State audit slams Colorado school construction fund for mismanagement, conflicts of interest

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Greg Campbell Contributor
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A Colorado Department of Education program meant to help school districts maintain buildings and repair unsafe ones has spent more than $1 billion since 2009, but a scathing state audit has found that only a quarter of the 70 schools identified as being in the worst condition have seen any funding.

Auditors found that an oversight board for the Public School Capital Construction Assistance Fund awarded grants to relatively low-priority projects while denying other projects considered to be high priority.

They also uncovered questionable expenditures approved under the program, including $877,000 spent on 1,346 laptops and iPads that were approved for one school but which were used at another.

“Auditors noted that those funds could have been made available for other health and safety projects that didn’t receive funding,” according to the report’s summary.

The audit, released last week, is especially timely, considering that Colorado voters are considering a new tax on recreational marijuana that will contribute up to $40 million annually to the fund.

But as the audit shows, the program has a poor track record of ensuring the funds make their way to the districts that need them the most.

The statute governing the capital construction program requires that a board of overseers — called the Assistance Board — prioritize projects based on the most dire health and safety needs.

But a $12 million “priority assessment” of all the state’s schools and related facilities completed in 2010 “was not conducted in a manner that clearly identified all health-and-safety related deficiencies,” the audit reported.

In other words, “the Assistance Board spent more than $12 million for an assessment of public school capital construction needs in the state that does not provide enough information to prioritize all those needs,” the audit concludes.

“[T]he Assistance Board has awarded more than $759 million in state funds but does not have information on the extent to which the grants have addressed the critical needs in the state.”

Those state funds were combined with $330 million in matching funds from the school districts for a total outlay of $1.1 billion.

Auditors also found that board members couldn’t explain their grant-making decisions, which were often done without scoring criteria to prioritize applications from school districts. Even when a scoring rubric was used, it was often ignored, with high scoring districts getting the cold shoulder while those with less dire needs were approved for funding.

One possible reason for the discrepancy is that the Assistance Board has relatively weak controls against conflict of interest, meaning that its board members could potentially vote on projects that they might have a stake in.

As an example, auditors detailed a 2009 application by a school district that applied for a lease-purchase grant. Prior to applying for the grant, the district rejected bids from two Assistance Board members’ construction companies. Meeting minutes don’t indicate whether those members voted for or against the grant, but auditors were concerned that they were allowed to vote at all. The minutes show that both members spoke negatively about the project during discussion prior to the vote, according to the audit.

“Allowing Assistance Board members to bid on design and construction contracts for projects funded with Program funds creates at least an appearance of conflict of interest and may lead to districts believing that the grant award process is unfair and inequitable,” the audit reads.

In all, auditors recommended 27 changes to address everything from prioritizing grant applications to tightening the screws on conflicts of interest. The Assistance Board and the Department of Education agreed to implement all of them.

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Greg Campbell