Poor Management of Jeffco's Capital Program | Susan L. Miller
Problems with the Management of our Capital Improvement Program

Regarding the district's capital program (which the voters approved in 2018 by an extremely slim margin of 1/4 of 1% of the votes cast), current estimates place it at least $173 million over the budget presented to voters in 2018.

Here are the details:

In 2018, Jeffco voters were asked to approve the issuance of $567 million in bonds to fund a $705 million Capital Improvement Program (CIP). The remaining $138 million was to be provided by the annual transfer of $23 million to the district’s Capital Fund from its General Fund for six years.

Voters were issued this “Flipbook” which detailed how much of the $705 million would be spent at every school in the district. The total added up to $563 million (note that this is the ORIGINAL flipbook, not one of the many subsequent versions Jeffco has published).

Some have claimed that the information in the Flipbook was just "marketing spin." Moss Adams disagreed with that (see below). So too did former district communications director Tammy Schiff, who in the district's application for a national public relations award noted that the Flipbook "summarized what every school was going to receive in terms of renovations or new construction from the bond program…In all, over 150 “Mill Levy and Bond Factual Information” presentations where made morning, noon and night over the eleven weeks between the board vote to approve the questions and election night. These presentations were fact-based.”

Finally, if the Flipbook was indeed just "marketing spin", then it certainly fooled Colorado Community Media's editors (publishers of the Jeffco Transcript, Lakewood Sentinel, Arvada Press, and many other local papers), who on October 18, 2018 published this endorsement of the proposed bond issue (Prop 5B):

"We applaud the district’s commitment to transparency: A citizens financial oversight committee and independent audit of expenditures will make sure money from the measures is spent as intended. We also commend the district for listening to criticism from its failed bond attempt in 2016, which cited a lack of clarity in how the money would be used. This time, the district has prepared a detailed booklet and website of exactly where the money will go at each school.”

Calling the original Flipbook just "marketing spin" is nothing more or less than an attempt to coverup the Capital Program's extensive cost overruns and spending on projects that were never disclosed to Jeffco voters (e.g., more than $50 million on athletic fields and facilities at the district's most affluent schools).

Back to the Capital Program overspending calculation.

Of the remaining $142 million, $56 million was transferred to Charter Schools and $86 million was for “Program Contingency”.

Each project at district run schools included a 10% “Project Contingency”. Total project contingency equaled 10% x $563 million = $56.3 million.

If a project experienced cost overruns of greater than 10%, the excess would be charged to the “Program Contingency.”

If a project experienced cost overruns of less than 10%, the remaining project contingency would be added to the Program Contingency.

When Jeffco later issued bonds, it received an additional $118 million in “Bond Premium”.

So what was the total amount of money that Jeffco had available to spend on district-run schools?

Start with the total $705 million Capital Program that was described to Jeffco voters when they approved Prop 5B ($567 million in bond funding, and $138 million in funding from transfers from the General Fund to the Capital Fund for six years).

Add to that $118 million in Bond Premium and $12 million in interest earnings.

That gives you $835 million to spend.

Of that, $56 million went to Charters from the Bond Proceeds, and a further $12 million from the Bond Premium.

That left $767 million for Jeffco to spend on district-run schools.

Based on the latest district data, how much of that $767 million has not yet been spent or committed (including the $30 million plus that was recently set aside to cover anticipated cost increases driven by rapidly increasing inflation)?

An estimated $31 million.

You read that right.

With three years still left on its six year Capital Improvement Program, Jeffco has already blown through not only the 10% contingency on the projects it has completed, but also the $86 million in Program Contingency that was supposed to cover the full six year program, AND nearly all the $130 million in Bond Premium and interest earnings it received.

Contrary to what some people believe, Jeffco’s Capital Improvement Program really has spent or committed $173 million more that its original $563 million budget (767 minus 563 minus 31).

Moreover, despite the district's projections for accelerating enrollment declines, the Capital Program has spent millions of dollars on schools that we will now have to close.

An independent review of the Capital Program commissioned by Superintendent Dorland found multiple problems with its management and governance. It was conducted by Moss Adams, which is the leading provider of School Bond Capital Program Performance Audits in California, where they are required by law. The Moss Adams Review (and note that a review is less rigorous than a Performance Audit) confirmed the many criticisms of the Capital Program that have been made by outside analysts (see here and here).

Shockingly, the district has failed to implement any of the Moss Adams report's recommendations for improving the management and governance of Jeffco's Capital Program.

Now let's look at two more egregious examples of Jeffco's poor capital program management: The $20 million Meyers Pool Giveaway and $8 million for unproven HVAC air disinfection technology.