BYFIELD — After enduring a yearlong audit of its 2000 building renovation at the hands of the Massachusetts School Building Authority, Triton Regional School District met with representatives of its member towns — Salisbury, Newbury and Rowley — this week to break some bad news.
Because the audit found discrepancies in how Triton was reimbursed for the $52 million project, the three towns must absorb more than $2 million in unanticipated lost revenue associated with a future decrease in state grant reimbursements.
"As a result of our audit, there will be a significant adjustment in the state grant funding that we receive for the remaining 12 years of the bond, FY10 through FY21," said Superintendent Sandra J. Halloran in a letter sent out to member towns last week.
The concern of member towns now rests in whether the annual shortfall — $127,642 for Newbury, $120,600 for Rowley, and $147,260 for Salisbury — will be absorbed into the original debt exclusion for the project passed by residents. If that's the case, as some leaders believe, the cost will be passed off into residents' tax bills, resulting in a relatively small expense per resident. If not, the cost could be tough to stomach for member towns.
"In Rowley it takes about a million to add a buck onto the tax rate," said Rowley's Warren Appel, who served on the committee that oversaw the building project. "We're not talking big numbers in the tax rate."
Rowley selectmen Chairman Dave Petersen was a little less convinced.
"I'm concerned that if that Proposition 21âÑ2 override doesn't cover this thing, then we're going to have to come up with $120,000," he told the committee. "If it doesn't, that's going to have a huge effect on the FY10 budget as we go from here."
After much discussion on how the shortfall could be communicated to residents and whether the state was to blame in waiting so long to conduct the audit, Salisbury Finance Committee Chairman Jim Dondero offered the following perspective.
"It is what it is," Dondero said. "You knew that the state payments were coming in too high because they were based on a different rate. We were all in a position to know what was coming."
"I feel as responsible as anyone," he added. "So I'm not pointing a finger, but that's the point. We all kind of missed this thing as it was going along here."
The middle school rebuild project, as explained by School Business Administrator Brian Forget, was completed in 2001 and funded in part by a grant from the MSBA in the amount of $30,097,663, or 67.32 percent of the total building cost This grant was meant to be paid to Triton in 20 installments for a period of 20 years.
Forget said the state originally estimated Triton's building costs considering a bond rate much higher than the rate actually obtained at the time of the project's completion. The lower rate will ultimately end up saving $8 million over the life of the bond, but because the state waited nearly eight years to perform an audit on the project, that mistaken estimate resulted in Triton receiving eight reimbursement checks that were $272,000 higher than they should have been. Over eight years, that amount equals more than $2 million — a figure Triton will have to pay back over the life of the grant.
"The towns were overpaid for eight years, and that impact is going to have to be made up over the last 12 years of the grant," Forget said.
Additional discrepancies were created, he noted, by the audit's finding that $1,578,251 of Triton's submitted expenditures were "ineligible" due to incomplete documentation or incorrect attribution.
Forget was able to restore $868,528 as eligible costs, he said, but the state rejected the remaining $709,000.
"That took five months back and forth to work out," he said.
In response to committee members questioning why the aforementioned expenditures were ineligible, Forget and Appel explained it was always known that some of the expenses would be ineligible — for instance, the superintendent's new office within the high school.
But as Appel noted, the committee and the contractor bear some responsibility for the ineligible costs, particularly two line items rejected by the state, deemed ineligible because no change order was on file to justify the $162,716 expense.
"I went back to check my notes and could find no record of where we had put forth a change order," Appel said. "But the committee did approve the work that was needed in both cases. That was an error on our part that we didn't make sure we had change orders for that."
Appel put forth it should have been the contractor's responsibility to put forth those change orders in order to justify the expense.
"There was never a change order brought before us to approve or disapprove them," he said. "I know the contractor doesn't exist anymore. Whether or not you can go back to them for it, I don't know."
