WESTBROOK – A state audit has found that the city of Westbrook and the Westbrook School Department must cover an additional $130,000 in expenses connected to the Westbrook Middle School construction project.

Part of that audit includes a bill from the state for more than $83,000.

A letter from the Department of Education to the school department dated Sept. 4 stipulated that certain “disallowed costs” must be reimbursed to the state before June 30, 2013, the end of the city’s fiscal year.

The Department of Education made the determination that slightly more than $83,000 in expenses, and nearly $47,000 in bond interest, will not be covered by the state, after state officials finished their bond audit of the project.

School Superintendent Marc Gousse said this week that ultimately, the cost would be divided between the municipal and school department budgets, but exactly who would pay for what is still being worked out.

“I don’t know how that will shake down,” Gousse said Wednesday.

The $34 million middle school opened in December 2009. After the project was finished, the state then went back to audit the project to make sure its money was spent properly on construction-related costs, a common practice, according to state Department of Education spokesman David Connerty-Marin.

But this audit resulted in a loss to the city of $130,000.

“That’s less common,” Connerty-Marin said.

The money breaks down as follows:

First, the bond interest expense. According to Connerty-Marin, anyone who gets bond money will owe interest on it to the bond bank, like any other loan.

But when the city got the bond money and placed in a local bank account, he said, the city also earned interest on the money being saved there. It is common practice, he said, to use the earned interest to pay off the interest owed to the bond bank.

Westbrook did that, Connerty-Marin said, but the earned interest didn’t cover all the bond bank interest, a difference of $46,882. Dean Flanagin, director of operations for the Westbrook School Department, said that money was already paid out to the bond bank, but Connerty-Marin confirmed this week that the state would not reimburse the district for that money.

That means, Flanagin said, the school department has to account for an unanticipated loss of $46,882.

The state’s bill, just over $83,000, Gousse said, includes miscellaneous “disallowed costs,” such as charges to Time Warner Cable that were mistakenly believed to be installation costs, but are actually monthly fees for service.

There were also travel expenses, architects’ mileage and other items Gousse characterized as “miscellaneous expenses that were not allowed to be coded to the school department.”

In the end, Gousse said, the audit is akin to “balancing the checkbook.”

City Administrator Jerre Bryant said both the city and the school department raised and administered the spending of the bond, so both will likely bear some of the expense of paying off the bill, but the final numbers on both sides have not been determined yet.

Gousse said he expected to know for sure who was paying for what by the end of December. He said there would most likely be a line item in the school department’s budget covering the expense.

Bryant said any money the city had to shell out could be handled the same way, but if the city finishes the fiscal year with a surplus, “we may just charge it off to that,” he said.

Gousse noted that despite the bill, the middle school project was actually finished under budget, and all while the school department changed superintendents and business managers.

“There’s been a lot of different people involved,” he said.

Bryant said the expenses were difficult to spot in advance because they emerged in part from the state clarifying what expenses were eligible to be charged to the project.

“Basically, what these things are, are eligibility requirements,” he said.

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