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To fund CBHS last year, officials planned to use a grant that had been spent.

By KELLEY BOUCHARD Staff Writer September 19, 2007

Starting Casco Bay High School has cost Portland taxpayers a lot more than school officials expected, an investigation by the Portland Press Herald/Maine Sunday Telegram shows.

The fledgling alternative high school cost $331,000 more than the $590,000 included in the budget last year, largely because Portland school administrators planned to use a grant they had already spent, according to e-mails obtained by the newspaper under the Maine Freedom of Access Act.

As a result, the high school's costs rose to $921,000 and helped push the school district into the red.

The excess spending is news to School Committee and City Council members because public school budget documents show how much was appropriated for the 2006-07 school year, but not where the money comes from or how much was spent.

"This is information I've been asking for for two years," said City Councilor Edward Suslovic, who sits on the council's finance committee. "It shows a disregard for the elected officials responsible for providing oversight of the city's finances. It also doesn't serve the students and staff of Casco Bay High School well to be under this cloud."

The newspaper received complete budget information about Casco Bay High with help from city finance officials, who started overseeing school finances after School Finance Director Richard Paulson resigned in July.

The overspending highlights accounting problems that contributed to a $1.7 million to $2.5 million deficit in the $82 million budget for the school year that ended June 30. The problems also led to the resignation of Superintendent Mary Jo O'Connor, who started and championed the high school.

Paulson recognized the error in Casco Bay High's budget as early as August 2006, according to e-mails, but he and O'Connor failed to reduce spending or seek a larger budget appropriation from the City Council.

They did consider taking action.

"We should sit down, soon, and see what we can trim," Paulson wrote in an Aug. 21 e-mail to Casco Bay Principal Derek Pierce. "Otherwise, you will be running in the red big-time by the end of the school year."

Now in its third year, with 230 students, Casco Bay was started with a $600,000 grant from the Bill and Melinda Gates Foundation. The school district received the three-year grant through Expeditionary Learning Schools Outward Bound, a nonprofit organization that promotes education stressing real- world projects and community service.

More than half of the $600,000 went to Expeditionary Learning for teacher training and start-up costs, said Scott Hartl, research and assessment director of the Garrison, N.Y., organization.

Portland received $277,880 to plan the high school and run it for two years. The money was spent by the end of the 2005-06 school year, the first year that Casco Bay operated in several classrooms within Portland Arts and Technology High School.

Hartl said O'Connor asked Expeditionary Learning if Casco Bay could receive its share of the grant within two years instead of three. He said it's not unusual to receive such requests.

"(O'Connor) said that she understood there wouldn't be money coming to the district in (the third year), so she would find funding elsewhere," Hartl said.

O'Connor has declined to talk to the newspaper for weeks. Her resignation is effective Dec. 28, unless the School Committee replaces her sooner.

Paulson has declined to talk to the newspaper since he resigned July 30. But his e-mails show how school administrators handled the Casco Bay budget matter.

Before Paulson e-mailed Derek Pierce on Aug. 21, 2006, he informed O'Connor and Donna Hazard, a payroll administrator, that the Gates grant was overspent. "All future payrolls need to be charged to the local budget. Bad news, I know," Paulson wrote in an Aug. 21 e-mail.

In another Aug. 21 e-mail, Hazard informed Paulson that $229,000 in teacher salaries and about $80,000...