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The Dublin school board last week reviewed the results of an outside audit done to determine the causes for a nearly $200 million shortfall for bond-funded district construction projects revealed publicly 18 months ago.
Findings of the report by consultant firm Eide Bailly mainly cite planning miscommunications, staffing turnover and failure to account for inflation, land costs and additional construction fees, primarily around the new Emerald High School. However, the audit did not report any elements of fraud or suspicious actions by district officials.
After Dublin Unified School District announced the shortfall in February 2021, residents and community members rallied around the issue, placing pressure on district officials to provide answers.
In May 2021, an independent audit was ordered to evaluate the outstanding funds. Eide Bailly, a public accounting and business advising firm, was hired to conduct and report their analysis. Results of the audit give insight into the economic shortfall — suggesting issues with planning and district operations.
“We were informed of about a $180-$200 million shortfall,” DUSD Board President Dan Cherrier said while introducing the agenda item on Aug. 23. “Members of the public rightly asked what happened.”
The goal was to determine the shortfall reasonings and identify any systemic issues from within the school district in hopes to provide answers and prevent future significant funding gaps. The audit was compiled using district staff interviews, previous board meeting minutes and agendas, as well as digital data such as emails and file attachments.
The 287-page report was presented by Eide Bailly senior manager Brandon Waldren to the DUSD Board of Trustees and open to members of the public.
Several general causes of the shortfall included escalation, employee turnover, planning changes and types of construction, the auditors said. In primary cost estimates for the project the price of the Emerald site land — over $30 million — was not included. They explained that initial estimates and budget for the project had been inaccurate since 2019 and project expenses were not calculated properly.
According to audit report documents, the DUSD board was not notified of the shortfall until January 2021. Eide Bailly said budget discrepancies could have been identified in 2019. Presenters noted how additional factors, such as COVID-19 and employee turnover, may have impacted the district’s ability to identify the shortfall.
“We are also keeping in mind other major events that could have impacted this,” Waldren said.
The report described issues within district actions surrounding the shortfall and presented recommendations for the future.
“The initial $100 million estimate was not calculated or determined by formal documentation,” audit results stated in reference to the preliminary estimated total cost to complete the new high school project.
To this issue, the advising firm urged that budgets and financial allocations be set by proper documentation for future projects. The documentation should also be including Education Specifications in preliminary estimates, presenters said.
“We didn’t want to make any judgment calls on the board’s decisions,” Waldren said. “We simply wanted to say based on the board’s decisions — these were the results that occurred from the board’s decisions.”
Through the third-party examination of the district, the total amount of the shortfall for all facilities constructions calculated to $183 million. Construction for the new high school accounted for 54% of that total amount, the accounting firm found.
According to DUSD Superintendent Chris Funk, at the next board meeting staff will present their viewpoints on the report findings. The board will accept and approve the draft, officiating the audit results and recommendations.
“We will update the board based on the recommendations, on what has already been implemented and in which way,” Funk said.
The superintendent noted how the district has already implemented a fraud hotline, per Eide Bailly’s suggestion. Funk continued, “if there is a recommendation we feel doesn’t quite fit, we will explain why and share what we are doing in place of that recommendation.”
The next board meeting to further discuss the shortfall and audit results will take place on Sept. 13.
