In October 2019 Jeffco’s BoE approved a $36M contract, on the consent agenda without discussion, for the construction of a Jeffco Fiber Network. $21.6M of the funding for this would come from Jeffco’s Capital Reserve Fund with the remaining $14.4M from the IT dept’s budget and grants.

Board Docs very specifically stated that $21.6M would come from the Capital Reserve Fund, not the Capital Improvement Program. The bond had been approved by voters nearly a year before and numerous bond related projects up until that time flatly stated that their funding would come from the bond program. This item was different in that it stated funding was coming from Capital Reserve.

Yet, the ‘H DW Network Upgrades’ project subsequently appeared on the monthly bond program CAAC report in December 2019. When project costs first started to appear on the CAAC report in January 2021, this project came with a $7M price tag.

The project next magically appeared in a Reed presentation to the Board as a “possible” use of $14.6M unallocated contingency in October 2021.

But, it didn’t stay there long. By the December 2021 meeting that $14.6M suddenly showed up on the monthly CAAC report with a $0 original budget. That means it wasn’t planned to be in the scope of the Capital Improvement Program, but yet, there it is. Who approved that and why did they approve it?

And, as is usual in Jeffco schools, it only gets worse. In a presentation posted days before a Feb 2022 Board Meeting, the Fiber project was no longer on the list of potential projects for the CIP’s unallocated contingency.

But, it magically reappeared several days later during the actual presentation (revision 1), but with a price tag of $5.4M, while still appearing on the CAAC report for $14.6M. The only reasonable conclusion for this is that the project is either running significantly over budget, or the IT dept can’t totally fund its $14.4M portion of the project.

Something very strange is happening with the Fiber project. The 10+ schools, including Vivian, Mulholm and Lumberg, who will end the program with FCIs over 20% will continue to suffer in facilities with significant needs because the bond program is spending money on projects that were hidden from voters and not going directly into fixing classrooms.

In February 2020 @JeffcoSchoolsCo BoE was presented with a Food and Nutrition Services Master Plan.

This plan included a recommendation that Jeffco construct a Central Production Kitchen at Quail Street, w/advantages such as providing fresh consistent food quality and alignment with the previous recommendations of the FNS Task Force.

The cost to implement the Central Production Kitchen was $29.4M, including soft costs.

So what did @JeffcoSchoolsCo do?

Absolutely nothing!

Financial genius Brad Rupert noted that Jeffco didn’t have $30M lying around.

Entrepreneurial wizard Jason Glass noted that Jeffco could use the bottomless pit of Capital Reserve funds or ask voters to approve another bond for the funding.

And District COO Steve Bell, who oversees FNS, just sat there like a lump on a log.

The truth of the matter is that Jeffco DID have money for the project and for some reason either incomprehensibly didn’t realize it, or didn’t want to use it.

In December 2018, Jeffco received $50M in premium from the bond’s first issuance, with another $30M expected from the 2nd issuance. If Jeffco set aside $25M of that for a Fletcher Miller replacement school, which was removed from the bond program, that would leave $25M, almost the $29.4M needed.

Yet, the bond program included kitchen renovations for 41 schools and the construction of 5 new schools. It is not hard to imagine $4.4M in cost savings if a Central Production Facility was created, reducing planned construction and renovation costs.

But the Board didn’t take action and leadership, including Glass, Schuh, Dorland and Bell, did nothing to advance the project while estimated costs have now climbed $10.6M to $40M.

How does that even happen over the course of under 2 years? That’s an increase of 37%.

Let’s be perfectly clear. This is now a $15M mistake. Money that could have been used in classrooms.

$25M in overages were spent on fields while a plan for a central kitchen which would supply fresh food to kids was just forgotten and now, based on current program overages, it is doubtful Jeffco will have the money to complete.

More than 3 years after Jeffco received the first $50M in what eventually became $118M in bond premium there has never been a discussion on how to prioritize or utilize that money, and now it is nearly gone, for unexplainable reasons. That is shameful and fiscal malfeasance by everyone involved.

This is just one of the numerous examples of mismanagement and incompetence related to Jeffco’s bond program. Jeffco should never be trusted to be good stewards of bond money ever again.

On November 10, 2020 the consulting firm of Moss Adams presented their findings from a mid-program assessment of Jeffco’s Capital Improvement Program. The report was not good.

Included in the report were areas that should raise serious concerns among the Superintendent, Board Members, District Staff and Jeffco taxpayers.

One of the areas that Moss Adams looked at was Contractor Procurement, essentially how contractors were chosen.

Moss Adams wrote:

… however, bid tabulations or evaluations for the selection and award of the projects were not available. Additionally, documentation was not available to demonstrate the selection process and awarding of professional services from the prequalified list of consultants. We were unable to determine whether or how the selection and award process for District projects included the factors outlined in the District’s policies and procedures.

Essentially, Moss Adams is saying that there is no record of how winning bidders were chosen. Think about that for a minute. Of the 6 projects Moss Adams looked at from a Contractor Procurement perspective (Appendix H), only one was awarded to the low bidder and that there is zero documentation on why low bidders for the other 5 projects weren’t chosen. In addition, 5 of the bidders who were selected were subsequently issued change orders, the minimum value of which was over $6.5M.

This is just beyond belief. It is certainly not hard to imagine scenarios where a procedureless system like this can, and maybe has been abused.

Something similar happened with regards to Architect Procurement.

Moss Adams looked at 8 projects with respect to Architect Procurement (Appendix I). None of the 8 provided a proposal, with Moss Adams stating that these contracts appeared to be “sole source procurement”. How can anyone think that there is not the opportunity for fraud, favoritism or over pricing with so many sole source contracts? And, not to be outdone by the Contractor Procurement, all of these architecture firms were issued substantial change orders too.

This is not the way to run a capital program. The optics are that there is way too much opportunity for fraud and corruption.

These examples are only the tip of the iceberg if you take the time to critically read the full Moss Adams report, not just the cherry picked and sanitized sound bites District staff presented to the Board.

The program is out of control, not just from a cost perspective, but also from management and fraud mitigating perspectives.

Jeffco taxpayers and voters deserve nothing less than full Financial and Performance audits. Taxpayers were promised that Jeffco would be good stewards of their money. That isn’t happening.

Last week Jeffco citizens heard the Moss Adams presentation relating to their review of the Capital Improvement Program.

If you looked at Jeffco’s Next Steps slide, you would think that only a few simple communications tweaks were needed.

This was reinforced by Superintendent Dorland telling the Board that “Most projects are at or near budget”.

However, if you read the full report, this couldn’t be farther from the truth.

First, it is completely false that most district projects are at or near budget.

The Moss Adams report shows that 59% of In-progress projects are over budget, with 19% of all projects expected to exceed their budget by over $500,000.

It is worse for Completed projects where 67.8% are over budget, with 18.8% exceeding their budget by more than $500,000.

Dorland was wrong. If someone gave her that faulty information they should be fired. If she said that without doing the proper research, then she should be reprimanded. She should always give the Board accurate information.

Regarding the report, the findings and recommendations were much more serious than Jeffco staff wants people to believe.

Here are the highlights:

• The current program cost estimate is now $136M more that what was initially shown to voters in 2018.
• Bid tabulations or evaluations for the selection and award of projects were not available.
• The District does not have policies and procedures specific to the change order process (i.e., review process, thresholds, approval process, approval levels, etc.).

These are egregious. Jeffco is talking about nearly 25% cost overruns (above the included 10% project contingency), with Reed telling the Board to expect another $43M in overages before the program is over.

Not having project selection evaluations means that the program is not transparent and is ripe for favoritism and or kick backs.

The same can be said regarding the change order process. This leaves the program ripe for vendor overcharging or kick backs.

None of these are good, but all were glossed over in the report review session.

To make matters worse, instead of acknowledging and addressing the Moss Adams findings and recommendations, all Director Rupert did was fault the consultants, make excuses and praise staff for the program.

It was appalling.

In addition, Rupert made a point that the program was not based on the 2016 Facilities Master Plan, when former CFO Kathleen Askelson, in her January 2021 bond review report stated that it was.

Rupert was wrong and Dorland was wrong.

The report was more damning than anyone wants to admit.

We can only hope that Dorland can clean the mess up, but her statements and actions to date don’t give me much hope.

Jeffco’s Flipbook (and here if Jeffco deletes or changes it) is declaring multiple schools are under their bond program budget when they clearly aren’t.

I will document two of the schools here, Fremont ES and Belmar, but there are many more, including Arvada K-8, Columbine Hills, West Jeff MS, Welchester, Eiber and Semper.

Why is this happening? There are only two answers, either complete incompetence on the part of staff or a desire to mislead the public into believing the management of the program is not as bad as it really is.

Belmar – tagged with a green arrow in the Flipbook

The Flipbook states that Belmar has a budget of $1,068,000.

The current CAAC report shows Belmar costs as:

Efficiency & Future + Paving	$848,999
Hazmat Costs	$85,281
FF&E	$382,202
Total	$1,316,482

This is nearly $250,000 over budget and does not include additional costs such as security glass, site lighting, IT cameras and network upgrades.

Fremont ES

The Flipbook states that Fremont has a budget of $1,289,000.

The current CAAC report shows Fremont costs as:

Efficiency & Future Ready	$1,087,700
FF&E Costs	$334,083
Hazmat Costs	$102,186
Total	$1,523,969

or more than $230,000 over budget, not including additional costs such as security glass, site lighting, IT cameras and network upgrades.

Jeffco is lying to the public to present a picture that they are good managers and stewards of our money, when the exact opposite is true. This is not a good look.

Jeffco should fix this immediately. In addition, Jeffco should show the total costs for each school project so that voters and taxpayers can see the truth.

Recently, Colorado Community Media, including Jeffco Transcript and Arvada Free Press printed an article by writer Bob Wooley about Jeffco’s Capital Improvement Program.

For the most part, Wooley did a good job of attempting to explain a financially complex program. However, there were some comments and statements made by Jefferson Public Schools’ officials that were misleading or downright false.

I’ve outlined several of those areas below:

1. The article states:

After the Bond passed, the project’s estimated costs were increased by nearly $32 million for a revised total of just under $737 million for the program.

TRUE – $32M in hidden costs were added to the program

After the bond passed, $32M in costs were added to the flipbook for the same list of projects. The use of $32M in contingency to cover these costs was essentially hidden.

2. The article states:

District officials say the increase was a result of changes in scope, market conditions, incorrect estimates or various other factors like asbestos removal, which were determined once the District was able to perform more in-depth evaluations of each individual project.

PARTIALLY TRUE – 81 schools’ cost estimates increased by EXACTLY 5%

While I agree that factors such as scope changes, market conditions and incorrect estimates can result in changed estimates, that doesn’t fully explain the extent of the cost estimate changes between the first and second flipbooks. The project costs for 81 schools, or nearly 60% of the total, increased by EXACTLY 5%. This is not indicative of changes in scope or incorrect estimates. That’s indicative of using Excel to pad costs.

3. The article states:

“We told voters we would accumulate six years of approximately $20 million at the back-end to fill up the program,” Reed says.

FALSE – Voters were told $23M

Voters were told that exactly $23M annually in Capital Transfer would be accumulated. In reality only $20.9M annually is currently being transferred. That means there is a $12.6M shortfall in stated revenue, again made up with Contingency.

4. The article states:

“and over $3.5 million was spent on hazmat expenses (which technically, do not count as overages).”

FALSE – Hazmat costs ARE overages

1. Why aren’t $3.5M in hazmat expenses considered overages? Any decent construction project manager with 50 year old buildings knows there is asbestos in those buildings that will have to be mitigated. Mitigation costs should have been factored into the original estimates.
2. Where is the money coming from to pay for the hazmat expenses? It’s coming from the District’s program contingency. Therefore, technically, and for all intents and purposes, hazmat expenses are program costs that reduce available contingency This is merely an attempt by Reed to put lipstick on a pig to make $3.5M in overages not seem like the $3.5M in overages hazmat costs really are.

5. The article states:

In a document Reed says is now posted to the Capital Asset Advisory Committee (CAAC) website, all budget variances are listed with specific overage amounts and the reason for the cost variance.

FALSE – This document lists variances against revised cost estimates, not original estimates

This document hides $32M in cost increases. That’s deception.

6. The article states:

Therefore, the precise amount of contingency that’s been spent on actual projects thus far is $65,815,424.

FALSE – The amount of contingency allocated is currently over $110M

$65M from what Reed wants people to believe is the contingency spent, plus $3.5M in hazmat, plus $32M in increased estimates plus $9M from recent fields project = $110M in contingency allocated.

7. The article states:

“I’m not a construction guy,” Bell said. “But we have a construction guy and I was speaking to him this morning and he said “you know, a year ago the cost of steel was $53 a ton — today it’s $79.” A year ago did anybody know it was going to go from $53 to $79? No.”

MISLEADING – Cost of steel is only one small component of cost increases

Both Tim and Steve have told the Board on several occasions that they have been getting good pricing due to the pandemic. And, this report shows that non-residential construction costs have been relatively flat in Denver for the last 2 years, increasing by only 2.1% total over that time. In addition, there are numerous projects that had no steel involved that are significantly over budget. This is a misleading and deceptive statement.

8. The article states:

“According to Tim Reed, Jeffco’s Executive Director Facilities & Construction, the amount of contingency that had been spent as of Feb. 22, was just over $81 million, of which nearly $12 million went to charter schools…”

MISLEADING to FALSE – $12M to Charters came from Bond Premium

The agreement with District Charters was that Jeffco would share approximately 10% of all bond proceeds with Charter schools. The $12M Tim Reed is referring to is based on Charters’ share of accrued interest and bond premium. This has nothing to do with District contingency.

The bottom line is that the Capital Improvement Program has already spent or allocated $24M over its original $86M contingency budget ($110M total) only 2.5 years into the program. In addition, Jeffco has hidden a $12M revenue shortfall from Capital Transfer. The amount of deception and lack of accountability for large cost increases is truly unbelievable.