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Photo credit: Ted Heinonen

In the context of our school board, COW stands for Committee Of the Whole.  Under the banner of COW, the Board assembles from time to time, to discuss the fate of our school district.  Another such meeting occurred on 6/4/19, to look over the upcoming 2020 budget.

Dollars and cents 

With the school board following a 12-page handout, our new CFO, Kathy Erickson, again ventured into the weeds of our school district’s long-challenging budget.  “This is just intended to be an introduction to the budget.” Erickson told our representatives. “We knew we only had one hour tonight, because of scheduling priorities.  We will continue to have a budget discussion at our Business Committee meeting next Tuesday.”

Be sure to mark down next Tuesday’s date and come early to Old Central, fellow citizens.  These action-packed events are generally stuffed to the rafters with spectators, and late arrivals may not be able to find a seat.  If you’re one of those rare people who fails to show up, however, it’s no big deal.  General fund expenditures for next year are only estimated to be about $110 million.  

The exact current estimate is $110,996,758.97, a jump of $5 million from last year’s figure of $105,873,460.
The numbers that really jumped out from expenditures were employee salaries and wages, which total $64,132,106.26, or 57.8% of general fund expenses, and employee benefits, which are now consuming 23.5% of general fund operating money, with a total figure of over $26 million ($26,065,944.61.)  
One of the goals of the whole process, CFO Erickson told our worthy Board, was to “strive for fiscal stability.”  One way to achieve this goal in our topsy-turvy public school world involves using new referendum money to “address prior-year budget gaps.”  One of these gaps is obviously the upward spiraling employee salary and benefit costs that will continue to grow greater due to contracts approved by the school board.  

Why is this so hard?

What has most struck me, following this process for several months now, is how hard the CFO and Finance Manager have had to work to balance this budget and meet the needs of the district when so much more money is pouring in.  
The state approved a 2% increase in the base general education allowance, which translates to $1,120,000 more aid.  The Duluth taxpayers gave the district a healthy ($5,089,000) levy increase.  The state is also doling out $90 million to Minnesota school districts, to help lessen the burden of the special education cross-subsidy, which amounts to an additional $275,000 flowing into ISD 709.  The school board also exercised its taxing authority last year, increasing taxes another $3 million without public approval.  That money was said to be ear-marked for maintenance and “other budget adjustments,” but only $759,000 was listed in this handout for long-term maintenance and I’m uncertain where the rest of it disappeared to.  

One thing is certain.  Without all the additional money coming in next year, many teachers would have had to walk the blank to unemployment this spring.  I don’t think operations could have been cut deeply enough to avoid slipping into statutory operating debt status, a dire state of affairs the troubled organization has narrowly averted twice in the past six years.  

A couple of specific concerns

Only $100,000 is included in this budget for curriculum investment.  The district plans to embark on a “5-year, 3-cycle textbook adoption.”  It was noted under this category that “approximately $200,000 additional per year for 5 years” would be needed “to meet projected expenses,” and that this $200,000 “does not include needed supplemental professional development.”

Erickson broached the next point of concern this way: “The Board passed a resolution to revise our fund balance policy—that we’d be STRIVING for 8% of our operating expenditures, which would be approximately an $8 million fund balance.”
The district’s last audit listed the unassigned reserve fund balance as $399,166.
“We knew that that ($8 million goal) was going to take several years.”  The district’s Chief Financial Officer continued.  “We knew that it would take some time.  As of right now, our current budget includes a $500,000 in the fund balance.  Will that (investment) still be there (at the end of this process)?”  Erickson rhetorically asked the Board with an abashed chuckle.  “I’m not sure.”  

She went on the explain:  “We have lots of moving parts.  We have lots of pieces to the puzzle that we are still putting together…”  She admitted that “it would be great if the number could be bigger,” adding that $500,000 was a “number that we could start out with…to STRIVE for, and work our way towards that $8 million goal.” 

Of course it’s distressing that our school district’s finances have been allowed to deteriorate to such a degree that, with millions more pouring in, only a half million is being marked for the depleted reserve fund--and the CFO isn’t even sure if that figure will hold.  
Two other concerns embedded in this budget forecast: next year’s estimated enrollment number, which the district bumped up in April, has slipped back down by 30 students--to 8116, and the district will continue robbing $1.5 million from the maintenance fund to pay employee salaries instead of fixing buildings.  Erickson said the 2020 budget “couldn’t sustain” transferring the expense back to the general fund where it belongs.

A little more digging

It bears repeating that CFO Erickson (as well as Peggy Blalock, the Finance Manager,) did work hard.  There was more detail and clarity in this 12-page handout than I’ve seen in all the years I’ve been watching this show, but I would have liked even more.  One category, for example, titled, “Foundational Investments,” had a total expense line of  $1,251,000.00 with a catchall list of “facilities investments, technology investments, transportation investments, purchase of a school bus, and administrative projects (boundary study/superintendent search.)”

I would have liked to have seen a cost-out on each of these items, especially the superintendent search.  The Minnesota School Boards Association is already contracted to come to Duluth, to provide some guidance on selecting a new leader for ISD 709, and the Board also intends to hire a company to help find candidates for the job.  

My concern is that our school board has a terrible track record when it comes to making this decision.  The Board has thrown around our money on big elaborate “processes” in the past, and then made an awful choice.  How much are these decision-makers going to blow this time, only to hire someone who doesn’t even have a license to operate as a Superintendent in Minnesota? 

As to the other detail lumped in the superintendent search—the boundary study—I can actually report that cost, as well as a few other interesting details regarding this expenditure.    
Two proposals to conduct a school boundary study were included in the April Business Committee agenda.  The study is supposed to devise some kind of school reconfiguration that will make the hare-brained Red Plan work. This effort is being spearheaded by the Superintendent, who wanted to hire RSP, a demographics firm, a few years ago.  Before it even began its prospective study, RSP brought up the specter of closing schools, which was stunning to hear with the district still hundreds of millions of dollars in debt from a massive consolidation project that was supposed to leave all the schools perfectly placed and “right-sized” for generations.  

One of many profit-hungry consultants, like Johnson Controls, that seem to swarm endlessly around school districts these days, RSP has a history of its own.  I highly recommend watching the Wichita school board meeting of 2/27/12 on YouTube.  Harassed by officious “representatives” and police officers at a public meeting, regular citizens speak out with an eloquence that is truly remarkable.    

A consultant called Cooperative Strategies, from Ohio, proffered one of the proposals for this boundary analysis.  The company’s proposal was 16 pages long, with a very colorful layout.  It all looked so seamless and slick, I was amused to discover a typo in its list of “boundary criteria.”  The third bullet point advertised “clean feeder patters,” instead of “clean feeder patterns,” between lower and higher grade schools.  At the very end of the proposal, past lengthy lists of staff resumes and past projects, we were given the price tag for this project: $58,9000, plus estimated (reimbursable) expenses of $14,855, for a estimated total of $73,755.

The other proposal was made by Northspan Group, Inc., from Duluth.  Elissa Hansen, who stepped down from her city council seat last year, is the organization’s President and Karl Schuettler is its Director of Research and Marketing.  
This proposal was seven pages long, all in black ink except for a some sparse blue highlights.  The price tag for this proposal was found on the first page, after the cover letter addressed to the Superintendent.  The estimated fee for this analysis was between $19,900-$24,000.  I haven’t had time to compare the proposals in depth, so I can’t say for certain why there was such a significant price discrepancy.  Both proposals are on the district’s website, under Board Book, Business Committee agenda (2.B,) for anyone interested in doing that.  

I want to make special mention of Mr. Schuettler, who is known in school district circles as the author of the blog, “A Patient Cycle.”  I assume Karl, who has voiced many strong opinions about the school board, especially in regard to the Red Plan and its aftermath, was taking this opportunity to act in the district’s best interest.  His signature on a proposal for a consultant expense of thousands of dollars from ISD 709 was certainly eye-catching.  

The Board chose the more-expensive option.  If we all cooperate, for a mere $73,755, Cooperative Strategies will undoubtedly transform the worst investment our fair city has ever made into the educational Shangri-la we were originally promised.   

Jumping in again

I won’t be writing for a while.  If you have a windmill in your backyard, you may find me jousting at it some morning.  I’m getting into the school board race again, and have three reasons for making this quixotic decision.  

(1) I want the school district to function better and have a rule against criticizing others if I don’t at least offer to take the reins of responsibility myself.  

(2) Most people are afraid to get into the public eye, especially when the organization is as radioactive as the district.  Someone has to step up to challenge the set narrative that will emanate from the DFL—endorsed candidates, however, and I am uniquely qualified to be that person.  If I don’t run, I fear the DFL’s candidate, with little or no knowledge of district operations, will step unchallenged into office in the third district.  I believe all candidates should have the depth of their understanding of issues, as well as the intellectual honesty of their positions, tested before they step into office. 

(3) My central identity as an American-my right to vote-was once robbed by this government body.  The only right I had left was free speech, and I’ve gone to the mat on more than one occasion to protect that right.  For a brief time, during elections, the people who have been running the show (our current Board Chair, for example) have to sit in the audience and listen to others.  

I assume Madame Chair will be less than pleased by a few things I have to say.  

Already: a campaign update

Six of seven members of the school board are DFL/union endorsed, including the current Chair, Rosie Loeffler-Kemp and former Chair, Dave Kirby.
Recently John Schwetman announced he is seeking DFL endorsement to make a run at dislodging Alanna Oswald from her at-large Board seat.  Mr. Schwetman is a friend of Loeffler-Kemp, and both Loeffler-Kemp and Kirby are on his campaign committee.  In effect, DFL-endorsed allies are ganging up to throw Oswald (who is DFL, but not endorsed by the machine,) off the school board.  

Alanna Oswald missed only one meeting I can remember in four years, when she was out of town for an MDE meeting.  For a while, suffering from an infected gall bladder, she sat uncomplainingly through several meetings, running a high fever.  She has been amazingly dedicated to the school district-—a very intelligent and competent public representative who always does her homework, and is often out in the schools and always accessible to the public.  

I’m not suggesting board member Oswald shouldn’t have to get out there and convince her constituents she is still representing their interests, or that Mr. Schwetman doesn’t have a right to challenge her.  I am unequivocally stating, however, that the political party that dominates our town has no legitimate criticism of Alanna Oswald’s record, and that she does not deserve to lose her job.   

Alanna will try to secure DFL endorsement in her bid for reelection, but Mr. Schwetman (a union man with a lot of connections, who plans on being in Europe during the endorsement convention) has a strong chance at coming out on top, meaning all the big money from the machine‘s apparatus would flow into his campaign.  

I know a lot of people regard politics as the scourge of society, but politics is the crucible that forges how we’re governed.  Schwetman’s entry into the race galvanized my desire to jump into this debate again.  For the next four months, I will fight has hard as I can against this cronyism and grab for total power by hegemonic political operatives who claim to be the standard bearers of diversity and tolerance.