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Independent Audit Finds HISD Bond Program Had “Weak or Nonexistent Policies”

Overall the audit report indicates that HISD didn’t have processes in place for critical steps in the building program to manage nearly $2 billion in taxpayer money.


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Former HISD Superintendent Terry Grier.
Former HISD Superintendent Terry Grier.

Auditors with the outside firm KPMG found that an increase in construction costs was the biggest reason why the Houston Independent School District’s construction program overran its budget by $200-plus million. They noted that there was a building boom in Houston and that drove up the cost per square foot to build a new school.

But the auditors found other problems, citing "weak or nonexistent policies" for the largest school construction program in Texas history. Houston voters approved nearly $2 billion in school construction in 2012.

The HISD school board was supposed to discuss the audit at a special meeting this week but cancelled it. Trustee Mike Lunceford said the report raised questions that he had brought up before.

“There was a multitude of things. You can’t say ‘Were they prepared?’ because there's multitude of things that happened along the way that were unforeseen,” Lunceford said.

Auditors, however, said that HISD could have prepared better. For example, district administrators used estimates from the 2007 building program, which focused on elementary schools. But they didn't consider that the new construction projects in 2012 would mainly rebuild and renovate high schools, which are between 16-26 percent more expensive to build.

The HISD board hired KPMG to conduct an independent audit after its own internal watchdog highlighted some mismanagement. That clashed with what then Superintendent Terry Grier said, that rising construction costs alone were why HISD needed more money. The board eventually approved an extra $200 million to shore up the project budgets.

The outside auditors agreed that construction costs were a big factor. But overall the report indicates that HISD didn't have processes in place for critical steps in the building program to manage nearly $2 billion in tax payer money. It noted the following “cost drivers:”

  • “Incomplete project assumptions and differing conditions;
  • Weak or nonexistent policies and procedures regarding budget development;
  • Lack of conceptual planning;
  • Misaligned programmatic specifics and project advisory teams expectations; and
  • Inconsistent construction bid evaluations.”

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