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Duluth Central HighSchool - Administration building. Photo credit: Ted Heinonen

It’s hard to believe how much time our school board, the body ostensibly responsible for fiscal control of an organization struggling with perennial deficits, spends talking about things like candy bars and rubber mulch. The mulch problem on district playgrounds, especially, has bedeviled the Board for a couple of years. 

The Board was in a bind with this mulch problem from day one, mainly because the district is broke with almost no reserve fund, and some very proactive people were upset and demanding ACTION. These parents were worried their kids were breathing in, and--in the case of some the littlest ones--even chewing on and swallowing potentially hazard bits of ground-up rubber. They were not-so-subtly suggesting they would pull their children from our public schools and send them to other educational venues if something wasn’t done. 

One of the primary reasons ISD 709 is so broke is because the school district invested hundreds of millions of dollars in a poorly marketable consolidation project. Because the project was so unpopular and disruptive, its enrollment projections have tanked. A school district already struggling with 1500 fewer students than originally projected by a failed investment could not afford another big student exodus. 

Cutting the budget repeatedly to adjust to a budget perennially in the red, while simultaneously being plagued by myriad educational issues involving student inequities and classes too large to compete in the marketplace, the Board struggled to find the will, and the funds, to make removing rubber mulch from playgrounds a priority. 

  Where there’s a will, there’s a way. 

Parents pounded away about the health risks to their children from the public podium. They offered to roll up their sleeves and do the job themselves. The Board debated and dithered. Finally, after several months, with pressure mounting, it passed a resolution directing administration to seek bids from contractors--to see what the price would be for various timeframes and options. 

This path wasted a lot of time, while the Board essentially journeyed down a road of self-discovery. Months went by. Eventually our school board was given the options and prices. After looking everything over, our elected representatives came to the collective realization that the only viable political route was to have the work done on all the playgrounds in one summer.

By then, it was late spring and difficult to find contractors who wanted to bid for the upcoming summer. One outfit--SAS--came in with the astronomical price of $1.2 million. Some members balked at such a ludicrously high price to remove rubber mulch and replace it with wood chips on playgrounds. One of the reasons the price was so high was because woodchips need greater depth to comply with safety standards than rubber chips. Rather than removing and replacing all the support posts for playground equipment, to reach compliance, the contractor came up with a plan to cover all the footings of posts not deep enough for compliance with protective rubber. 

This brought the price down a bit--to $1,041,264. This cost was based on estimating the need for work on one playground--Lester Park Elementary--and assuming all playgrounds would need work in a comparable price range. The Red Plan being the Red Plan, however, the contractor discovered that the depth of playground equipment posts varied widely from school to school--meaning more analysis on a school-to-school basis was required. Now, the contractor--SAS and Associates--wanted the Board to approve more money for this additional work: $12,475 more. 

As part of this whole scenario, it is important to remember that taxpayers were being asked to add $12,475 more to a price tag of more than a million dollars, to tear up and retrofit playgrounds they’re still paying the original bill for. 

In their own words. 

The issue was first brought to the Board’s attention during the Business Committee meeting of 9/13/17 and it exemplifies the constant division between members, involving fiscal accountability. Rosie Loeffler-Kemp seldom questions (in fact, I can’t remember her ever questioning) the legitimacy of a district expenditure; Art Johnston, on the other hand, as this city knows quite well, is a constant watchdog. 

Member Loeffler-Kemp’s manner of speech is more halting than usual, but the tone of her voice is loud and forceful. Her words sound very deliberate, even while she is stringing out and tangling her syntaxes: “I think in terms of over-costs--you know--I went back to some of my notes--way back, as we discussed this…” She told her colleagues. “And you (looking at Dave Spooner, the district Facilities Manager) were very clear with us as we were discussing this, that--ahhhhhhh--this is a first-time project, the way we’re doing this, and that costs--you know--that we’re going to be--we were going to do as good as we can to estimate the cost. I think Luke (Sydow, the founder of the landscape architectural firm, SAS) was very clear, and so--ahhhhhhhh--we wish it (the cost) wouldn’t of (gone up,) but you were very clear with us, as the discussion was happening…And I think that we certainly need to pay them for the work that they’re doing--it shouldn’t even be at question, here.” 

Board member Johnston’s gravelly voice also resonates deeply and forcefully. He doesn’t pause as often Loeffler-Kemp does, and his “ahhhs” are much shorter, but his sentences also tend to run on at times:
“I would like to add a comment.” He announced to his fellow Board members, following up on what Loeffler-Kemp just said. “I think we have to keep in mind also that a contract is a contract. And I did not see the original contract, but most contracts say that the existing condition or the existing structure has to be confirmed--at least I just got done writing a contract with that language in it, myself. And since I’m assuming all contracts have that in, it does seem, from a contractor’s point of view--again, I’m not going to object to any consensus here--but--ahhh--sometimes, me being a contractor for the Federal Government; sometimes I make good money and sometimes I lose my shirt. That’s just the way it is. So again, just because they’re working hard doesn’t necessarily mean that the contract entitles them to get more money, particularly if you had a clause in there that the contractor must confirm the existing condition, before you start a design. So, I’m just throwing that out, that I’m not--that I’m hoping that you’re considering that, too, Mr. Spooner, for future contracts.”

Again, the reason I transcribed these quotes--word for word--was to show the underlying debate I’ve witnessed for years in the boardroom. There has been a perennial tug-and-pull over the process of procuring good contracts and holding administration and its various operations’ consultants accountable to the letter of those contracts. Reining in costs is of course ultimately in the taxpayers’ best interest. It is also in the best interest of our public school district, because money lost to poor fiscal management is also money lost from the classrooms. 

 
The debate continued: regular Board meeting, 9/16/17.

The basic problem with switching out rubber mulch with wood chips is that a thicker blanket of wood chips is needed to protect kids from getting injured when they slide down slides, or jump from other playground equipment. The equipment is also anchored in place, which means there are posts planted in the ground. The concrete footing of each post is a potential hazard for injury. 

Initially, the district was going to remove and reinstall all the equipment, to adjust to the wood chips, but then decided it would be cheaper just to coat any footing not deep enough with a poured-in-place rubber compound. The problem, again, came about when the contractor and district administrators estimated the cost of the job by looking at just one playground. They assumed all the playgrounds were installed uniformly and they could extrapolate the cost of the entire job from examining one. 

The playgrounds, however, were part of the Red Plan--which means such an assumption was overly optimistic. To put it into the words of the Doug Hasler, the district’s CFO: “We felt it was appropriate for us to rely on the plans that we had in-hand, based upon what we understood to have been the installation of playground equipment on our properties. Obviously, that assumption has proved faulty.” 

Transcribing the CFO’s lengthy justification for the requested price increase wore down the point of my pencil. I will cull out just a few phrases of this bureaucrat-speak, to give readers a sense of the argument made to the Board that it was actually a blessing in disguise to discover Johnson Controls had failed to install equipment uniformly on all the playgrounds. Adjusting to this reality would require a larger upfront cost, but the district would reap more “savings” in the long run. 

The good news was expressed by Mr. Hasler this way: “We have found that the depth of footings is not at a uniform distance from the surface, and what that has revealed to us is we have an opportunity, and that opportunity is that the depth of (some) footings is so deep we don’t have the vulnerability--we don’t have the exposure to students coming in contract with the footings, so it will not be necessary on some of the playground locations that the poured-in-place rubber compound needs to be used--which will be a cost savings to us.” 

However, Mr. Hasler added: “SAS relied on plans that we had, based on how we understood all of our playgrounds to have been installed…If we, at the very beginning of this process, had (told them) ‘we want you to fully evaluate each and every concrete footing for each and every piece of playground equipment on each and every one of our properties,’ that would have been quite a bit of work, and that would have resulted in a different front-end contract cost that they would have been proposing to us for the work to be done.” 

Facilities Manager, Dave Spooner, added a supporting observation that “there’s approximately 50-70 footings per playground.” 
After management presented its reasoning for another upfront expenditure--allegedly offset by a future savings--Board member Nora Sandstad, (my sole hope of any existent fiscal sense in the DFL-endorsed camp,) came up with a perfectly reasonable compromise: 
“I’m wondering if we wouldn’t want to consider moving this decision to next month. By then, we’ll know whether or not we’ve met the Oct. 15th deadline to get all of the playgrounds done, and we’ll see if the cost-saving that is predicted in terms of not having to do poured-in-place (occurred.) I think perhaps some of us would then be more amendable to approving the increase requested by SAS.” 

During the debate over member Sandstad’s resolution, Mr. Hasler threw in another lengthy speech, claiming that the district’s reputation would suffer from shortchanging a contractor. He keyed on this point: “There’s just things you discover once you get into (a project.) Anytime you’re talking about something below the ground, count on something being there in a fashion you did not anticipate…We will be working with other design professionals in the future--whether it’s landscape architects or building architects, or engineers or whatnot…” He cautioned the Board that if it didn’t pay up in this case, these “design professionals in the future are going to look at us sideways, because they want to know--they won’t always know, because we don’t always know--the condition that we will find when the dirt starts to fly…”

The contractor should bare some of that risk.

After the gross fiscal laxness of the Red Plan, I suspect we’ll never have to worry about our school district looking like a tightwad no contractor wants to deal with; rather, the exact opposite is true--it is incumbent on our Board to put out the message that we are never going to be so easily scammed again. 

Johnson Controls is a very clever corporation, clever enough to protect itself against the contingencies Mr. Hasler described, by embedding indemnification clauses in the Red Plan contracts--such as clause 1.3.3.2 of the Program Management agreement: “JCI shall be entitled to an appropriate adjustment in JCI’s schedule and compensation if conditions are encountered at the site which are (1) subsurface or otherwise concealed physical conditions which differ materially from those indicated in the Contract Documents or (2) unknown physical conditions of an unusual nature, which differ materially from those ordinarily found to exist and generally recognized as inherent in construction activities of the character provided for in the Contract documents.” 

We got hit with continually expanding upfront costs from JCI, and obviously never reaped the full benefit of promised future “savings.” 
There are two problems with the way the district has been handling contracts--signing poor, pervious contracts to begin with, and/or caving in and not upholding explicit contractual language, after the fact. 
The most recent example of an extremely poor job of procuring a good contract was the deal given to the Superintendent. Would a corporate Board of Directors approve a three-year contract extension with a CEO who’d tried to jump to another company three times, without minimally getting some clauses to protect its own company in case he laced up his running shoes again? Would they only include a golden parachute clause protecting HIM? 

The way some board members and district administrators talked about this deal around playground mulch you’d swear they were stakeholders with SAS. Board Chair Kirby, Business Committee Chair Harala and Education Committee Chair Loeffler-Kemp were immediately ready to pay out more money. All three were sold on the idea that SAS deserved $12,475 more. All three claimed SAS should be paid the extra money as soon as possible and voted against member Sandstad’s resolution to table the vote. 

The other four members--Welty, Johnston, Sandstad and Oswald--voted to adopt a wait-and-see attitude and postpone a decision about spending more money until next month, with member Oswald making the most cogent remarks of the evening: 
“I’m going to vote in favor of this proposal, but I really want to clarify that this isn’t even remotely a statement about Luke Sydow or (SAS) his company, or how hard they’re working or how much they’re valued or worth…This is a budgetary decision for me, not anything else…This is about the fact that Luke and his company are under contract with us; they’re not necessarily employees. If we were paying them as employees, there’d be no question what they’d be getting--they’d be getting paid for their time…” 

Thank you, member O.! Holding to contracts and carefully parsing out taxpayer money is not being a mean Scrooge. It’s about being responsible with resource management; it’s about fiscal control; it’s about using funds with the same clear-eyed sense any successful business would! After the Red Plan, our public school district very likely has a push-over reputation as one of the biggest public-organization contract pigeons on the planet. At this juncture, our school board needs to tighten up its act and be much more concerned about what its money management looks like to Duluth taxpayers. 

I’ll conclude by asking this question on behalf of taxpayers: would Mr. Kirby, Ms. Harala and Ms. Loeffler-Kemp have been so quick to pull out their personal checkbooks and cut a check for $12,475, if a contractor discovered he was working harder than he thought he was going have to, and decided he wanted more money in regard to a project on their own property?