2020-08-31 PPS School Board School Improvement Bond Committee/Audit Committee Meeting

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District Portland Public Schools
Date 2020-08-31
Time 16:30:00
Venue Virtual/Online
Meeting Type committee
Directors Present missing
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Event 1: PPS School Improvement Bond Committee and Audit Committee 8/31/2020

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or do you want me to kick it off or go through that i'm just trying to get settled if you don't mind going first a couple minutes late thank you how do you do that um so we're gonna start um so i'm gonna start the committee meeting it's a joint committee meeting between the school improvement bond committee and the audit committee and we're here to have a presentation of the bond performance audit that was done um this past year and uh so our agenda today is we're going to do some introductions of the committee members we also fortunately have student representatives on both the committees who have joined us today so we'll want to make sure that you introduce yourselves as well and then uh staff and then um the representatives of the audit firm we'll do the introductions and then we'll have a presentation of uh the the audit and a brief presentation of this the staff response uh then open it up to q a and also um commit any committee discussion uh the first thing i'm going to ask before we do introductions is i'm not sure if roseanne or kara are on the line but do we have cara do we have anybody who signed up for public comment just keep that no okay perfect um let send us a text uh or let us know if midway through somebody um asked for that so why don't we start uh first with um introductions i'm going to ask the committee members why don't we start with board members and we also i'm not sure kate wilkinson we have a community member who's on the audit committee and then the student reps and then we'll go to staff so i'll just start julia broome edwards chair of the audit committee and board member um michelle de pass board member and i'm on the audit committee and the chair of the school improvement bond committee hi andrew scott uh board member member of the uh uh bond committee and the audit committee and the audit committee sorry it was waiting away that that quickly from us amy i guess i see amy if you're talking are you taking roll call we're just doing introductions of the board and committee members so that we know all who's here since it's a joint committee meeting and we have some new members sorry about that i'm here i was on the phone right that second but i'm here present paying attention okay uh is scott bailey scott bailey not on either committee uh not paying attention so okay uh why don't we go to uh our uh student reps who are on both committees go ahead and introduce yourself hi i'm parker i represent benson on the dsc i'm on the policy committee and the bond committee uh hi um i'm jackson i use he him or she her pronouns and i'm on the audit committee any other student reps uh well hi i'm nathaniel i'm student rep to the board and i'm not on either committee but i'm here anyways great thank you all for joining us especially in distilling your near summer how about staff hi good evening this is dan young i'm chief operating officer marina do you want to go next sure thank you dan marina cresswell i'm the senior director of the office full modernization and scott perola is with me as well scott hi my name is scott perella i'm the program manager assisting marina with the overall bond program anybody else before we introduce the auditors mary captain more internal performance auditor roseanne powell boardman janice hanson internal auditing cara russia executive assistant for the board office
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great thank you everybody for joining us today um so with that uh i am going to ask the auditors to introduce themselves share an overview of the audit and i think probably the best thing today would be for us to allow them to get through their presentation and then we can come back after they've presented and after uh staff has presented the staff response then we can go into q a so if we can allow them to with the exception of any sort of clarifying questions that were as we moved through it okay well good afternoon everyone my name is kathy brady and i'm here today with lian liu to present the results of our year two performance audit of the 2017 bond program uh we really wish we could all meet in person but we're still pleased to be able to do this remotely and discuss the audit with you today and answer any questions um as you might recall pps hired our firm in october of 2018 to conduct the annual performance audits of the bond program for at least a four-year cycle so today we're here to talk about the audit that spanned from august excuse me april 1st 2019 through march 31st of 2020 of this year and before leanne covers all the details of the audit i wanted to give a quick uh background refresher of our firm we've got lots of new members since the last time we presented so our firm shoburg abashank consulting which is a mouthful it was founded about 20 years ago by the california state auditor and his chief deputy and that office does audits that are similar to the secretary of state in your um in oregon there so a lot of similar types of audits and at the state auditor's office and with shelburg abbas shank we've done numerous education audits of k-12 schools school districts boards of education and even at the community college in the university level as well as we do audits of other government sectors over the 20 years and and even in the past we've developed extensive expertise in capital improvement and construction audits often bond funded and we only specialize in public sector and government you know type entities in the western u.s we're headquartered in sacramento california although we do have a local presence in the vancouver portland area which makes it um convenient for us there when we can come on site one thing i also wanted to touch briefly upon is the type of standards that we follow they're called general accepted account government auditing standards also known as a yellow book and following these standards really is a cornerstone of our firm we believe it has essential accountability and transparency for public programs and provides a framework really for the integrity objectivity and quality of an audit those standards have many different provisions some are general in nature that relate to our independence ethical principles we have to follow continuing professional education they guide us and direct us on how we're supposed to plan and supervise an audit and that our results have to be based on sufficient and appropriate evidence that's really one of the most important aspects of the standards for us our conclusions have to have evidence they have to have data they have to have observations they have to have testing we can't based our conclusions just on um unsupported opinion or our years of experience or hearsay they have to be documented um and supported uh the audit results that are put in our reports the standards also have reporting requirements that we have to follow some of the more important ones from an oddities perspective is that we have to obtain and incorporate views of responsible officials so that helps guarantee that the oddities perspective has to be incorporated into our auto reports um the one last thing i'll highlight about standards is that the auditors have to be audited too um every three years we have to undergo a peer review process where an external auditor comes in and they look at our work and our processes and reports to make sure that we follow the standards that we say that we follow so the standards are important they set this framework for us to do the audits at pps the bond audits and they start from the very beginning where we set the audit scope we meet with osm staff pps executive leadership board and committee members we meet with external consultants that are hired and contractors and we're looking to get their perspective and identify concerns and
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challenges or maybe some the program status what phase something's in and then we review preliminary information maybe it's status reports maybe it's contracts maybe it's project files or some meeting notes and then we take that information and develop a high level risk assessment that helps point us on what some possible areas of audit would be we we consider phasing project phasing so if we wanted to look at construction management it doesn't make sense of projects certainly in design so that's a key factor some of those things that we do to help us set that audit scope um when we have all that information we prepare a draft work plan that gets discussed with osm management and the bac audit subcommittee where we refine add maybe remove tasks and that sort of sets forth that year's audit scope that can then be adjusted as we go along and new information is found but that generally sets the scope for that particular year so now to talk about the specifics of the 2019 the audit scope and the results i'll turn it over to leanne liu thank you kathy as you can see on this slide our year two scope focused on five main areas the 2017 bond status health and safety construction management contracts and procurement and prior audit recommendations like last year's audit report you will find a section discussing each of these areas as well as a short three and a half page bullet type executive summary for those of you who just need the key results and recommendations the report also contains pps's response as appendix c on page 49 and i believe marina will provide additional details on that in a little bit so with that let's get to the details in section 1 of the report we looked at the overall status of the bond program and the progress that has been made through december 31 2019. we mined through expenditure and scheduled data in osm's e-builder system and looked at how that system reconciles with pps financials to be comfortable that the data provided to us for analysis is reliable we also visited the madison construction site and with this being our second year auditing the program we certainly have seen a lot of changes since the fall of 2018 where projects were still in master planning so for madison and kellogg those two schools appear to be on schedule to be open for the 2021-2022 school year lincoln based on schedules that we saw is anticipated to have all phases completed by 2023 which only leaves us with benson for which construction is anticipated to wrap up in august 2024 in terms of cost based on the scope and estimates as of january of this year the bond will require approximately 1.08 billion to complete the current portfolio of projects by 2024. the concern with that is that the benson high school project is estimated to cost 357 million but cash flow projections for benson indicate that the 2017 bond will only have 67 million available through december 2021 to pay for benson expenses at that time in december 2021 benson will be in the middle of construction and having cash available during that time is obviously critical to move forward we understand that the board has passed a resolution to fund benson with a full faith and credit loan in case your november 2020 bond does not pass which would ensure continued work at benson but what we wanted to point out with this recommendation is that there needs to be further analysis provided to the board about the impact the repayment of such a loan would have and other pps commitments so that the board is fully aware and can make informed decisions about how bond funds will be spent going forward section two of the report summarizes our audit results regarding the bonds health and safety program the health and safety program area was an area where we did spend a lot of audit effort reviewing information and discussing status and progress with osm and as you can see from the section title the main takeaway is that a lot of progress has been made across all health and safety areas but from a public perspective answering a simple question such as what has been done was not easy we spent time looking through data in e-builder talked to health and safety project managers reconciled information presented to the bond accountability committee and had numerous working sessions with marina's team until we got to a point where we could say something
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more than just how much money has been spent on health and safety so on this slide you can see that improvements have occurred at many school sites and in some instances even more was done than initially envisioned by bond what was challenging though for us to identify was which of the nearly 100 schools within the district received what type of improvement since information available was limited and although we learned that osm is developing an interactive map to provide a better visual of where improvements happened across the district that was not yet publicly available during our audit so since that map was not ready the audit attempted to provide a simple summary of what has been done with the 150 million set aside by the bond and this is what it looks like a listing of all schools and simple summary of what was done i know it's very small for the slide but exhibit 6 on page 15 of the report has a bigger image so for example the first school on this list abernathy had let paint issues corrected while regular school number 56 had work done in all areas except radon and security but with this table you can see that there has been volumes of work accomplished over the past two summers since the 2017 bond passed however this type of comprehensive status information was not available at the time of our review and because of that we are recommending that as osm completes the interactive map there should be also supplemental summary information about the health and safety program on budget schedule and status so that the public at any point in time really knows what is going on with health and safety improvements additionally to be able to provide that information osm needs to make sure that internal systems and tools in place for capturing health and safety data are reliable and accessible to all team members so that health and safety reporting needs to oversight bodies and the public can be better met section 3 of the report provides our audit results on how osm is managing the day-to-day construction of the bond projects we found that osm practices in place are in line with construction industry leading practice and management of the construction projects was solid and what we did to do to arrive at that conclusion was for key elements of construction management we evaluate the practice and protocols in place to see whether what osm is doing mitigates risks related to project delays or cost increases and as you can see on this slide we found good practices such as regular meetings review of construction payment requests and frequent construction site inspections as well as facilitating open lines of communications between osm project managers contractors and the architect by having them on-site in trailers to help with delivering a successful project continuing on to the areas where we noted improvements could be made during construction management we found that while the process to review monthly payment application is strong the process to review change orders could be enhanced by requiring project team members to upload records of cost negotiation notes other marked up quotes into e-builder to allow for adequate evidence supporting osm's due diligence in reviewing contracted change order prices and ensure costs are adequately managed overruns contained and to really minimize risk of potential future claims or disputes the next section section 4 contains our audit results on osm's procurement and contracting of services for the school modernization and health and safety program before we go into details i would like to briefly explain two different project delivery methods one being design bit build or dbb and the other being construction manager general contractor or cmgc on the dbb method which is being used to construct kellogg as well as most health and safety projects pps hires an architect first to help with the design and then once those designs are done hires a contract to actually build the project according to plans the lowest bid contractor typically gets the job on the other side you have the cmgc method where you still have an architect but you bring on the contractor or cmgc early in design to get feedback from a contractor construction perspective and negotiate the construction contract as designs are finalized there are differences in the procurement and contracting process depending on which delivery method is used and we
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have highlighted those differences in exhibit 14 of the report but what is important for you to know is that the cmgc processes employed at osm for madison and lincoln aligned with leading practices and peer districts that we looked at however we do have a few recommendations related to cmtc procurement as shown on this slide the first one which is probably the more important one relates to the cmtc contract for lincoln where the contractor performed work during pre-design before the actual contract was signed we understand there were challenges surrounding the negotiation of that contract but regardless contractors should not be allowed to perform any work prior to a contract being fully executed and signed by all parties since it just unnecessarily increases liability for pps recommendation number seven is geared towards a formal evaluation of the cmgc delivery method once madison and lincoln are complete to ensure that benefits and challenges are looked at closely and that adjustments can be made going forward for future capital school projects this is really to minimize potential cost increases or schedule impacts from past lessons learned recommendation 8 is somewhat related to recommendation 7 but instead of a postmortem look it is intended to have osm present to the board nbsc and discuss in real time rationale and decisions regarding the timing of when construction costs under the gmp are negotiated with the contractor this provides for greater transparency and accountability of important decisions osm is making on a daily basis to move projects forward with regard to the cmgc contracts themselves we found they were comprehensive and again generally contained content that aligned with best practices but there was some contract language in the architect in the cmgc contract for madison and health and safety projects that could be clearer and more consistent to avoid any confusions or disputes over contract terms one of them related to a oregon administrative rule where contractors should should maintain financial records in accordance with generally accepted accounting principles the other related to addressing inconsistencies in the timing of cost estimateds provided by the architect and the contractor during the design phase to ensure that those two estimates are based on the same set of specifications so that the resulting estimates can be more easily reconciled and there's really no gap in expectations lastly there were some inconsistencies in how contract the payment language for health and safety work was interpreted and the level of detail and documentation needed to approve payment now the next and almost final slide government auditing standards that kathy mentioned earlier require that we follow up on prior audit recommendations related to our scope of work what that means is to the extent possible we are actually looking to validate whether osm and pps have really addressed the audit recommendations based on the responses they provided so we found that osm is taking the performance audits and resulting recommendations seriously as shown on this slide when looking at when looking at the status of our firm's recommendations for the 2017 bomb as well as the 2012 bond audits conducted by a different firm we found that many recommendations had been completed with steady progress even made on the 19 recommendations that we issued just last year since that time osm has formed an audit implementation team with senior level decision making staff created and posted an audit implementation tracker on the bond website and regular reports to the bac on progress all of these steps help ensure continued program improvement and demonstrate accountability to taxpayers this concludes our presentations but i think we're holding for questions until um marina or dan presented um the osm response does that sound yes that's correct thank you very much for the presentation and the work of the district staff this year marina do you are you the presenter of the district i am okay scott is scott's kindly going to show the presentation so that i can actually see that and see your faces at the same time while i talk you through it
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otherwise it's hard for me to see both at once um a big thank you to um sec to kathy and leanne and their team to for all the work that they did this year on the audit report um it was an interesting year and um challenging with the pandemic in the last part of the the audit year so um it definitely had to be flexible with us as we were dealing with a lot of other issues at the same time so sec presented 11 recommendations as part of this audit report and we responded to all 11 of the 11 five of those we concur four we concur with some additional comment we have one that we completed prior to the audit report publication and then we have one that we show as a non-concur go ahead scott um these are the five recommendations that we concur uh i don't know if you want us to talk specifically about the recommendations that we concur with maybe provide um so for example on number four like what's that a timeline so it's continuing the development of the interactive map just maybe a little bit of color commentary around each color commentary all right i'm i'm up for that uh recommendation number four the interactive map tool uh we we actually have had kind of a breakthrough over the last couple weeks we are very excited about bringing that forward and while we don't have it ready for prime time just yet we do anticipate that tool is going to be very easy to use for the public to go and click on a specific school and see the bond projects that have been completed for that specific school so we are still working through some of the details of that are we're working in coordination with our our planning and real estate folks as they are also putting together information for the facility's condition assessment number five and um i should actually say 5 9 10 and 11. um we do concur with these we are going to be bringing this up with our next audit implementation team we call that the ait since i use that acronym you'll understand what that means um that will be coming up at our next meeting as we start to discuss what it's going to take to implement but i i feel fairly comfortable i'm saying that the the three that are um specific to contract language should be fairly easy for us to implement particularly numbers nine and ten number five i think we just need to have a better look at what the documentation is that we currently include and figure out what our pathway is for that so we're happy to provide more information once we have a sense of what it is we need to do to meet that recommendation scott so the recommendations where we concur with comment generally what this means is that we concur but there might be some things that we want to note as part of that so recommendation number three was revisiting systems and tools for capturing health and safety project expenditures and data for reporting and there are a couple things we we absolutely agree with that um there have been some challenges with our project management system in terms of how we report out but we wanted to note two things which is the data that's already in there is already categorized and collected in a certain way that makes it challenging for us to report we can make changes for future data collection and we've already started doing that but it's it may not help us report on historic data so we may still go through some contortions to report on some of the historic data from our projects as we have gotten more and more accustomed to managing these projects and we've developed a better understanding of our project management software and how we can better utilize that to be able to report out on data but then the other piece of it is also we need to manage our construction per best practices for construction management not allowing the software to determine how we manage the project so we will always prioritize best practices for construction management
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and it may mean that the software doesn't always work the best way so those are things we just wanted to kind of note that it's never going to be quite perfect so we are making improvements as we move along um recommendation number six prohibiting contractors to perform any work uh we actually already do what happened here is that we did not follow our own rules so um we wanted to be really clear this is language that's already in the contract with the lincoln project we had asked the contractor to participate in a value engineering workshop that was time sensitive we should have provided them a formal written authorization for that work so we know that there are some things that we need to change both in terms of our practice and ensuring that we're following what's in our contract scott recommendation number seven we did want to note on the post-project completion analysis of those projects rs requires that we do an analysis of any alternative procurement that analysis can't be completed until the layer of the data final payment or the date of final completion what that essentially means is we can't do it until the project is done and so we wanted to just kind of make a quick note that for madison and lincoln that's going to be 2022 and 2024 so these are not going to be resolved anytime soon we will definitely continue tracking these recommendations um but we we have to wait for the timeline to roll out for those projects before we can complete them um recommendation number eight the um rash memorializing the rationale decisions with the bac related to our gnp negotiation timing we do actually talk quite a bit with the bac about our gmp timing um in fact i'd say we probably discussed it at every one of our meetings um for the last year on the different projects that were coming up to gmp um but i think what we need to do is maybe call it as a specific topic item in a way that we can actually memorialize it so that it shows up very specifically in our in our meeting units that that do of course then get shared with the board as part of the quarterly report for the completed recommendations um recommendation number two was implement a plan to ensure that team members have access to e-builder and that non-pps staff have computers to access project information um we have done that we actually upgraded our licensing for the software to allow unlimited users so we're now providing unlimited access to all of our um consultants contractors sub console needs um to to be able to be part of our processes in uh e-builder and we have purchased ppf computers for all contracted staff as well as regular pps staff that allows contracted staff to get easier access to the pbs network which is where we hold many of our documents um outside of e-builder so a lot of our draft documents are kept outside of e-builder on a pbs network our final documents are typically kept in e-builder now all staff will have access to both and our non-concur recommendation actually has to do with providing the board of education with analysis of the implications our understanding of the recommendation is that that analysis was supposed to be provided prior to the 2020 bond we had already provided cash flow for benson to the board um the board passed a resolution identifying the alternative funding mechanism in the event that the bond does not pass if the bond doesn't pass and we need to come back to the board to have a discussion about the cash flow we'll have an updated cash flow analysis and we can have a discussion about what that means um in terms of the general fund implications and um scott i'm actually going to put you on the spot a little bit because you are so good at talking about how it is we have implemented our audit recommendation follow-up process um so i'm actually going to turn over scott for this one okay so um essentially the the way
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osm works through any recommendation that comes up through any of the audits going back to the beginning back to the 2012 audits um is first that as once we go through this presentation and the audit report is published and reviewed with the district we then take all of those recommendations and we add them to the audit tracker as individual line items from there osm then takes those recommendations and starts working through the resolution process of what does that look like is it a an e-builder process modification and enhancement and then reaching into our e-builder experts to make that happen do we work with purchasing and contracting about contracting language uh changes or whatever it might be particularly as we get into working with other departments as we're working through those solutions when we come to resolution we bring those that work product that work process back to the ait team that meets every month and then we talk about what that process looks like and basically work through that here's what the recommendations were coming out of the audit and with the intent does the ait group feel like we've addressed the intent of the recommendation um if they feel like there's something we have missed then the osm team will go back and we'll address the corrections or if the the ait feels yes we have addressed the intent well then we'll mark it as closed from there once once from the portland public side that the issue is considered closed then marina will reports out on a quarterly basis to the bac of um kind of the the breadth of all of the outstanding recommendations what have we reached conclusion on what have we um resolved in just the last reporting period what are the ones that are still open and what's our work plan for those and then um as kathy and liana mentioned part of the yellow book rules is the continual follow-up on where we are with those past recommendations and so then i work generally with uh grace and michael and leanne to talk about here were the recommendations here's what we've done to address it does that answer and address all of the needs if not then that gives sec the ability then to open up a new recommendation in the current um auditing year if we need to then go back and revisit it so it's kind of a holistic life cycle where there's quite a bit of review lots of tracking lots of conversations um i spent quite a bit of time working with grace and michael on a regular basis about trying to go back and find all the documentation um okay uh you guys said you revised the contract language can you get me the new language can we get the old language do the comparisons that kind of thing so it's a pretty robust process thank you scott and i also wanted to note on our audit tracker we've been um we've been continuing to develop our audit tracker this is something that was relatively new to us a year ago and we've continued to kind of refine it try to improve it one of the things that we do now is we identify which of the recommendations we within osm have marked as closed since the prior time that we reported out so it's always clear when we have closed something new and why we closed it so we explained what it was we did or or why we consider it complete and then for the recommendations that are still in progress we identify where we are in progress with them sometimes that may be as simple as saying we're still looking at it but sometimes it says here's what we think we need to do and we're trying to figure out how to do it right whether this is the best way to do it so we've we've tried to improve that audit tracker to provide as much transparency as possible to our implementation of the different recommendations and um we are also and in fact i just reached out to our internal auditors this afternoon to try to improve some of the information that they have from us to post on their website so that it's really clear where we are with each year of the audit and how many of those recommendations we've implemented and that's it for us questions um this is amy i just want to make a comment about the work of the audit implementation team from 2012 and 2017 it's really good to see this process come full circle that's why we do it so it leaves me with a good margin of confidence that we are in fact learning
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as we go and appreciate seeing that um i think that um since we've heard from our auditors and uh and staff's response um i'd like to open it up for questions and answers um from anybody that's on the call and i will make note of those um as we're going as well i had a question about um the staff's response to um what would happen if the 2020 bond doesn't pass um it sounds like well the board has already decided that they would take out a credit loan um to fill that funding gap um but it doesn't sound like there's sort of any thinking uh yet on how that would impact the overall budget um that feels a little uncertain um you know i i think the bond's gonna pass um but that doesn't uh necessarily excuse a lack of foresight if it didn't um is there any thinking or any uh consideration by staff on the impacts of the of sorry of a loan of the loans impact on the pps general budget and maybe before maybe before it might also be worthwhile just because we have a number of board members and also the student representatives who weren't um who didn't participate in that earlier discussion about the resolution in the past that we provide the information related to the resolution um and sort of what the discussion was at the time so that they have that background information i think this is an excellent question parker but also we should just make sure that everybody has that base level information since we've had a shift in the board and new students engaged in the conversation and with that marina are you the um point person to answer parker's question i mean i think it's really a question more for pps finance because it pertains to the overall financial health of the district not so much the office of school performance because they have the commitment that their projects under their stewardship will proceed regardless of what the funding source is so i don't i don't see claire but dan maybe i don't know you might want to speak to that briefly yeah not a problem it is a great question and i think um you know to be just to make a point that there isn't uh it's not the case that there hasn't been consideration it's just all the detail isn't there yet so uh here in a little over two months time if that bond does not pass the information that finance has if they need updated information around cash flows and around our funding we can the office of school organization can provide that additional information where they can do their analysis of the type of full faith and credit obligation the timing of that and how that would all be put together and what those impacts would be on the general fund so my understanding is if if we need that data then it will become uh well then we'll look at it and sure i think not to speak for finance but they're going to have to go through some effort to determine exactly what that funding mechanism is and they're going to need lots of different pieces of information including information from osm but from other areas as well or what available financing might look like so there is time to do that uh after the bond vote and so that's when that would come together well i guess then i'd also be interested like what julia said how the board reached that resolution if they i guess didn't have this information about how it would affect um pbs operations if the bond didn't pass does anybody want to take that on is that right now or yeah yeah so um but what i would suggest um that we do is provide all the information also um there was an extensive board discussion about the resolution that we
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get that circulated to everybody and then we can um answer questions that individuals may have there was just as i think some additional commentaries so that we had we knew we had the opportunity for november 2020 and even if we weren't successful um potentially if or if we decided not to go in november of 2020 say we made that decision not even that didn't pass there was also an opportunity of may um 2021 as another another opportunity as as well so i mean obviously with where the cash flows um what that um that sequencing looks like would be impacted on when we had gone um there was a full discussion about that and i think we should get you all the information so you can see kind of what what the board was thinking and the interaction with the staff it very much was um a and i'll just speak from myself is that um when voters voted on the 2017 bond it was that there would be a full modernization of these three high schools and one middle school and when um the cost estimation and a number of other factors changed the overall size of the project there was a decision made that um regardless of um these other issues which was subject to it to a different uh bond performance audit that that the board felt that it had made a commitment to the broader community that benson would be completed and that um just because benson was the last high school in in the sequence or the last of the four schools in the sequence was not a reason for benson not to be um the work for benson not to be included so the the commitment from the board at the time was that um we felt the voters had voted to approve that and that this was our way of making it demonstrating the commitment that we were going to see that through so this is andrew uh thanks churchburn edwards for that explanation thanks parker and jackson for the question uh and thanks to the auditor for the finding and staff for the response thanks all around um i think this is a really important conversation that we need to have going forward i i do i am interested in hearing a little bit more from the auditor about the timing um what i what i heard from staff in the non-currents um was not that the conversation's unimportant but that we didn't necessarily need to do that prior to november 2020 um and the audit finding is that you know uh we'll run out of cash on that project in in december of 2021 um and so i guess my my question and then i do have a follow-up comment but my question for the auditors do you feel as though that conversation needs to happen prior to november 2020 given the current construction schedule for benson um or is that a conversation that can wait until we know the results of the election i can go first while kathy finds the unmute button so you know when we looked at that and we did have extensive conversations with your cfo we asked for any type of information that she has or scenarios in case you know worst case scenario is if you're november 2020 bond does not pass and we know you approved the resolution to go out for a loan basically but what we wanted the osm and pps to show the board is the implications of that loan on other pps activities so how are you going to repay that money where does it come from is it going to be general fund or however whatever other funding source you are looking at um at the time we talked to and we sort of wrapped up our audit what we call fieldwork selected data analysis piece of it around march of this year so that's around the time that we talked to and financed the last time and at that time there wasn't anything that they could show us that said in case the bond does not pass we're gonna pay the we're gonna get the um the loan and we're gonna pay it back with you know whatever funding source and kind of like providing that information to the board so that you know going forward in case the bond does not pass you'll get the loan but that's going to be you know a couple hundred thousand that has to come out of a
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different um or or has to be taken away from potentially a different um program and that's what we felt was missing from the information that we looked at so um and hopefully you know that can occur um in coming months or before or you know at the latest i guess if the bond doesn't pass but i'm not sure kathy if you want to add anything else no i think you you covered it mostly it's really just a you know a timing of when it's best to provide that information at this point um it hasn't been there for a while um and i think it's just looking at maybe some scenarios that could be presented um it's hard to know and there's so much that could go into there's different funding sources they're tiny and different ways that you that it could be constructed but um just some more information my insight is what we were looking for for the board on potential implications there's there's so many different ways to do it but what types of things would be considered what plans would be put in place you know who's going to decide timing and anything that really just additional that could have been provided great i know i appreciate that that clarification i i think this is a really important finding um and i think for me that the issue is really that the timing of when the conversation occurs um and so just as as one board member i'll just say i i i think this is it's an important conversation but i do think it can probably wait um right now the board's decision was to move forward with a 2020 bond that includes funding for benson i think if that if that bomb passes then then we've solved that issue if it doesn't pass um the board needs to go back and and have a conversation about what next steps are i want to be really clear to the student reps so the the resolution that the board passed you know was passed by a previous board there are three new members on this board um i have some pretty significant concerns um about that resolution i have some pretty significant concerns about the district taking out full faith and credit bonds to complete this project so what i would say is that to the extent we need to have that conversation the conversation needs to be about the financial implications of a bond but also the operational implications of stopping construction on a project um or also potentially looking at a may 2021 you know option and sort of where those go so from my perspective i want the entire menu um on the table um at that conversation because i i think i think there are serious operational implications for for taking out a full faith and credit loan of that size but i think the most important thing is that i i believe that conversation can wait um you know ten more weeks uh until we sort of know the results of of this approach um and then we we can if need be uh reconvene to sort of figure out what our next steps are those were my concerns as well were the uh the running out of capital halfway through a remodel um can i ask just kind of a potential clarification it sounds like what julia might be indicating is back in december 2018 when they did that resolution there may have been some analysis provided to the board at that time as part of that conversation about the implement implementation implications of what that might be so is that what you were saying julia that perhaps there may have been something that supported uh or some sort of analysis back then that maybe we could get um yes but it would have been i think so but it would have been very preliminary because we of course hadn't gone through um the budgeting process for all of the schools i believe this was part of i'm trying to recall but part of our um ability to move the lincoln um project to the next phase um a sense from benson alumni that they didn't want um and they've been some some in the larger benson community they didn't want to be um sort of because they happened to be last in the sequence the sorry we're out of cash now um so there was i think a preliminary discussion but it was not i'm pretty sure it was not a that it would not be as robust as the um conversation and information that we would have now because of of what we know about the size and scope of the project not just benson but also the mp the multiple pathways to graduation building are there other questions
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so i have um we thank you um parker and and jackson for for um for your questions and andrew your comments is there um you said that we could probably review those of us that weren't at that discussion in december of 2018 is there a way to review the uh meeting contents or at the very least a transcript and asking kara if that would be available um just to provide some background information um that was also prior me but i would imagine that there is a youtube video out there that shows that meeting so i could look for that and and it wasn't a detailed analysis it was really a judgment from our um financial leadership that yes that would be possible but there wasn't uh a bunch of underlying analysis that came with it or or was there not also a you know what if you know a scenario in other words i think the students on the call are asking you know what happens if the bond doesn't pass and so it sounds like that conversation hasn't been had but we can put that off until after november 3rd because we don't know if we need to have the conversation until after that time i would agree with him regarding the timing and yes the conversation was did occur um but it was um uh you know the the guidance of the staff leadership was that yes we could um borrow our way out of that problem or the bond not to pass but there wasn't a ton of um you know underlying documentation there other than their their assessment that yes that would be possible and we had credit rating that would enable us to do that well alpha i think the time was you know in terms of um lending you know it was a different time in 2018 uh december of 2018 so um yeah i'd be interested in following up and um definitely hearing more about this too so i have a question if um we are done with um the benson topic um so i'm this is this is a more general question first of all um you know i just i want to just acknowledge that i think it's quite remarkable the implementation of the 2017 bond [Music] in the midst of a pandemic because you could have as i was reading through the report all of a sudden i read like this was like pre pre-coveted i'm thinking i totally had forgotten like okay we didn't even take that into consideration that the staff has really continued to work and deliver on the projects as evidenced by by by the audit so i want to acknowledge that because i think um it's not just you know the projects are on track and on time with some additional recommendations from the auditors which is notable but that has also happened in the midst of a pandemic um my general question for the auditors are since this audit was completed um is from uh april first 2019 to march 31st 2020 so that's all sort of pre-major coveted impacts i guess it was right at the tail end of when things were starting to shut down um but what are there um before we head into next year's audit cycle are there um construction and bond related risks that we should be thinking about now that we're in sort of the full coven experience and instead of waiting until next year or maybe this is even the topic is there something that you're seeing in your other audits that you're doing or just from your knowledge of the industry that pps should be taking into consideration given given covid so um covet happened right around march so we have started another construction audit during this time unfortunately um it's still in progress so we cannot provide any information on that but um there are um you know discussions out there about the the the benefits if you will of how it has impacted construction and the the um you know the risks to add so if that's something you know we wanted you wanted us to look at for the next audit cycle we certainly can but i don't think we can comment on you know what we've seen at other places um at this time
01h 00m 00s
since those audits are still in progress and they're not public yet there are a lot of risks that are out there that the construction industry is talking about we we attend a lot of webinars about it and what's going on um without really going into pps and knowing what they're doing you know to maybe mitigate those they may or may not be experiencing those things from their contractors um i think we can say um we've seen some projects not having any impact yet from it in terms of they still are maintaining their schedule it it you know sometimes it takes a lot more you have to do a lot of um you know hygiene and masking and and restricting movement on a construction site so that obviously could have an impact on schedule and delays and who pays for it so that's the type of risks that are talking about um we don't know yet we haven't quite seen that that's materialized it seems almost that maybe some of the projects in progress are continuing to go along okay we don't know how yet it will really impact something hasn't maybe started construction yet and we've been lucky since our projects have been at the front end of their construction cycle which it's really once you get on the interior work where other construction projects are seeing those delays when you have to fit people into confined interior spaces so we've been very lucky that that's not where we are with our projects that are underway now but that time will come yeah i know it's um having an impact just in terms of uh it's more adding to the cost on commercial construction given uh just the processes that um you have that aren't normal construction processes that you have to go through to maintain all the health protocols um so i had a question um about the water this is um for the [Music] the auditors um on the water um pilot there was a slide that showed and the in the report the analysis was that um the health and safety improvements uh are underway um and what there was a call out that i want to say roofs and something else were ahead of where was anticipated our roofs and the seismic were well underway but i was wondering about the analysis of the where we were with the water because it implied that we looked like everything was moving along and so i wasn't sure if there was additional information that you saw that had you come to that conclusion that i only asked because it was it's one of the eight but it was like one it was the one that was on everybody's mind when the when the bond passed so i'm wondering if there was more information behind that that led you to come to the conclusion that that was on track so that's a kathy or lynn i'm i'm gonna let land take it once she gets her mic off mute i apologize so um on page 14 of the report and i may need to have marina and scott jump in if i'm because it's been a while so i may not remember everything correctly but for the um the water project so the they did the pilot program and that was completed and what they also did was they sort of like employed a face approach where they i think over 2000 water fixtures in common areas in classroom that they returned them to service because they had to be shut off so that was done to address some of the lead issues and then they did the pilot at um i believe six sites and then they strategically were installing drinking water stations to even further reduce the lead particles so just you know looking at what they've done with the nearly 2 000 fixtures doing the water pilot program that's done and now from that program rolling it out at future sites um you know it did look like they made a lot of progress with in that area and um i'm not sure marina or scott if you want to add anything else to that but that's where we left it off and maybe the reason that left me with the question is
01h 05m 00s
because it doesn't really talk about the 2000 which i know um i know it happened because that was right during the board right in the aftermath of that so is it that what you're what's um being projected as being measured in the water is sort of phase two and phase one was the 2000 fixtures and that's not necessarily captured on the chart so oh i'm sorry so yeah so in the chart what we try to do is because we're trying to line it up with what was initially provided in the bond ballot language and that said exhibit 5 of the reports is up to 90 school sites they pps did an internal assessment and why not and so then they did those fixtures um they did the six pilots and then um doing about 15 each month um so that's upcoming as of january 2020 so yes we didn't have it in the chart but we have it in the narrative of the report great thank you i don't know if staff had anything they wanted to add i just wanted now getting credit for all the work that um in some ways that had been done and i was trying to reconcile the work that i knew had happened with what it looked like the measurement was in the report yeah i think the chart was maybe a little bit misleading simply because all the work had been done to bring other fixtures to less than 15 parts per billion um so that there were no fixtures that were still functioning that were more than 15 parts per million um that work had been complete but then i think you know sort of the excitement of the pilot project um and the ability to get our um all of our water sources for those pilot schools um to less than one part per billion um maybe that just kind of took over the chart a little bit shall we say um the other work uh you know i i do think scc was giving us credit for all of the other work that kind of came beforehand um it was just that knowing that we were we were moving forward with something so much better um i think that's probably what really showed up in the chart okay so you've got to read the narrative and the chart to get the full okay great thank you yeah i'll i'll just jump in more generically to thank the auditors i i thought it was very thorough and very complete and and i appreciated all the work on it and i really appreciated the um which was actually provided a significant amount of detail um at a level that allowed for relatively quick digesting so um so thank you for that as well um and for staff all the work i mean i think what this audit shows is i think exactly what director medward said a few minutes ago i mean there's a tremendous amount of work going on um the work for the most part is getting done um the way we expect it to get done and we're meeting most of the standards and everything and the findings in here um are important um but i think they're the normal things that you would expect to find with any um multi-million dollar uh hundreds of millions of dollars you know of projects and and i appreciate staff's diligence in going through and responding to it and and quickly making some of those changes so thanks so i have a couple other questions but if others have then they can go ahead uh yeah i guess this is probably a question for marina but for recommendation seven you just put on that comment that we would have to wait till 2022 or 2024 for the madison and lincoln um analysis and i was wondering like with their recommendation would those things that they wanted included like the benefits and challenges of the construction manager and general contractor delivery method like would that all be included in it it would that's in fact that's kind of the point of the alternative procurement analysis is to identify whether the alternative was the right choice as opposed to going with the standard and the standard of course is a low bid um process so it is intended to really you know sort of identify what what the benefits were of going with that particular type of contracting versus what maybe could have been better the other way unfortunately you have to get through the contract to to do the analysis and
01h 10m 00s
so that's where that you know is not to say hey we're not going to do it it's really just to say we're going to do it but you got at least two years before you're going to see anything happen on this so this is going to sit outstanding for two years on one of those goals and four years on the other one so and wait patiently and will that information be like ready for the next round of contracts if this bond does pass for um i guess the next high schools like would we change our contracting method if it ended up being that it was not effective um i don't i you know probably the fair and practical response to that is we're constantly analyzing our contracting methods i don't think we're going to wait for the formal analysis to to tell us that we need to really rethink how we're contracting um and the analysis is great it's going to help us pick out some things that um you know some nuances to the contracting method that we could probably improve but i think making it a choice to do a completely different style of contracting method we're not going to wait for the analysis to make that decision i think that'll be pretty clear to us along the way um we continue to have those discussions i think we have them every time um you know we've one of our modernizations we did not do is an alternative procurement the kellogg middle school that's a typical designed to build um so you know i think those are things that we constantly talk through i have a question um regarding that too so as a district are we um being fluid in our decision making in terms of which contracting process we go through we haven't decided to always do the cmgc for instance and and we yeah yeah we have not decided that it's always cmgc okay we're definitely having the conversation each time and also with each of those the board has approved um that the the office of school performance should or excuse me that the that osm should go forward with the cmgc process and then it comes back to the board again when the contract um is identified and the contractor is identified so it is an it has been a new conversation every time um so i had to execute director constand that's good to point out that we do when we do an alternative procurement we have to provide um a justification for that alternative procurement and that has to go to the board for approval before we move forward with it sorry janice that's okay thank you um so i thought i had a couple of questions about number recommendation number seven also but then when the auditors explained in their presentation about thinking about number seven as a postmortem um her words not mine but um and then number eight being a more um like a more timely way of looking at discussing the rationale decisions related to the timing of negotiations um and future contracts it sounded to me like this really full the recommendation number four would do be like a full postpartum but then they're also making a recommendation that um there be some memorial memorialization and discussion of underlying rationale on a more real-time basis in relationship to some of those decisions and maybe i misunderstood it but i thought that's the way it kind of was explained am i correct i i don't want to speak for sec but that's my understanding of it as well yes and sec will correct me if i'm wrong no no you're right marina so the number seven is really at a holistic postmortem look at the cmgc delivery method number eight is really related to the timing of the gmp the guaranteed maximum price negotiations there are different um you know when we look at peer districts school districts there's different um milestones or timelines when those negotiations occur and not necessarily saying that what pps is doing is wrong it's just varies between districts so just evaluating that and looking at what's um you know maybe the best timing and be consistent with that that's what we're thinking on a real-time basis not um really the the whole postmortem look
01h 15m 00s
like marina said that's you can only look at it once the project's done but in the meantime while you're developing your um cmgc contract and you're negotiating those costs and everything that goes into it those types of discussion can be better memorialized and then you know kind of learning from that as well did that help janice oh sorry okay i had a question about uh recommendation number three um it says uh you know concur with comment um it specifically points out re-categorization um the recommendation itself at least to my understanding didn't uh point out re-categorization in the past but also with the uh the upcoming interactive map i feel like those two things sort of lend each other or sort of lend themselves to each other um is there i also maybe it's my lack of proficiency in sorting through this document but i couldn't find a uh uh a timeline for the uh interactive map um could you offer any uh clarification around that sure so the interactive map i think as i mentioned um earlier we're we're still working on that we had gone down a certain road as far as how it would um operate and it wasn't it wasn't very satisfying like we were we were kind of struggling with it it didn't it didn't feel right um like i said we recently had kind of a breakthrough on how we can make it work we're pretty excited about how it's going to operate and how user-friendly it's going to be um but we're right in the middle of reformatting sort of making that work and then testing it so i i don't have a timeline right now but um i have some meetings coming up this next week that will help me get a better understanding of how far away we are we're we would really really like to have it done um prior to our next quarterly report out to both the bac and the board so that's where we're we're trying to focus our efforts we've been trying to get this done for a while and just kind of struggling with that for many people all right i i look forward to uh to hearing more about that in the future yeah just to add to that i'm would just add that i'll be looking forward to that interactive map because i think that is very much for people i think our community very much has a community uh outlook of what's happening all over um the city and different schools and also at the end of the day people um if you're a parent want to know what's happening in in in my school so i think it's just a it's a great tool for us to be able to communicate directly with families about changes and improvements that are happening in their schools so i think it will be potentially one of the most well used uh tools uh related to the bond project when it's available so uh look forward to when you have the interactive map uh i guess ready to unveil um i know a lot of people are very interested in it i had a just a clarification question on recommendation number six um because the district had to concur with a comment and this was about the um contractor not being prohibited from doing work before a contract was signed and it sounds like um at least from the district commentary that um it was one one project we already have rules in place so the people the broader community shouldn't be concerned that there's a whole bunch of work happening without contracts that our contracting process um already has that as a requirement but that in an individual case that didn't happen and so this is a um making sure that we adhere to all of our processes and protocols is is that an accurate way to capture what happened there fcc do you would you like to respond first or oh i i'm sorry i thought it was directed towards you but yes yes there is that that provision in there we
01h 20m 00s
always look when you do a if you're looking at a contract to make sure that the first invoice coming in isn't first services before the contract was signed so um that was the only one that we found that instance and i believe unless liam correct me right wrong no that's correct i can say from experience that that's something that um only happens once in your construction career for the sample of projects that we did look at the contract and related um payment application that was the only one where we saw that great so it sounds like it's being addressed and it was uh sort of a one-off um case um i also had a question about um this is a question but maybe um when i was reading through the report i also noted that um osm was hiring an outside independent construction auditor to perform midpoint and close out audits so just as an explanation that's a so in addition to these bond performance audits that are occurring we also have another set of auditors who are looking at the detailed invoices as well so this is another auditing layer is that how you would describe it marina yes that's exactly how i would describe it in some ways it's um it's almost like diving down another layer of detail so our construction contract auditor goes deep into the actual construction contract they look at the language and the requirements of the contract and they look at all of the payment requests all of the documentation that goes along with change orders basically all of the documentation that supports the money we are paying to that contractor to ensure that that fits the requirements of the contract itself and so um they're incredibly detailed the the midpoint audit is intended to highlight things that need to change before the end of the of the contract so they are working with the contractor with our project team from essentially the start of the project they're having conversations they're asking for documentation they're saying you know here's how we expect your documentation to look and they're really working with contractors to um get compliance with the contract so that we don't end up at the end of the contract with a bunch of things that don't they don't meet our requirements and then we have to go back and ask for a lot more information or ask for it to be done in a different way so it's it's a super detailed look it dives down a little deeper than what our performance auditors do they look they're they're looking just a little bit bigger picture thank you are there any other questions before we wrap up it doesn't look like i have any uh like we have any i would like to thank scc thank the auditors for a thorough job well done um particularly getting this in you know during a pandemic um and also the office of school um office of school management osm um particularly for addressing the um the audit recommendations that came in um through the 2012 bond but also the 2017 you're well on your way to have having addressed all of those um recommendations so thank you for your work i'm just going to add i concur so i think um michelle we can um adjourn the meeting unless anybody else has anything they want to want to add before we wrap up with four minutes to spare there we go let that be the standard you're here thank you everyone thank you everybody thanks everyone thank you thank you bye bye thank you


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