Millions of dollars apart

City seeking more than $7 million it says BOE owes it

The city administration has contacted the Board of Education about where millions of dollars in reimbursements are for school construction projects bonded for by the city, paid off by the state, and allegedly reimbursed to the board.
In a letter to the board and Schools Superintendent Patricia McGeehan on Dec. 19, and obtained by the Bayonne Community News, City Business Administrator Joseph DeMarco questions the whereabouts of $7.4 million alleged to have been reimbursed by the School Development Authority.
DeMarco’s letter includes a listing of projects that he says have been completed at a dozen city schools.
“As you are aware, the city, serving as bonding agent, is responsible for repayment of the bonds,” DeMarco wrote. “The BOE is required to reimburse the city for any payment received by the state SDA.”
The letter goes on to say that the city had gotten confirmation from the SDA that payments had been received by the board on various grants.
“The BOE was obligated to transfer these monies to the city in order to honor its bond obligations,” DeMarco continued in the letter.
But does the board have the $7.4 million, or any part of it?
Reached on Dec. 22, Assistant Superintendent and Business Administrator Leo Smith Jr. confirmed that he had received the letter requesting payment for various projects, but said he could not address the issue at that time.
“There’s nothing for me to comment on at this juncture,” Smith said. “We’ll answer within the 30 days [requested by DeMarco]. “We’re trying to put a response together.”
Reached on Jan. 2, Smith again said he couldn’t comment, stating that DeMarco’s letter had been sent to the BOE’s auditor and that the board was awaiting a response.
Bayonne Chief Financial Officer Terrence Malloy said the reimbursement has been an ongoing issue. Because of the type of school district Bayonne was classified as, for any capital school improvement, the city must pass a bonding ordinance. The money is then given to the school system to spend on the project(s), the SDA reimburses the district, and the city should then be reimbursed.

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“The BOE was obligated to transfer these monies to the city in order to honor its bond obligations.” – Joseph DeMarco
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“It’s not unusual for there to be a backlog, because you have to spend the money before you receive the reimbursement,” Malloy said.
But apparently the city had not originally realized the degree of the shortfall.
Malloy said he brought the discrepancy to the administration’s attention during the summer, and that a meeting with the SDA in Trenton early in the fall revealed the large scale of the backlog.
“That was when we found out they had paid over to the Bayonne Board of Education a significant sum of money related to school projects,” Malloy said.
Not only is the alleged $7.4 million in dispute, an examination of open items uncovered another $4.4 million that the city bonded for that may be in jeopardy, DeMarco said, because of the board’s “inability to supply documentation to close out the projects.”
He also wrote that the $11.8 million in funding he says Bayonne should have received could have a profound impact on the city in the near future.
“This matter requires your immediate and prompt attention, as it affects the financial well-being of the city and its residents,” DeMarco wrote, “as the city is in the process of developing a budget for the upcoming year.”
DeMarco said that by Jan. 5 he had not received any response to his request, formal or informal, from the board.

Joseph Passantino may be reached at JoePass@hudsonreporter.com.

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