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Photo credit: Ted Heinonen

School board Committee of the Whole meeting, 3/6/18

Before the special Board meeting held in Old Central, to discuss ISD 709’s deteriorating budget, storm clouds had gathered on a windy, late-winter day. A document had already circulated through the city, revealing more bad news. The district’s fiscal ‘19 budget, millions in the red a month ago, had plummeted further into negative territory, with a deficit now projected to be $6,120,102.

I would be remiss if I didn’t pause, here, and thank our venerable hometown paper, our Chamber of Commerce, the DFL and unions. Obviously the stability we were told would result from the huge investment the establishment of Duluth backed with all its power has materialized as promised. The Red Plan has clearly been a great success!

The plan projected more than $65 million of extra savings available for use in the budget, beyond Installment Lease Payments — the monies appropriated annually to cover the construction bond debt. In fiscal ‘19, more than four million (precisely: $4,286,529 and 68 cents!) EXTRA dollars are supposed to be lying around from all the “efficiencies” created by the magnificent plan.

Thanks again, wise and visionary leaders. It’s all working out really well! 
 
Back to the slippery slope

A good part of this lengthy budget meeting was spent with the Board trying to decipher Administration’s calculations for arriving at the larger deficit. Some members were a bit annoyed compensatory education money they’d voted to move to the district’s western schools last January was now being counted as part of a budget negative. The way the argument for this accounting was being “framed” by Mr. Gronseth and his staff, member Sandstad declared “illogical.” 

Administration tried and tried to explain, Superintendent G. even resorting to drawing out a simple pie chart. The “reasoning” went this way: The district is currently using about $4 million of comp-ed money to lower the student/teacher ratio district-wide. If the Board wants each school to keep 80% of the funds it generates from the number of kids eligible for free-and-reduced lunches, then Administration decided (unilaterally) that the money should become discretionary. 

Confused yet? 

Whenever you use 80% of anything, you are left with 20%. The remaining 20% of comp-ed is what Administration has now designated as nondiscretionary, or “allocated” money. Currently, allocating 20% of comp-ed district-wide amounts to about a million dollars. Subtracting 1 million from the 4 million dollars of comp-ed money now being spent across the district to address the student/teacher ratio leaves about $3 million (exactly $2,983,000) more added to the deficit. According to district administrators, this money needs to be cut from somewhere else in the budget, to keep class sizes from jumping up (especially in the eastern schools.)

The fiscal ‘19 deficit grew primarily because of this number. 
Some members just weren’t buying what Administration was selling. Member Sandstad countered that there appeared to be some “double-counting” in this calculation, because some of the discretionary money could be used for staffing more teachers. 
Super Mr. G., however, maintained that this money had to be viewed in a more open-ended manner, telling the Board that the continuous improvement teams organized in each school would be given the latitude to use these discretionary funds in the manner they saw fit, “to address their needs.”
It was all highly debatable, but Administration’s bottom line is the bottom line. Even if all the money transferred West were used for teachers, the student/teacher ratio would still climb in the eastern schools. If the western schools are going to start keeping 80% of the comp-ed money they generate, more money is required if no ground is going to be lost in the East. District 709 has no money, so that means CUTS. Superintendent G. claimed, in consultation with staff, he’d already identified $3.5 million in reductions and cuts, with “some work to do, yet.”

After the precipitous, downward trajectory we’ve experienced on his watch, this question is fair to ask: is Bill Gronseth really the right person to lead us out of this mess? 
Watching this process unfold, a larger question becomes even more manifest: how in the world can our struggling public school system keep cutting? The organization has been in deficit nearly every year of the decade-plus I’ve been going into the boardroom. While expenses have risen because of labor contracts, and the budget has gone south because of the Red Plan, the Board time and again has had to axe $3, $4, $5, $6 million from operations. 

Back in 2012, the district’s Finance Manager, Jody LeBlanc said that without deep cuts the district’s budget would “fall off a cliff.” While making those cuts (axing teachers that had been with the district as far back as sixteen years), former Board member Judy Seliga-Punkyo said, “If we keep cutting, we’re going to get to the point where we’re not even going to be providing anything.” 

That was one of the few times I’ve ever agreed with Judy. Just a few months ago, in December, the Board cut $1.5 million from operations; by June they’re supposed to come up with $6 million more? How can our school district keep cutting and cutting and cutting? How much fat can there be on one government pork chop?

As one Board member put it to me off the record, during a break, “Are we going to end up cutting staff, so we can hire staff?”

Some people will end up in the soup line

The Superintendent ran the show during this meeting, as the Superintendent has been running the show in ISD 709’s boardroom since Keith Dixon came to town. Mr. G. pointed out that laying off teachers and “changing the student/teacher ratio — by one (student)” would result in “about $800,000” in salary reduction, but he voiced determination to keep the ratio as it is. He claimed that over the “past 7 to 8 years,” the district had made millions of reductions in operations without affecting the ratio. 

That claim was not exactly true. The 2017 ratio was 13.47/1. The last time the district narrowly averted slipping into statutory operating debt status (in fiscal ‘13,) the ratio jumped to 14.60/1.
The district-wide ratio is, in some ways, an artificial calculation. Some programs, by their very nature — such as CTE (career/technical education) and Special Education — have smaller numbers of students per teacher. Also, all certified teachers in the system are counted in the overall student/teacher ratio, whether or not they are actually employed as classroom instructors

A more accurate barometer is the average classroom size. The excess operating levy referendum approved by Duluth voters in 2013 actually had a minimal effect on the student/teacher ratio in the classrooms. The average number of students per classroom teacher dropped from 29.33 to 27.42 in the elementary schools. Middle schools dropped from 34.42 to 32.69, and high schools dropped from 35.66 to 34.15 — a one (and a half) student drop per classroom in the high schools. 

Class sizes in ISD 709 remain quite high, one of the primary reasons our public school system has been struggling in the educational marketplace. The decision to maintain the student/teacher ratio appears to be driven by political expediency (a deathly fear of the richer, more powerful people in the East feeling the pain of the ill-considered Red Plan,) but it does have a rational basis: any increase in the ratio would likely have a deleterious effect on enrollment numbers. 

So the question comes back to: what, (or who) will be cut instead? 
Believe it or not, district Administration does now operate (to a minuscule degree) more openly than it did during the height of the Red Plan. During this meeting, however, even some of the Board’s cheerleading DFLers pushed back against the convoluted generality of the information they were being handed. Par for the course, the Board has essentially been kept out of the loop so far. Newly elected fourth district representative Jill Lofald questioned how the school board could be more involved, so it could be certain whatever decisions are ultimately made “reflect the Board’s values.” 

When Chair Kirby asked if, by the next Business Committee meeting, the Board could have a “more specific” list of possible cuts, the boardroom’s paramount leader, Mr. G., hedged: 
“In an organization — where 80% of our budget is people — when we start talking about significant reductions, it gets pretty easy to put names and faces on those reductions. And so, we try not to have public discussions where people could be identified before we’ve had discussions with them.” 
As a non-teacher district employee, living paycheck to paycheck, that statement alone would have me pretty nervous. 
“So,” Mr. G. continued, “admittedly, we (Administration) may leave some of our descriptors a little in-general until we have had conversations with people…because it just doesn’t feel good if people hear from a public meeting about budgets that their job is being considered for elimination.” 
By now, I would be feeling really nervous. 
As usual, Board member Oswald had her head in the game and asked some of the most probing, detailed questions. She pointed out that without the additional $3 million now added to the deficit, the $3.5 million in cuts already allegedly identified “would already have the problem pretty much solved, wouldn’t it?”

The word, “allegedly,” has to be added because the cuts actually laid out for the Board during this meeting amounted to $2,482,215, but Superintendent G. admitted to the truth of member O’s observation. The original deficit given to the Board a month or so back was $3,993,500. If that had held, and our wily Superintendent truly has already found another million dollars lying around, “only” $493,500 more would have to be trimmed. As it is now, our emaciated district must lose another $2,620,102. 

Member O. also asked if all this budget maneuvering would in any way “help to rebuild our reserve fund?”
Mr. G. hedged a bit again, bouncing a few questions off of CFO, Doug Hasler, and obliquely suggesting the restricted reserve would stay at about $100,000, and the unrestricted would be lifted out of the red, but remain essentially depleted. “My hope is,” our Superintendent added, “that we will have a referendum (this fall) that has some revenue towards a long-term plan for building up the reserve.” 

By Board policy, the unrestricted reserve fund should be about $9 million in the black. Instead, our lame public school district has fallen into a deep, black hole, and the taxman will soon have his hand in your wallets, Duluth!
Since K. Dixon first stepped into town, it was evident we were going to pay and pay and pay for the grandiose screw-up of fools. 
 
Some are more responsible, but will never admit it

The group that has held control of the boardroom has made only one proactive move in the past dozen years: the colossal, ill-conceived fiasco called the Red Plan. Otherwise, they’ve had no game plan at all. All they’ve done is react, react, react to one crisis after another — wriggling their way out of this or that corner by borrowing from the maintenance fund or some other shell game-type maneuver. 

They all talk a big game when they run for office. They write into the town paper that electing them will result in all kinds of wonderful progress, like “adding back more opportunities for music, movement and art and language at all levels,” or “adding back the seventh period (or a creative alternative) in the middle and high schools,” but none of them ever have a clue about the realities of the budget, and, in effect, only create a false expectation in the public’s mind. 

Every one of them seems to come into the boardroom with a raft of excuses at the ready. During this meeting, member Josh Gorham informed his colleagues that he’d just come back from an MSBA workshop where he’d learned that many school districts are having budget problems:
“We have to acknowledge that State-wide certainly school districts are constrained with their budgets and sometimes that goes beyond us, here — it goes to the State level, it goes to the Federal level…we’re dealing with and grappling with realities that are sometimes beyond our control.”
Personally I think the MSBA’s acronym should be changed to SBEA (School Board Enabling Association,) where board members are trained in the most effective ways to deflect responsibility: 
“We’re not to blame! Every school district is in the same black hole! Blame the chintzy State funding formula! Blame Special Education and all those other nasty unfunded Federal mandates! Blame the deferred payment — or wait, that was all paid back! Blame Trump’s tariff on steel and aluminum!”
During this meeting, Board member Lofald (who admitted during the campaign that dealing with the budget would not be her “strong suit,”) displayed the loose talk that has long been the hallmark of Board leadership — by declaring with blunt emphasis: “In my mind I’m thinking there shouldn’t be any general ed money going to reduce class size!” 

Apparently ISD 709 is going to have to start laundering all State formula and tax levy money through an off-shore account in the Caymans. 
After a brief pause, Super G. explained that “general ed funding is what funds all staff — all teachers.” 
Lofald was searching for some way to lessen the pain for the eastern schools without making cuts (she asked if the 20% of money designated as “allocated” could all go east,) but even then the statement didn’t make much sense. If the western schools lost the 20% allocated to the student/teacher ratio, they would HAVE TO use part of the 80% of discretionary funding to reduce class size, or find themselves in worse shape. 

For several years I’ve listened to statements of this ilk in the boardroom. This particular time, I really did want to stand up and respond: 
“Actually, general education money SHOULD be going into reducing class size! No more general education funding should go into paying for buildings! And, until this district is on firmer financial ground, no more general education money should go into pay raises and gold-plated bennies!” 
Ostensibly responsible for fiscal control, our imprudent Board has already locked itself into paying building debt until 2032, however, and has signed off on four more years of contractual increases — essentially giving away the store. 
$3.3 million will again be automatically appropriated out of the general fund to pay Red Plan debt in next year’s budget, and $2.5 million was listed in the informational packet as next year’s salary and benefit increases. These two expenses — $5.8 million — pretty much wipes out a $6 million deficit. How many people are going to lose their jobs because of swimming pools and pay raises? 

More lost staff and programming is definitely going to hurt a school district that has spent millions and millions of dollars like a high-rolling Vegas gambler. This round of cuts may very well reduce the organization to something comparable to a bum who’s lost everything but the clothes on his back — limping along, holding out a begging hand to the taxpayers.