A recent audit of Portland Public Schools’ 2017 bond found cost estimates provided to the public for the school renovations and health and safety projects were $100 million less than professional construction estimates circulated internally.
But auditors found no documented reason why the estimate was lowered — or who made the decision.
Consulting firm Sjoberg Evashenk presented their findings to the PPS Board at a meeting Monday evening.
Portland voters approved the $790 million bond in May 2017, to cover modernization and renovation at three Portland high schools and one middle school, and to address health and safety problems such as lead-based paint and ADA requirements.
School board members have been wrestling with cost overruns on the 2017 bond since April 2018, when projects appeared to run nearly $90 million over budget. Costs have risen since then, though the district has made changes to rein them in to a degree.
Internal documents from the PPS Office of School Modernization showed cost estimates totaling $678 million for the four major rebuilds. But when executive leadership from OSM presented the bond to the PPS board in January 2017, total project cost for those four school projects had been reduced to $580 million.
Board Chair Rita Moore showed frustration with the audit results.
“As far as I can tell, there was no oversight on the single most important question,” Moore said. “There was no discussion about how much was it actually going to cost.”
Moore, who was not on the school board during the bond process, pointed out that there were groups in place she believes should have asked more cost-related questions.
The audit found during the bond development process, board questions focused more on design than cost.
Board member Amy Kohnstamm, who led the campaign for the 2017 bond, called a bond accountability committee a “big miss.”
“An external entity that should have been engaged in the vetting of the cost estimates, but that wasn’t part of their charter,” Kohnstamm said.
Adding to the $100 million shortfall, auditors say estimated costs to complete school modernization projects have increased 37% since the bond passed.
Since 2017, many top executives have left Portland Public Schools. PPS was under the leadership of interim superintendent Bob McKean in May 2017, when voters approved the bond.
Superintendent Guadalupe Guerrero joined the district in fall 2017.
At least two officials with oversight of finances or facilities are also gone. Guerrero fired former chief financial officer and deputy executive officer Yousef Awwad in November 2017.
Former chief operating officer Jerry Vincent resigned in April 2018, just as the bond’s cost overruns were coming to light.
Sjoberg Evashenk interviewed current OSM staffers for the audit, but no former employees.
“We did not have access to them,” said the firm’s Catherine Brady.
The school board is planning to put another bond on the ballot in 2020. Benson Polytechnic High School, originally slated for reconstruction with 2017 bond money, will become a part of the next bond because of the funding gap.
Moore and other board members expressed concern about the board’s preparedness when the time comes to present another bond measure to voters.
“I don’t know about construction costs, that’s not what I do,” Moore said. “How can I perform due diligence when I am not an expert in this?”
Brady suggested the board ask for more detail beyond project costs, or cost per square foot on school capital projects.
Scott Perala, interim senior director for the Office of School Modernization, suggested Moore break down the bond development process and focus on one part of the bond at a time.
Board member Julia Brim-Edwards still has basic questions about what went wrong in 2017. She wants to know why voters weren’t informed that the school projects they agreed to fund at $790 million may end up costing more than $1 billion.
“I don’t have a clear understanding of how I’d tell my mom or my next-door neighbor what this difference is, the components of it,” Brim-Edwards said. “I don’t think we can tell the community this is never going to happen again if we still can’t explain that delta between $790 [million] and $1.01 [billion].”
Auditors suggested several recommendations for future bonds. They include developing a formal cost estimation methodology and conducting an analysis to determine what caused an increase in construction costs for the 2017 bond projects.