There's more to Cd'A schools story

At the Monday School Board meeting, Trustee Dave Eubanks, speaking to the Board and the community, called for the disposal of district assets. His goal, apparently, is to replenish the district's contingency fund after some of those funds were used to ensure sufficient funding for completion of Winton Elementary School.

He went on to complain about the "district being the loser in a series of grievous miscalculations involving the reconstruction ... on the part of someone who is no longer employed at the district." I am that employee and I'm not there any longer because district leadership and I could no longer agree on efforts to maintain financial safety of district bonds as well as district financial processes - including construction. My fiduciary responsibility to the community gave me no choice but to leave.

The reconstruction of Winton was made necessary because the old building could not meet current building codes through a remodel. Studying the building, it was questionable how much rebar steel was in the foundation; it had serious asbestos problems and the district and the community would benefit most by rebuilding the school. It was left for last in the projects process, because I knew the $4.9 million - allocated prior to my arrival - would never be enough to build a new school.

At every board meeting, when I gave the construction report, I made certain to remind the board and district leadership we were seeking to husband savings from other projects to support a rebuild of Winton and why. A Winton rebuild would never happen at $4.9 million. I received strong support from Trustees Hamilton, Seymour and other former board members. The largest single savings was on the Canfield project, where more than $1 million was saved and redirected to the Winton rebuild.

The second largest savings was in technology when $947,000 of funds targeted for VOIP installation was not needed. I sequestered those funds on my spreadsheets, also for Winton's rebuild. I warned district leadership many times over two years that the funding of the rebuild could be difficult, exciting or worse - interesting. The sale of the Northshire property was to help with the rebuild.

It is very true the sale did not generate as many dollars as I had hoped. I recommended and district leadership and the Board accepted my recommendation of the second best price offered. My reasoning was that a) the rebuild was literally upon us, b) the slightly higher offer was by a developer and I could not get comfortable that the transaction would close on time - which would leave the rebuild in a difficult place. So while it did help with the costs, it wasn't as much as I hoped for.

The final impact point of the rebuild costs was the choice to expand Winton by six classrooms to plan for growth. I took a deep breath and urged we go ahead as we had seen a need to try to place "all-day K" in more building; that will take more classrooms. I fully anticipated controlling costs and finding other savings as the project moved forward. After all, I had found more than $1 million in savings in the FY 13 budget that was passed just as I arrived at the district.

While I had no input in the creation of that budget, my years as the Finance Vice-Chair of School District 2 Board of Trustees in Billings, Mont., had taught me to look into the fund balances in the many different funds always in a school district budget and where extra dollars might be held - for whatever reason. District 271 was no different. Because of the myriad of funding streams a school district has at the local, state and federal level, it is rather exciting what surpluses can be found in the several funds.

The acquisition of the new District 271 office building was a stroke of good fortune for the district. The district had to move; the old building was being demolished as part of the Sorensen expansion. It was also an unhealthy and ancient building. The present district office building was offered to the district at $2.5 million and was acquired for $2.2 million. The purchase contract required the district to lease for nine months at $21,000/month followed by the purchase. The goal was to bring all district level administration into one location (they were in the several schools across the district), thereby gaining efficiencies of operations and freeing up space in the schools. When the 'occupying' dust settled, the building was fully utilized at that time.

There is no question now (nor when the building was acquired) that it is an excellent facility in terms of quality and overall operation. Its weakness (a not uncommon one in office buildings) is the mechanical. That can be addressed as the district chooses. The district lightly remodeled two offices and cut a hole in the wall for the reception area counter. No other structural changes were required or made. Trustee Eubanks would sell the building, believing it is worth $3 million, and those dollars would go into the Contingency Fund. Unless the Government Accounting Standards Board - GASB - rules have been drastically altered in the past few months, as well as the rules of accounting, that is not possible.

The building is a "hard" (capital) asset. A "hard" asset is a capital asset - buildings, vehicles, land and so forth. When it is sold, those funds are capital funds for restricted use. They cannot be used for daily operating expenses like salaries, programs or contingency funds. Can.Not. Be. Done. They must be used for another capital asset.

This has been explained in detail in a board setting in the past. Because of the sale of non-performing assets (unneeded land and parks), the District financed this purchase without requesting separate taxpayer funding, and the headquarters had to move.

The Thomas Lane property of 10.86 acres does have a value of "several hundred thousand dollars." Then-Superintendent Hazel Bauman and I viewed that as property to be traded for a future elementary school site. It is prime property; at least two developers have approached the district asking if was for sale. It would work well in a trading role, but not as a sale to increase the contingency fund. It, too, is a capital asset; it must be used for capital projects. It could be used to buy buses, as an example.

Trustee Eubanks states the district's Contingency Fund was $7.6 million in 2011-2012 and projected to be $2.9 million at the end of the current fiscal year. Perhaps Trustee Eubanks is confused. The district Contingency Fund in 2011-2012 was not $7.6 million; that would be the General Fund - a completely different fund balance that includes the Contingency Fund as part of its total. The district's Contingency Fund was never higher than $2.9+ million in previous years. The Contingency Fund can be increased the way its been done in the past; add a specific amount - to be determined by the Board each year at the end of the annual audit.

Disposing of the district headquarters building should not be for $3 million, but perhaps closer to $4 million. We were buying in a distressed real estate market; we knew the property was an amazing acquisition dollar-wise as well as space-wise; the ease of instant utilization was a bonus. I commend Trustee Morrisroe: Selling it would be short-sighted.

Selling the Thomas Lane property deprives the district of a valuable piece of land to trade for a new elementary site in the future; it is a performing asset. An educational use should be found for Hayden Lake Elementary - a school of all-day K, perhaps? That might free up other elementary space to accommodate the growth that is evolving now, or it could be sold for its land value because of its location - the center of the downtown in a thriving community. Again, it is a capital asset; GASB rules do and will apply to any sale.

While I was at the district, it was requested we reduce our operating balance sheet report to the board each month to a page of bar graphs - a measurement report that is easy to read, but tells nothing of the condition of the district's finances. This changed for the Board while now-former trustees Hamilton and Seymour were still serving; they requested the traditional balance sheet keep coming to them as they could read and understand it.

I kept my own spreadsheets on each bond project, updating them as invoices crossed my desk. Architect fees were planned for and deducted from the available monies on each project before the architects ever had a number with which to work. When it became clear the leadership and I were not on the same page financially, it was time for my wife and I to begin our next life adventure in North Carolina ...and we have.

At that time the funding for the Winton rebuild was in place to handle the expected costs. I knew where it was; I was never asked, so I didn't volunteer the information. In the last fiscal year's audit, the Management Discussion and Analysis should have been written by the very top district management. Moody's Rating Service requires that; GASB requires that.

One of the reasons then-Superintendent Bauman and I received a cordial welcome from Moody's - and a high rating on our bonds when we presented the district bonds for rating - is because of the quality of the bonds devolving from the quality of the district and its following GASB rules. As I explained to leadership, Moody's can also downgrade the bonds which would create a problem for the district. Public entities are under official scrutiny like never before by financial regulatory agencies.

During my time there, I carefully removed the district from the very interesting attendance numbers counting used to calculate qualification for an emergency levy after the first three school days of each school year; that should be followed every September going forward. The old way left the district's calculations open to question and legal challenge.

During my private sector career, I was fortunate to build a company that had $1.4 billion in sales with a solid profit performance and bonuses to all employees every year for 29 years. During my trustee career in Billings, I was fortunate to have good people in the district's finance department who helped me learn school finance. As said earlier, when the district and I parted, the needed funds were in their places. Where they went after that and where they are now, of course, I would not know.

Wendell Wardell was Coeur d'Alene School District's chief operating officer from May 2012 to November 2014. He now resides in North Carolina.