A law firm’s investigation shows Fort Bend ISD’s $132.6 million shortfall for its May 2023 bond was primarily caused by administration leaders not adjusting major project costs for inflation when the bond was delayed from the November 2022 election.

In a nutshell

Rogers, Morris and Grove’s report was released on FBISD’s website April 23, following FBISD board of trustees voting at the April 22 board meeting to waive attorney-client privilege and release the report publicly.

“I believe that doing the investigation initially and now releasing the report is necessary so the board can do our duty to the public to provide transparency and accountability to this matter,” trustee David Hamilton said at the meeting.

The backstory

FBISD staff notified trustees Feb. 5 the $1.26 billion bond program would face a $132.6 million shortfall, with district officials, at the time, crediting unexpected inflationary pressures and rising material and labor costs.

On March 4, the board hired consulting firm Gibson Consulting to audit the bond and Rogers, Morris and Grover, a current contractor for the board, to internally investigate allegations of whether a district employee withheld information about the bond overrun.

The results

The investigation showed administration leaders made a “conscious decision” to not increase cost estimates for anticipated compounding inflation on projects between the 2022 and 2023 bond proposals.

“The overall explanation seemed to imply that the actual rate of inflation has been higher—or is expected to be higher—than what the district accounted for in its budget planning,” the report reads. “The reality is, however, that the district did not account for any additional inflation from 2022 forward.”

Former Chief Operations Officer Oscar Perez, who retired December 2022, and Carolina Fuzetti, former executive director of design and construction, claimed they brought inflationary concerns to former Superintendent Christie Whitbeck and former Deputy Superintendent Steve Bassett “on multiple occasions” between the bond proposals, according to the report.

Information in the report was comprised through interviews law firm officials conducted with current district employees; officials with PBK Architects, the district's architectural consulting firm on the bond; Perez; Fuzetti, who left FBISD in October; Whitbeck, who retired in December; and Bassett.

According to the report, reluctance from administration leaders—indicating Whitbeck and Bassett—to adjust the bond proposal was due to:
  • Optimism that FBISD staff, including Fuzetti, could offset rising project costs by finding savings opportunities on bond projects as well as use contingencies from other projects to cover overruns, as district staff did in previous bond programs
  • Fear the public would criticize and accuse district officials of “inflated” budgets between the proposed bond programs, as it was the largest the district proposed
Zooming in

PBK Architects helped prepare a $1.18 billion bond package for FBISD’s November 2022 election; however, district staff and trustees ultimately delayed the bond until the following May to instead pursue a voter-approval tax rate election, which failed to garner enough voter support.

In that time, district administration didn’t ask PBK Architects for revised project costs and seemingly ignored PBK's inflationary estimates the firm provided through 2026 for the 2022 proposal, according to the report. One major project not adjusted for inflation between bond proposals included:
  • Clements High School: Projections from PBK anticipated the cost to rebuild the high school to fix foundation shifts would rise from $222.84 million in 2022 to $252.76 million in 2024.
Remember this?

The investigation also disputed a claim from Bassett, who during the Feb. 5 school board meeting said a former member of district staff failed to share a November 2022 email from PBK about “major projects,” keeping the district from being able to adjust the bond proposal accordingly.

However, the investigation showed PBK’s email to the staff member—identified as Fuzetti in the report—only addressed rebuilds of Briargate and Mission Bend elementaries.

While Fuzetti did ignore PBK’s recommendation to increase the cost per square foot estimates for the schools, it didn't affect the shortfall, according to the report. Instead, the shortfall came from PBK designing the rebuilds larger than Fuzetti planned.

A letter from the district's Audit Committee, also released April 23, says it's unclear whether the discrepancy was due to lack of oversight or lack of communication upon her departure from FBISD.

One more thing

In an April 23 phone interview, trustee Rick Garcia said Bassett is still employed by FBISD, but he was recently reassigned to another position. FBISD officials said he's now deputy superintendent over special projects.

Former Deputy Superintendent Beth Martinez, who briefly served as acting superintendent before Marc Smith's appointment in January, is still on the district's executive leadership team, according to the FBISD website. She now serves as deputy chief of staff.

Meanwhile, Jaretha Jordan and Kathleen Brown were named deputy superintendent of teaching and learning, and deputy superintendent of operations, respectively, at an April 8 agenda review meeting, according to an April 9 news release from the district.

Before FBISD, both Jordan and Brown worked in Duncanville ISD with Smith; Jordan served as chief academic officer, while Brown was chief human resources officer, according to the news release. Jordan spoke publicly in favor of Smith's appointment to FBISD superintendent during his contract signing Jan. 8.

How they voted

In the April 22 meeting, trustee Kristen Davison Malone abstained from voting on releasing the investigation publicly, with all other trustees approving the release. Before the vote, Malone said she believed hiring Rogers, Morris and Grove for the investigation was a conflict of interest and that she didn’t have enough time during the hour-and-a-half executive session to review the report, which is 32 pages.

During the meeting, Garcia pointed out the law firm’s background, which includes 25 years working with community colleges and school districts, including Katy ISD and Lamar CISD. He said Rogers, Morris and Grove has also provided guidance to other school districts facing bond shortfalls.

“At the end of the day, it is an external investigation; it’s not an internal investigation because the school district is not conducting the investigation themselves,” he said.

What they're saying

In the phone interview, Garcia, who is chair of the district's Audit Committee, said several things contributed to the bond shortfall: a lack of oversight in the contracting process, and Futezzi and Perez leaving FBISD, as Futezzi was the primary contact between PBK and the district.

"It was almost a perfect storm of events,” he said.

However, he pointed to the previous administration's decision to not adjust the project costs between the 2022 and 2023 bond as the main contributor.

Between the 2022 and 2023 bond proposals, district administrative staff, the board of trustees and the district's Bond Oversight Committee, composed of community members, all had access to the estimated project cost changes, or lack thereof.

Garcia said while he and other trustees "asked a lot of questions," he said he ultimately relied on district staff and the Bond Oversight Committee to provide correct project estimates.

"We need to be able to adjust our policies to align with industry best practices and implement a more thorough system and checks and balances," he said. "There's blame to go around, [but] obviously, the buck stops at the superintendent."

Next steps

Gibson Consulting's audit of the 2023 bond is set to begin in May and could be completed in late 2024 or early 2025, Garcia said. The investigation will help inform the audit, as the consulting firm now has more information on which programs and projects had issues, he said.