Superintendent’s Memo Hinting

Hawley Cost Overruns ‘Premature’

By John Voket and

Susan Coney

Newtown’s finance director labeled a memo hinting at $1.2 million in cost overruns on Hawley School climate and air control renovations discussed by the Board of Finance Monday as “…premature.” The note from Superintendent of Schools Evan Pitkoff was classified as such because bids on the project, already set to be bonded at $3.3 million, are not scheduled to be returned, or opened, until the end of August.

Director of Finance Ben Spragg, who attended the meeting, told The Bee that the memo to First Selectman Herb Rosenthal, copied to the finance board, came as a surprise because anticipated increases for the job mentioned in the correspondence exceeded 35 percent.

Mr Spragg was unsure if or how the town could manage any additional costs on the initiative.

“The first year of debt service on the $3.3 million in requested bonding for the project is already built into the 2005-2006 [municipal] budget.” Mr Spragg said. “From a financial standpoint we will have to review the adequacy of the budget to bear that extra cost.”

Mr Spragg said the project was sold to officials and taxpayers on the premise it was an overdue and necessary equipment upgrade that would enhance the physical comfort and air quality for students and staff at the local elementary school, which was constructed in three phases with the original structure dating back to the 1920s.

The finance director said he could not understand how the school board came up with the $4.5 million figure since the bid process for the project will be ongoing through 2 pm on August 23. He also questioned why there would be any significant cost overruns since taxpayers already approved a $290,000 allocation to the Board of Education to complete engineering, designs, and the entire bid phase on the job.

Mr Spragg pointed out that Newtown has a somewhat unconventional process for financing projects of this nature in that the financing is broken into two phases: the first to get to the point where there is a firm cost established and awarded contract in the works, and the second phase that allocates the funds to complete the actual project.

“They are supposed to go through the bid phase before they ask for project money,” Mr Spragg said. “If they haven’t [completed the bidding process] it is premature to ask for more money.”

Pitkoff Justifies Costs

Superintendent Pitkoff said that there were a number of reasons that prompted his memo requesting the increased allocation at this juncture in the process. He said that since the $3.3 million allocation was approved last year, he was informed there have been measurable increases in the cost of materials as well as delivery and transportation costs to get all the supplies to the job site at the school on Church Hill Road.

He said the administration and staff would face more challenges than originally expected phasing the job while students are shuffled from one area to the next as crews progress through the building. The superintendent said an indoor air quality specialist that was contracted by the district also advised taking the project to a higher standard than previously thought.

“There will be more precautions taken for the benefit of the students and staff while work is ongoing during the school year,” Mr Pitkoff said. “And the amount of work [to be done] during the summer will mean more overtime.”

Without providing specifics, the superintendent said that both the air quality consultant and the overall project consultant developed “more challenges” when finalizing plans to install the heating and air handling equipment and infrastructure, especially in the oldest section of the school, which was completed in 1921.

“There is increased complexity, especially in the oldest section,” Mr Pitkoff said. “But we want to protect the students while completing all the phases in a timely, effective, and efficient manner.”

When contacted Wednesday, the superintendent explained that the original budget allocation in the capital improvement plan (CIP) was the best estimate that could be made at the time with the information that was available.

“The town sets the timeline for when the numbers have to be provided for the CIP. We had to put something in [the CIP] and we made our best estimate,” Mr Pitkoff said.

School and town officials will have to wait until late August to determine if the lowest bid will equal the upgraded $4.5 million allocation request.

“It potentially could go higher,” Mr Pitkoff said. “I don’t know it will get any closer to the original bond amount [of $3.3 million].”

Project consultant Brian Wetzel of Consulting Engineering Services of Middletown was somewhat more optimistic.

“The cost may be more, but it may be less,” Mr Wetzel said. He said that no matter what number comes in as the winning bid, the request for proposal includes a legal stipulation that will force the eventual contractor to hold the line on material and labor costs for as long as a year from the date of the award.

Kortze: Promise Broken

Contacted following Monday’s meeting, finance board chairman John Kortze said he initially thought the memo was sent as a courtesy to remind the first selectman that the second phase funding allocation would be needed soon.

“But I knew there was something wrong with the numbers when I saw the letter, so I went out to my car for a copy of the CIP,” Mr Kortze said, referring to the approved capital improvement plan that included the $3.3 million budget allocation for the project.

Mr Kortze said he understood that materials go up in price, but also questioned where the $4.5 million figure was coming from if the district was still more than a month out from opening bids.

“The bidding and planning process often conflict. Bids are revised, numbers change — that’s a reality,” Mr Kortze said. “But 35 percent more…that’s a lot.”

Mr Kortze said he was more concerned with the implicit promise made to Newtown taxpayers when the original bond allocation was approved during a town meeting.

“What bothers me is the budget has been passed, the taxpayers have spoken and endorsed a specified level of spending on the Hawley School project,” Mr Kortze said. “As a matter of function, we’re being asked to raise the budget over what was approved.”

While the finance board chairman said he appreciated the school board and administration doing its “due diligence” in informing town officials that the numbers would likely escalate, he questioned the process by which the original bonding was formulated.

“Why is there such a large variance?” Mr Kortze asked. “Why didn’t we know this if all due diligence was done up front in the planning process?

“I’m sure there is a reason,” he concluded. “Whether or not it is justified remains to be seen.”