Published: September 05, 2009 06:42 pm      

Seeing red: Greater Clark CFO working to help alleviate $1.1 million bond deficit

With just one month on the job, Greater Clark County Schools Chief Financial Officer Frank Collesano is tasked with trying to alleviate a $1.1 million deficit in the district’s bond for renovation projects at Charlestown and Jeffersonville high schools, as well as New Washington Middle/ High School.

The bond order, which was set at $99 million, went in excess of that for two main reasons, Collesano said. First, he said the board counted on getting a good interest rate from the bank on funding for the project. He said Greater Clark expected to get about $3.4 million in interest from that and put that into the project.

However, Collesano said the struggling economy meant the district didn’t receive near that amount.

The second issue was caused by switching architects for the CHS project. Kovert Hawkins/Michell, Timperman and Ritz was originally hired, with a fee of 5.45 percent of the project’s costs, according to resolution from the then Superintendent Thomas Rohr, dated May 9, 2006.

However, the board decided to fire the architect, paying the company $200,000 for the work it already completed and to hire The Estopinal Group at a rate of 7.7 percent, according to previous reports and a contract then Interim Superintendent Travis Haire presented to the board in February. That percentage adds up to $3,064,600, without counting change orders or reimbursable expenses.

Collesano said he took care of the first issue by renegotiating with the bank. A letter he sent to Superintendent Stephen Daeschner reports that Collesano authorized BB&T to transfer the district’s cash balance from the bond order from a treasury note to a money market account. He said in the letter that the move is expected to bring an increase of $160,400 or more in the next 15 months, creating a total of $1.58 million in interest.

That brings the deficit down to about $900,000, Collesano said.

“We are going to try to resolve it the best we can,” he said of the remaining void.

Meanwhile, he is trying to keep that number from growing because of change orders to the projects. He said some of the architects have been charging the district for mistakes they made in design that they realized once the project started.

He said he is making the architects pay for changes they caused from now on. Some recent change orders architects have filed, which he is refusing to pay for, include moving an electrical system from one area of a room to another and reinstalling a urinal that was not up to code after their first install, Collesano said.

Collesano said lessons from this are all things he already knew from his 30-year work history, which includes to negotiate architect fees that are within the budget and to have those architects design a “fool-proof” building that will require few change orders.

He also said money that will be earned in interest shouldn’t be included in the budget, since it can’t be guaranteed.

On top of all of this, Greater Clark is involved in a lawsuit filed by the first architects, who are alleging they weren’t paid for all the work they had completed prior to being dismissed, according to attorney Larry Wilder, who is representing Greater Clark.

He said that case is in the discovery phase.