How cost overruns and an FBI probe could doom Beaufort County's schools referendum
The Beaufort County school board will ask voters Saturday for $76 million to build new schools and additions despite a contingent of voters who say they don’t trust the district to spend the money wisely because of cost overruns at two Bluffton schools, both of which are now part of an FBI investigation.
Construction of River Ridge Academy, estimated at $25.5 million, cost $32 million by the time the school was completed in 2015. And May River High School, estimated to cost between $35 million and $43 million, is now projected to cost a little more than $67 million. River Ridge and May River will be expanded if Saturday's proposal passes.
Meanwhile, voters know little about an ongoing FBI investigation that involves the two schools. Details of the probe are secret, but board officers said in February that the district is not the target. In early January, the U.S. Attorney’s Office requested records relating to the construction and bidding of the schools from the district's chief financial officer Tonya Crosby and its facilities, planning and construction officer Robert Oetting.
Timing also could hinder passage of the referendum. District leaders are coming off a 2016 loss when voters said no to a $217 million bond proposal — the district's first rejection in more than two decades.
Additionally, a majority of school board members are up for election in November, raising questions about who would oversee the spending of the money. And the board's sole employee, Superintendent Jeff Moss, might be considered for a job as Alabama's state superintendent of education.
The two Bluffton schools are the only schools built so far during Moss’ time at the helm of the school system. He has been a controversial community figure amid fallout from his two ethics violations stemming from a high-paying, newly created district office position filled by his wife. The violations caused a split in the school board that oversees him.
For voters like Paul Egan of Bluffton, the board's previous conduct makes him question how well it would provide oversight on major construction projects. He voted no on both of the board's 2016 referendums and he plans to do the same on Saturday.
"This school board has demonstrated its utter incapacity in working together in a deliberate and respectful manner," he said. "I don't trust them with $76 million."
District leaders defend the costs of the schools, citing inflation, expansions to the projects and changes in design.
"Both schools were desperately needed when they were built," said board member Mary Cordray, one of several members who has seen the projects from start to finish.
"We did try to take preemptive steps (in 2016) but we were unsuccessful," she said, referring to the failed bond measure. "This reinforces how urgent the issue is for me today. For both schools, from day one, the plan was to add on when the growth demanded it, and the growth clearly demands it."
Overestimate, under-budget
Project estimates are just that — estimates, district officials say.
“An estimate is not a budget,” Moss said at a recent superintendent town hall meeting. “It’s what experts in that field believe can be done. When you add a second floor or swimming pool, then you have a new estimate.”
The difference in those two words allows the school district to say some of its previous projects came in under budget. If the scope of a project changes after the board establishes the budget, the board can vote again to raise the budget.
"It’s a technicality in my mind," board member JoAnn Orischak said of Moss' reliance on using the word "estimate." "The board votes in good faith based on those numbers he presented to us."
Regardless of word choice, both schools came in over the estimates presented to board members at the October 1, 2013 meeting during which the vote to build the schools took place.
In a 10-0 vote, the board decided to build River Ridge Academy using $25.5 million set aside from a 2008 bond referendum. The board would ultimately end up using an additional $2 million from savings from other 2008 referendum projects, another $2.25 million reallocated from savings in previous fiscal years and some additional funding from the district’s capital fund for furnishings.
Also that October night, the board authorized the building of May River High School using “8 percent” borrowing capacity — money the district is allowed to borrow without voter approval. The funding mechanism prompted three board members to vote against the motion because the school would be built without the public approving the project through a referendum.
No budget was set in the vote to build May River, though Moss presented an estimate to the board that night, telling members, “I believe those numbers will come between $35 and $43 million.”
In March 2014, the school board unanimously approved the issuance and sale of a bond, not to exceed $75 million, $25 million of which was from the 2008 referendum to build River Ridge. The rest — not to exceed $50 million — was for the new high school, then-chief operational services officer Phyllis White told the board.
"I don’t want board members to be concerned that we are going out to spend $50 million,” White said. “We don’t know at this time the cost of the new high school … So it’s really for the funding purposes. It’s not permission to go out and spend $50 million on the high school."
Then-board member Jim Beckert requested the bond resolution’s language specify the two schools' costs. His request was not added into the earlier motion. The resolution ultimately did not include that language.
Fast forward a few months.
In July 2014, the board’s Finance & Operations committee unanimously approved raising River Ridge’s $25 million price tag to $28.8 million using savings from previous fiscal years. District officials said then that inflation and expansion of the project were the reasons.
"If you think about how long ago the referendum occurred, and with the changes in costs and scope of the project, I think the ability to get the price that close is very good," Cordray said then.
Soon after the River Ridge project estimate increased, Moss informed the board that May River’s had also.
“We do have some new estimates for the new high school,” he told them in September 2014. “If you remember, the previous motion was not to exceed $50 million.”
Moss said those estimates were based on “averages and square footage cost.” Citing more accurate estimates, he suggested the board approve a budget not to exceed $68 million that would cover additional costs, including close to $9 million for site work done on the soil to prepare it for construction and make it stable enough for building.
Moss read through a laundry list of additional costs, which included:
- Site work: $8.6 million
- Contingency funds: $2.8 million
- Telephone/security system/technology: $4 million
- Athletics fields (football, soccer, tennis, baseball, softball): $6 million
- Capacity fees: Almost $1 million
- Furniture fees: $3.8 million
- Architect and other consultant fees: $2.2 million
“We haven’t done value engineering, so I think we can cut some out of it,” Moss said. “These numbers are pretty solid. I’m confident we can say not to exceed $68 million.”
Board member Evva Anderson said she felt restricted by the increase in cost and the need to make a decision quickly to alleviate Bluffton’s overcrowding.
“At this point in time, we’re darned if we do and we’re darned if we don’t,” she said. “We’re really at a point that we really don’t have a lot of choices at this point in time. Our children (are) already stacked in the class, stacked on the bus.”
The board voted 8-3 to approve May River’s $68 million budget.
District officials said Thursday that May River's board-approved budget was $70.1 million — the $68 million as well as the architectural firm's $2.1 million contract. Previously, Moss had said the architect's fees were included in the $68 million budget. He also said at a recent town hall meeting that he was aware of only one budget for May River, $68 million. Regardless, the district projects the total cost to be a little more than $67 million.
Shifting explanations
District officials have provided a variety of reasons for the fluctuations in both schools’ estimates.
At the time of the 2008 referendum, district officials slated River Ridge to open in 2012, but pushed back the opening to the 2015-16 school year. The three-year delay meant three years of unaccounted inflation.
Moss said last fall that River Ridge’s scope changed from a school serving about 800 elementary school students to a facility for about 1,000 students in grades kindergarten through eighth. This meant additional features, such as middle school athletics fields, were folded into the design.
The district’s request for qualifications, an application for architectural firms to submit, noted a capacity of 1,200 students, though the school’s current building capacity supports about 1,000 students.
If Saturday’s referendum passes, the addition will increase the school’s building capacity to the originally intended 1,400.
Asked about the school’s shifts in capacity, district spokesman Jim Foster wrote in an email, “(The capacity) of River Ridge Academy was reduced because the available funds weren’t sufficient to build a larger facility.”
Both River Ridge and May River’s rising costs can also be attributed to their location, Moss has said.
“What I’ve been told here is that the supply chain here is much more expensive than Columbia,” Moss said.
He added that when the costs of land, fixtures, fees and permits are subtracted — “because those are different from locality perspective” — he says the schools’ per-foot construction cost are among the most affordable in the state.
Like River Ridge, May River’s vision changed several times, Moss said at a recent town hall meeting.
The original $35 million estimate was for classrooms, not a comprehensive high school, he said, describing a process that began as an “all-ninth grade academy,” then morphed into a high school serving four grades but with athletics being played at Bluffton High. The Educational Specifications committee — made up of all district employees — discussed features the architect should include in the schools’ designs.
“The educational committee started with one vision and moved to a full-fledged comprehensive high school,” Moss said.
In response to an open-records request for all of the committee's meeting minutes, the district provided seven pages of notes from two meetings held in December 2013. None mentioned the concept of an all-ninth grade school. In the application for architectural firms to submit designs for May River, the project description read, “New 9-12 Grade School and Master Plan.” Minutes also note athletics fields, locker rooms, a scoreboard, press box, P.A. system, long jump pit and bleachers.
Orischak, who attended the town hall, pushed back against Moss’ recollection of when pricey features, such as athletics fields, were added.
“At that time, we were presented with a $45M full-service high school with the fields,” she said.
As one of the board members who has seen River Ridge and May River from start to finish, Orischak’s faith in the district’s estimates has disintegrated.
As Saturday’s referendum nears, she will be one of five board members voting no on the $76 million request.
Last spring, Moss presented a $118.5 million referendum to hold in the summer of 2017. The plan, which Moss said would accommodate five years’ worth of capital needs, included $39.5 million to build a new school adjacent to May River High. Officials said they developed that estimate based on pricing the district did in 2015 and noted construction costs rise with each passing year.
The new estimate for the Bluffton school: $44 million.
This story was originally published April 13, 2018 at 4:52 PM with the headline "How cost overruns and an FBI probe could doom Beaufort County's schools referendum."