Caught between a rock…

by Loren Martell

Duluth Central High School. Photo credit: Ted Heinonen
Duluth Central High School. Photo credit: Ted Heinonen

Board member Welty tried for some levity during the Special school board meeting held on 5/30/17. He described his and his colleagues’ predicament as being “caught between a Rockridge and a hard place.” Our Board often uses the word, “parameter,” so let me first lay out the parameters. 
 
Protecting us against competitors; keeping us broke.
Our savvy DFL-endorsed Board majority refused to sell the Rockridge school to Many Rivers Montessori, which offered ISD 709 nearly a million dollars for the property. They decided instead to move Woodland Hills Academy into Rockridge, which meant they had to fix Rockridge up. However, in the wake of the disastrous and foolhardy endeavor called the Red Plan, they are now predictably penniless. Woodland Hills, meanwhile, is in the process of selling Cobb school, where they’ve been operating for years, to Many Rivers Montessori. “The Hills,” as the organization has taken to calling itself, needs Rockridge finished within a matter of months. 

What’s a broke school board to do, but turn to the new American way of making ends meet, especially with government operations? Our Board is going to borrow, and they’re going to borrow against an already pathetically sub-par maintenance fund. 
We should be spending about $3 per square foot annually to get the full service life on all these obscenely expensive buildings our town just built. According to information supplied by the district’s Facilities Manager, Dave Spooner, the bonds the Board was debating leveraging against the maintenance fund would result “in less than 75 cents per square foot spent for maintenance and repair on district buildings.” Subtract a couple of million for two roofs, and the remaining amount per square foot is approaching 50 cents. 

A $850,000 roof for Lakewood Elementary originally scheduled to be replaced this year in the current ten-year maintenance plan has now been pushed back to next year at a price tag of $1.2 million. The district has already scheduled a new roof for Rockridge in 2021. That roof, estimated at $750,000, is undoubtedly going to cost a lot more in four years. All maintenance items bumped into the future will jump in price. During the meeting, Mr. Spooner informed us construction costs have been jumping by 7 to 8% annually in recent years. 

New and like new? 
On top of roofs that need replacing after running up a bill of nearly half a billion that was supposed to leave facilities “new or like new,” the district estimates it will spend next year (actual price will almost certainly be higher) half a million dollars to “replace failed stairwell ceiling finishes” in Denfeld. Apparently big chunks of plaster have been falling down and plywood is currently nailed into the stairwell ceiling of a school we just invested $45 million in. 

We’re also spending an estimated $60,000 to refinish a gym floor at Ordean East and replacing an exterior door for another $100,000. The following year (fiscal year 2020,) in another of our “new or like-new” buildings, Congdon Elementary, the district is slated to spend another $280,000 for “exterior wall restoration” and another half million to “replace 150 exterior windows due to operational failure and leaking.” Taxpayers have already covered most of the cost of a new tile roof left undone on Congdon, during the Red Plan. 

Apparently this half billion dollar makeover didn’t come with any kind of warranty. 
During this meeting, the Board also discussed spending $445,737 to rebuild a playground at Stowe Elementary. The estimated cost in the Red Plan for the playground was $103,000, but the work was never done. The current plan is to raise the entire playground up a foot and a half and put in a drainage system to keep water from seeping through the wall of a school completely renovated at a cost of $4,449,413, only eight years ago. 

The Red Plan was never going to work without a hitch. A project of this magnitude moving at warp speed was impossible to keep accountable, exactly what Johnson Controls was angling for. After lecturing that our buildings were in shoddy condition because of poor maintenance, the Red Planners invested hundreds of millions into a long-range facilities plan without including an adequate long-range maintenance schedule in the plan. The maintenance fund was already inadequate to protect this huge investment forced upon us, and now the district intends to raid it. 

The whole mess was handed from the original DFL Board majority members to the current DFL Board majority members, who backed themselves into a corner. They not only refused to sell Rockridge, but also turned down generous offers for Nettleton and the Central campus. Millions of dollars of asset value has been sitting empty year after year. Instead of finally having some cash on hand and a reasonable reserve, district 709 finds itself in deficit, while crossing a milestone of fiscal mismanagement. Over a million dollars has now been officially thrown away on the Central property alone, based on administration’s own conservative estimates for maintenance and utilities ($170,000 x 6 = $1,020,000.)

Reversing policy and selling to other educational organizations was the only way to salvage a reasonable outcome, because the whole scheme was daft to begin with. Our school district dumped ten buildings (eight of them school buildings) and nearly two hundred acres on the market at the same time in a little town like Duluth. Eliminating its primary customer--other educational organizations--the district claimed it would sell all this “excess” property quickly and at top dollar. This foolish idea violated every tenet of supply-and-demand, and was never going to work. The $27 million the Red Planners claimed they were going to make from these sales was fantasy from day one. 

On 5/30/17, our current school board found itself caught in a mess, a mess very predictable and a decade in the making. 
 
To have HOCHS, or have not?
Member Oswald asked the first probing question of this meeting. She wondered why some of the schools--Lincoln Park, Laura MacArthur, Piedmont and Lester Park--were not scheduled for any work during the district’s ten-year maintenance plan. 
Mr. Spooner answered that he was “putting these new projects (the Rockridge renovation and the rubber mulch project) into fiscal years ‘18 and ‘19, and pushing the (overall) plan out. That doesn’t mean,” he explained, “these schools you mentioned won’t be in there, because the plan gets evaluated every year.” He elaborated further, using an example: “If you look at 2023 on out, this building (Old Central) is primarily the building being worked on, but as a Board and district administrators, we probably need to have a discussion on (whether) this building stays in the plan. This (ten-year plan) is a living document (strapped to a fiscal time bomb that could very likely kill our district…)”

“Thank you.” Member Oswald replied. “I hope you can understand my concern when I didn’t see these buildings listed in an itemized project. You’ve led me right into my second question. I was the one who mentioned last year the extreme amount of HOCH’s (Historic Old Central High) projects--totaling $18 million--in last year’s plan (exactly $17,899,595 of $25,264,103, or 71% of all the maintenance money projected to be spent over the next decade.) But now, there are only $8 million. Can you tell me what happened to those $10 million worth of projects?” 

“As I mentioned,” Mr. Spooner responded, “with a bond repayment of $790,000 (that will now be coming out of the maintenance fund, if you approve this bond sale) I had to shrink each year and the length of time grew. I could (now) provide a plan that would go out to 2032. Many of the projects have been pushed out, because of our trying to make it (the maintenance budget) work within our existing $2 million levy and the bond payment, and trying to fit all the projects in. So, there’s still $18 million worth of work, if not more, that needs to be done to this building.” 

“Thank you for that clarification.” Member Oswald replied, admirably not cringing openly at the truth. “I wanted to make sure we didn’t just magically repair something. I know that your predecessor had a sense of urgency about getting those (repairs) done, considering many of the structural issues with the (Old Central) building…So I hope--I trust in your judgment--that you’re picking and choosing the right projects that need the most attention, first.”

“Right--” My Spooner responded. “There is a larger need in this building. It’s a discussion we need to have, because there are items that need to be dealt with, soon. Expensive items.” 
Member Harala eventually stepped in and made the following remarks about the situation: “I don’t think this is necessarily going to happen during my tenure, but I do think it is something we need to be discussing with our community: to potentially have it (Old Central) be sold at some point in time. I’m just going to go on the record and say that it would be a great opportunity for our community to gather around and look for ways: potential for housing or tax credits, etc. I’m wondering if there are potential parties that would be interested in reusing it and taking on some of the significant debt.” 

We’ve done so well in real estate, do we dare hope our Board will soon toss another red-hot district property onto the market? Maybe we’ll be able to find some European Duke looking for a castle fixer-upper. CASTLE FOR SALE! Great Location, with plenty of local serfs impoverished by school district’s foolish spending available to work as servants! Only needs $18 million in repairs! 

The Red Plan identified $5,545,953 of maintenance needed for Old Central. None of this work was done, either. The historic old school’s renovation and plans for a new transportation center were both tossed over the side of the boat, when the grandiose facilities project was discovered to be $11.6 million over budget in 2010, which means this deferred maintenance has been growing more and more expensive over the past decade. 

What a plan, and at only half a billion, a bargain to boot! 
Member Oswald thanked member Harala “for officially going on the record (with) her statement about Old Central. I remember,” member O. added, “at a meeting about this time last year when I made the comment: ‘does the community really want to spend $18 million on this building?’ I also remember,” she further added, chuckling self-consciously, “the community outrage about possibly tearing this building down, which I will NEVER advocate for…”

The attack on Ms. Oswald was led by the News Tribune, which wrote on its editorial page: “The blasphemy uttered by an elected official. Of course elected. Cheap political points.” The paper went on to exclaim that “Board member Alanna Oswald--like so many politicians, candidates and pot-stirrers before her, missed the mark” with her comments about Old Central.

Inflammatory remarks written in the paper of record. Of course on its editorial page. Should I dive to the bottom and call them cheap, rhetorical points? The paper’s whole lecture about the work needed in Old Central was practically bereft of any real insight into the district’s fiscal problems, especially in regard to maintenance expense. 

 
Not enough space, again
I could easily write ten pages about this meeting, and still not do it justice. Member Sandstad made one of the best points of the debate when she complained the Board was forever finding itself in a “reactive” stance, but that’s the reality of the moment. Just as in the private realm, if you are fiscally on the rocks, it’s virtually impossible to be proactive. Unless you can find a way to procure a wad of money and/or dramatically cut expenses, all you can do is put out fires and stay one step ahead of the wolf. 

Administration’s recommendation to borrow from the maintenance fund was the Board’s only choice, given the circumstances, but member Sandstad was correct that the same situation has happened over and over, and long before she was around. June 27th, 2011, is the most egregious example I’m aware of. On that evening, just three days before Dixon left town, the full Board discovered for the first time that the Red Plan was millions over budget. One member admitted to me later, (off-the-record, with a whiny tone) that they had no choice but to rubberstamp more money because they were “over a barrel.” 

For years administration has tended to drag its feet and then spring its recommended “solution” at the last moment, so the Board may as well be in a barrel, plunging over Niagara Falls.
“After twelve months on the Board,” former Board member Gary Glass wrote (1/3/09) in the News Tribune, “I’ve found the general process by which district administration operates to get its way is by hoodwinking the school board into thinking members are followers rather than leaders, and that they must rely on staff to make decisions. This is done by limiting the information and time needed by Board members to evaluate information and to form their own opinions, by not allowing Board members to attend agenda-setting meetings so they know of upcoming issues and have time…for questioning, analysis, discussion and evaluation.”

It is regrettable Mr. Glass--a very intelligent, sensible man--was not in the controlling majority back in 2009. 
The mess the Board now has on its hands is the result of bad planning and poor returns on big expenditures. During this meeting, Art Johnston expressed considerable displeasure at a new directive from administration: to spend $445,737 on a playground. Mr. Johnston--the Board’s Lone Ranger of fiscal accountability, an indefatigable numbers cruncher--was in fine form: 

“$445,737 for a playground? That exceeds the cost of a custom-built house. I don’t know what kind of specs they put in there, to get this so high, but there’s something wrong, here.” Member Johnston pointed out that even Johnson Controls’ estimate “as high as they were on everything, had the Stowe playground at $103,000. All the other playgrounds done through the Red Plan were somewhere in the $60-$70-$90,000 price range. The total cost for all the playgrounds done through the long-range facilities plan was $750,000. Now we’re doing one playground for $445,000?”

Tirelessly pursuing fiscal truth through a foggy slough of corporate flimflam and government bungling, the Lone Ranger read through Johnson Controls’ description of the Stowe playground project--work, which again, for some obscure reason, was never done: “Replace existing playground with new equipment that meets the needs of enrollment. Replace surface materials and edging, as well.” The estimate on all this work from JCI corp., notorious for padding expenses, was less than a quarter of the current cost. Mr. Johnston pointed out that the Board has been catching heat about high estimates on projects. 

“We really have to start containing some of these costs.” He argued (for about the zillionth time) in a room where sensible arguments about money come to die. “$445,000 for a playground is highway robbery…I don’t know what’s going on. All I know is: $445,000 is a really, really expensive house, in Duluth--a custom-built house in Duluth.” 

Whoever is making the profit will probably build one. 
The playground project and borrowing from the maintenance fund were passed by the Board, with members Oswald and Johnston casting some protest votes.