COEUR d'ALENE - The Coeur d'Alene School Board has decided to cover a nearly $1.9 million budget shortfall for the Winton Elementary School reconstruction project.

Board members voted unanimously Monday night to use its unrestricted fund balance account to assure contractors working on the Winton project that they will be paid.

First, however, trustees wanted to know how exactly the administration could overlook such a large amount of expenses.

Superintendent Matt Handelman took the time to recap the decision to rebuild Winton rather than remodel the school.

"So 'how did we get here?' And that is a fair question," Handelman said.

The bid for the original design was awarded to TW Clark Construction in the amount of $6.66 million with an additional $608,000 approved for additional classrooms pending the anticipated sale of its Northshire Park property on Atlas road.

That set the overall budget for the Winton project at $7.478 million in May of last year, which the board felt it could afford with revenue from a variety of sources that ultimately didn't come through as well as it had projected.

"We anticipated about $7.5 million dollars," he said, adding at the time it looked like there would be enough money to cover the $7.478 million budgeted for the project.

"With information we had at the time, we were all very excited," he said.

The Northshire property did sell in June of 2014, but at a lower price than anticipated, Handelman said.

Then, in October of last year, Handelman said he learned that an architecture and engineering bill of $534,000 was not included in the regular bid for the project, which raised the cost to $7.8 million but did account for unforeseen costs of moving portable classrooms and asbestos mitigation costs.

He said on the revenue side, the district had anticipated saving $454,000 in a Voice Over the Internet Protocol phone system and other technology projects, which actually only realized a little more than $100,000 in savings.

They had also anticipated a little more than $500,000 in contingency funds that never materialized.

Overall, he said, the district only received about $6.2 million in revenue sources that were projected to produce $7.5 million.

Compounding the problem was the $534,000 architecture and engineering bill, along with $200,000 to relocate four portable classroom units. It was clear there was going to be a major shortfall.

"Did you know about this when you said 'let's do this?' No you didn't," Handelman said to the board. "Did I know about it? No I didn't."

Handelman said he didn't realize the full extent of the problem until November of last year when someone asked who was watching the money.

At the time, district Chief Operating Officer Wendell Wardell was managing the project. Wardell left the school district at the end of November.

Handelman said now that he is in charge of watching the money, he is focused on finding the funds to cover the shortfall.

He suggested three funding sources, including an unrestricted fund balance, surplus property sales and the district's restricted fund balance, which could be used as a last resort.

"We know that one of these things or any combination of these things will cover this," he said. "That's the history. Those are numbers as we see them today. That's looking forward in terms of options."

Handelman recommended using the unrestricted funds, but cautioned that it would make budgeting fairly tight for the next fiscal year depending on a number of factors.

Trustee Dave Eubanks wanted to know what the effect would be on students and labor negotiations next year if they used the unrestricted funds.

Handelman said he doesn't anticipate any effects on students this year, but there might have to be some tough budgetary decisions next year depending on state funding and other factors between now and the next budget cycle.

He said it likely would be a factor in labor negotiations as well.

"But the good news in all of this is that it is only for one year," he added.

Trustee Tom Hamilton wanted to know how the architecture and engineering fees were overlooked in the budgeting process.

"Whose omission was that?" Hamilton asked. "Or was it error or omission? If it was omitted, was it the contractor or was it us?"

Handelman said the information that was presented to the board about the contract at the time came from the chief operating officer.

"It was the COO who omitted that information," Handelman said.

Hamilton said he is not happy about the situation for a number of reasons, including the board's credibility with the community.

"I am not happy about it because we have to take political heat for something we have not done," Hamilton said. "Yes, we are ultimately responsible, but we were making our decision based on the numbers that were presented to us at the time."

Board Chair Christa Hazel said the situation is frustrating to her as well.

"I recall that vote. I recall that decision," she said. "We all asked a lot of questions and expressed our concerns. We had dialogue with one another. I remember being uncomfortable with how close we were going to cut it.

"At the end of the meeting, I voted to support it and to go on with the project based on the assurances I was hearing," she added. "And it's the one vote I have questioned, but what's done is done."

She, like Handelman, added that a one-time expense is something the board can solve.

"It's one thing to ask the public to trust us. It's one thing to say that we are being transparent starting now," she said. "It's another to have the public start to take faith in that. One of the bright spots that I see is that key partners in our community are starting to see that we are being transparent with our numbers."

The board ultimately decided to cover the shortfall with the unanticipated fund balance and to begin looking at liquidating some surplus properties to backfill that account.