a dishonest manner. They were made based upon an understanding of what the scope of this work was. If that understanding was incorrect, we fix it and we go on,” Charles said.

Van Gronigen said, “OK, having said all of that, I do appreciate, as an oversight committee, I do appreciate having the information and really I’m not trying to jump on anybody’s case, I just really appreciate having it and now that we do have it, I thank you for it.”