In the Nov. 10 Jeffco School Board study session, representatives of Moss Adams, a public accounting firm gave a presentation on an evaluation of the school district’s Capital Improvement Program (CIP) midway through it’s proposed six-year timeframe.
In June, 2021 Jeffco School District issued an RFP with 17 key questions to guide the evaluation process focused on how the CIP moved forward following the 2018 election bond and sale.
Four vendors responded to the RFP. One finalist, Moss Adams, interviewed and was selected to perform the evaluation.
Moss Adams was provided with comprehensive information, websites and documents regarding the CIP. They conducted interviews with 12 individuals representing disciplines inside the organization, as well as external stakeholders.
Moss Adams had detailed discussions with facilities construction teams to clarify and provide additional information about project financials.
Jeffco’s Superintendent, Tracy Dorland said to this point, the District is in design, construction or has completed 231 CIP projects (including 69 % of the work the District committed to when the bond was passed, though the list has expanded). She emphasized that the District can and will complete all of the CIP projects promised to voters.
“Most projects are at or near budget,” Dorland said.
However, there are well documented examples of projects going significantly over budget. Alameda International Jr/Sr High and Patterson International Elementary are two examples, both of which ended up more than $1 million over budget.
Dorland listed Kendrick Lakes Elementary School, Columbine High School’s new entrance and a new addition for Foster Dual Language (PK-8) as milestone projects. She said Arvada High School, Jefferson Jr/Sr, Lumberg Elementary and Bell Middle School are considered milestones as well.
Dorlandsaid more than 1,000 stakeholders including principals, teachers, students, volunteer staff and community members have served on committees engaged in the CIP program including the CAAC (Capital Asset Advisory Committee) and DAG (Design Advisory Groups).
Moss Adams’ Stephen Bacchetti started off the presentation. He said his firm had been able to answer the 17 key questions from the RFP and that they used AICPA (American Institute of Certified Public Accountants) consulting standards in their efforts to do so.
Some of the areas the firm looked at include master-planning and project estimating controls, adherence to design and construction budgets and bidding and procurement procedures.
Bacchetti said overall they noted a lot of good practices by the district. Among areas for improvement, he said the key focus for Jeffco as it move forward are: complete and accurate master-planning process procedures and reporting, complete and accurate performance tracking against master-plan budgets, and construction audits to validate project costs.
“This is not a financial statements audit, a performance audit or forensic investigation,” Bacchetti said. “During our very specific and limited procedure, we didn’t observe fraud, and if we had we would have notified the district at that time.”
He said as a best practice, his firm recommends having a performance audit performed to track performance, validate the implementation plan and include best-practice objectives to meet the needs of the program based on where the program is currently at.
Moss Adams’ Tammy Lohr picked up the presentation from there, saying she wanted to take a moment to celebrate the successes of the bond program, noting that every school was touched by the program.
However, Lohr said there were opportunities for improvement.
Lohr said her firm noted that there were several documents that helped inform the bond program.
“What we’re hoping to see is really the ability to track how each of these reports helps inform the bond program so the District is able to show the community exactly what we were doing and why there were changes along the way, because changes are inevitable,” she said.
She said Moss Adams would like the district to develop a comprehensive, prioritized list of projects, define within policies and procedures what are the criteria for making those priority decisions, and define the decision-making authority for the approval process of those projects.
Lohr said Jeffco is in a unique position where it was able to take advantage of market conditions and get a lot of bond premium, so with the prioritized list, it can determine how it wants to use the bond premium to support capital assets across the district.
“We know that the District is in the middle of its master planning process update this year and so we’d like to see some of the recommendations go into effect with the evolution of that new master plan.
Accurate and complete reporting were next on Lohr’s list. She said they are essential to ensure buy-in and trust from stakeholders in the program. Furthermore, Lohr said her company found some gaps in policies and procedures.
“For a bond program this size, we often see fully separate, dedicated policies and procedures,” she said.
There were three areas Moss Adams noted to be opportunities for improvement. Lohr said the first area was related to labor allocation.
“The bond language itself states that senior management officials cannot be charged to the bond program. The District has a definition of what senior management is — that’s COO (Chief Operating Officer) and above, so let’s get that written and approved by the board in policy and procedure,” Lohr said.
Moss Adams would also like to see the District define the term “local.” The bond program provides a local preference for contractors. Moss Adams found the District has an informal definition of the word, saying it applies to any contractor headquartered or with a local office between Ft. Collins and Colorado Springs. Lohr said that definition might be perfectly reasonable, but it should be written in policy and procedure and documented so it can be adhered to. Lohr said the District’s procurement policy to define how contractors are selected could be improved.
The final area of policies and procedures that Lohr addressed concerned “change orders” including how they are approved and processed. Change orders are used when the scope of a project changes.
Construction audits were also recommended, with Bacchetti saying they can help validate that the cost of work definition and expenditures, line up.