Tuesday, May 09, 2017

Waiting for FEMA: Joplin R-8 Board extends loan, plans for sharp dip in reserves

A few moments ago, the Joplin R-8 Board of Education approved a 10-year extension of certificates of participation (loans) that were taken out in 2014 to cover the cost of construction of Joplin High School. The plan is to pay off the loan in four years.

CFO Paul Barr said that millions are coming from FEMA and SEMA, but it will take a few years, making the extension of the loan necessary.

"We need to be patient and let the process work," Barr said. "It will take a little longer."

After questioning from board members Lori Musser and Jennifer Martucci, Barr acknowledged that the amount the district will have paid in interest by the end of the four-year period will be about $2 million.

Paying back the loan is going to force the district to reduce its reserve fund to 10 to 12 percent, Barr said.

"A 10 to 12 percent flow is a good point to be comfortable with." Barr noted that a district has to get down to two or three percent reserve before having to be concerned with a state turnover.

The financial dealings were necessary, he added, to give the district "the buildings our community wanted."

At this point, Barr said, the district has received $35 million in reimbursement from FEMA.

The first mention of loans came in 2014 when Barr spoke during a board meeting about the need to cover $8 million of "might-as-well" spending, spending that administration officials did when they came up with an idea and then said they "might-as-well" spend the money and do it. These expenditures included artificial turf for practice fields and the soccer field, lighting for all fields, a press box, four extra tennis courts and a track so the students would not have to go to Junge Field every day during track season.

That original $8 million loan turned out to be far less than the district needed. That was revealed in an e-mail sent from Barr to former Superintendent C. J. Huff following the July 22, 2014, board meeting:

The financing package we are putting together looks like this at this time. The financing team, including US Bank, will continue developing the package targeting initial Board action on T 7/22. Currently this is draft information:

Short term financing - offset by future collections from FEMA (75% of building projects), CDBG grant, 404 Safe Room grant, EDA grant $37 million. Cash flow projections reflect most of this to be paid off within 6-9 months. Maturity date 6/30/15.

Intermediate term financing - offset by future SEMA collections (10% of building projects) and lagging FEMA collections after all projects are closed out - received in the months following 7/1/15. Estimated $9 million. Collections during FY16 will pay this amount off. Maturity date 6/30/16.

Long term financing - for additional building scope items at JHS/FTC - scope items not a part of destroyed buildings. 20 year lease purchase bonds - $8million. Payable with approximately $600,000 of former capital outlay budget reduced for FY15 and future years for the short term. Future new revenues to be set aside in pieces to grow to $600,000 for re-payment years 6-20 so the capital outlay budget can be replaced in about 5 years.

Both the intermediate term financing $9m & the long term financing $8m are planned to bring to the BOE at the September meeting, with a closing in the first half of October.

It did not take long after the July 2014 meeting for district officials to call for even more loans. At a special meeting March 12, 2015, the board took out a $29 million loan.:

During the meeting, the Board will consider a resolution authorizing the District to (1) issue Certificates of Participation (Joplin Schools, Joplin, Missouri) Series 2015A, in a principal amount not to exceed $29,000,000, the proceeds of which will be used to (a) refund and prepay certain Certificates of Participation (Joplin Schools, Joplin, Missouri) Series 2014A and (b) pay a portion of the costs of completing a rebuilding project in advance of being reimbursed for such costs from federal and state grants, (2) amend lease agreements with the Missouri School Boards Association required to issue the Series 2015A Bonds, and (3) amend an agreement with the purchaser of the Series 2014A Bonds prior to their prepayment.

While money from FEMA will still be coming, the amount is not likely to be anywhere near as much as R-8 officials were hoping.

Documents obtained by the Turner Report through a Sunshine Law request indicated that district officials violated FEMA regulations from the beginning when they awarded a $3 million plus no-bid contract to Witt Associates, a Texas-based firm, to handle the tornado recovery process.

Problems revealed during those documents included the following, which were noted in the May 1 Turner Report:

District officials agreed to FEMA estimates while already knowing they planned to ask for more money.

Among the other revelations in the documents, Joplin R-8:

-Missed one FEMA deadline after another, some of them by as much as three years.

-Asked for more federal taxpayers' money, but provided almost no documentation to support those requests.

-Asked for money for damages that FEMA photos indicate were either overstated and/or non-existent.

-Agreed to a limit of $155 an hour for some of those working on the project, but submitted requests far above that amount, up to as much as $430 an hour.

-Violated FEMA regulations from the beginning by hiring a high-powered and high-dollar firm to guide the district through the recovery process without putting the job up for bids.

-Possibly violated the Sunshine Law during a December 2016 Board of Education meeting when the same firm was hired to help the district as it tried to deal with FEMA paperwork. Again, the firm was hired without taking bids.

-Told FEMA the district's entire focus was on "rebuilding and reopening its educational facilities" and then they would focus on how much it cost.

So far, FEMA has rejected the district's closeout request and two appeals for $1.5 million for the East Middle School grounds.

FEMA has also rejected $46 million of the district's closeout request for Joplin High School, approving slightly more than $7 million.


Anonymous said...

Mr Barr might as well be looking for a golden parachute before the final decision comes in.

Anonymous said...

I've seen many high school campuses. Hundreds of them. Joplin has the most unattractive campus I have ever seen. I cannot believe this is what the community wanted. It looks like a cross between a prison and an amusement park.

Anonymous said...

10-12 percent is a sharp dip?

Anonymous said...

Why are you always throwing Paul Barr under the bus? Paul makes no decisions without approval from the BOE or Superintendent.

Anonymous said...

Barr will go along with years of benefits he claimed from a previous Supt...Barr is guilty of protecting financial games for years....

Anonymous said...

@ 5:09
Paul Barr is a Certified Public Account, his duty is to the taxpayer, not CJ or the BOE! Barr failed miserably in his duties, excused irresponsibility by calling it "might as well" spending, and feared CJ firing him so much that he allowed the taxpayers to be screwed over with years of financial penalties to pay for excessive and inappropriate actions of an incompetent idiot (without a job) by the name of CJ Huff.

Anonymous said...

It is time for the last of them to go. Barr is on his way out. He just doesn't know it yet. The writing is on the wall.