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Photo credit: Ted Heinonen

I mistyped “robe” instead of “rope” in a sentence of my last article. Actually “robe” could work in the context of the metaphor I was using, if you were drowning and hoping Jesus or one of His apostles would save you. 
As it struggles to keep its nose above a swirling pool of red ink, let’s hope the good Lord hasn’t forsaken our improvident public school district. 
  
Special school board budget meeting, 3/27/18

During the Committee of the Whole meeting, we were introduced to the idea of “new investments” in our public schools. These investments, in effect, were going to be conjured up through cutbacks and playing a shell game with existing funds. We heard a lot about a funding formula constructed around the percentages of 20 and 80. 

During the Business Committee Meeting, a week later, the Board was handed Option A and Option B. Tonight, another week or so later, during a special meeting called to discuss the budget and cast a preliminary vote on the way to move forward with the fiscal 2019 budget, the Board was handed Option A.2 and Option C. 

Repeating my approach from my last article, I am first going to give readers some sense of what we’re dealing with here, by using our clever Superintendent’s own words as he “explained” these options:
“There’s 80% of comp-ed funds spent at each site on both of these options. That is because--when we say we are taking 20% for district-wide--that school is also getting a portion of those funds. So, some portion of the 20% they’re getting back, because it’s then given back on a per student basis. So, for example, Denfeld: 20% of what they generate is $147,000. What they get back, on a per student basis, is $117,000. So, that 20% — the whole thing — isn’t leaving the site. What’s leaving the site is about the difference of $30,000 there. So, when you take 70% of what they generate as discretionary, they are also receiving part of that 20% back, and they’re also receiving part of that 10% back, because some of that is — as you know — 10% is going to change the ratio, but it also changes their ratio. So, they’re getting more staff because of it. So, it’s not that the whole — you know — if you looked at that 20% and that 10%, it’s not that all of that leaves the site. Some of it stays at the site. So, that’s why Option C also meets the language of the resolution…” 

How do we channel professor Einstein? But of course we, in Duluth, don’t need the genius professor, because we are blessed with our able representatives! 
 
Multiple challenges

As our Super’s “explanation” illustrates, part of this meeting was complex and difficult to report on, so please bear with it. You have to follow form to understand function in the boardroom. 
Mr. G. and his staff are trying mightily to perform a fiscal abracadabra act and produce something from nothing: never an easy task. It is not easy to make “new investments” when you’re completely broke with no bank account and no new revenue coming in. Try doing it in your household budgets sometime. 

Last January the Board voted to keep 80% of compensatory education funding at the schools (mostly in the western part of Duluth) that generate the money. Compensatory education funding is additional State aid generated by the number of students eligible for free and reduced price lunches in a school. Until recently, only about 50% of the money schools were eligible for was being appropriated to those specific schools. The rest was being distributed across the entire district. Some of that funding was going into curriculum, but most was being used to reduce class size — or the student/teacher ratio — district wide. 

Citizens in the western part of Duluth started raising a ruckus about the fact that their schools were lagging behind eastern schools on many fronts, while aid generated by the need in their schools was being shifted to schools in the east. Citizens from the east, however, are not exactly thrilled that the Board sided with the west on this issue, and also have been showing up in the boardroom. 

At the regular March Board meeting, a PTA activist and parent spoke with passion about the situation in Congdon Elementary: 
“The teachers are excellent. They are passionate about teaching and deeply committed to their students, but the school is overcrowded. I offer these examples of what that actually looks like for Congdon students: 
First, the school cannot offer a pre-school program, because we don’t have room. Second, both of my children bring a cold lunch everyday, because they don’t have enough time to move through the hot lunch line and eat their lunch. Three, there are so many students in a classroom that the teachers — no matter how good they are — do not have the ability to address the wide range of abilities and challenges of their students... 

One of the reasons we strongly supported the last levy is that we were told those funds would be used to reduce class size. We’ve raised this issue at Think Kids meetings, and last year we hosted several members of the school board at Congdon, to talk about the situation we are facing. Here we are, a year later. One of the few sources of funding that’s actually available to Congdon may be cut, and we understand that our already large class sizes may get even larger.” 

During this evening’s special budget meeting, another PTA activist and parent told the Board that she grew up in the central hillside area of Duluth and “went to three schools that are now closed because of the Red Plan.” Her kids now attend Congdon Park Elementary School, and she made these comments about the plight of students at the school: 

“Some struggle with homelessness and home insecurity, with little to no mental health services to mitigate this trauma. There is economic instability visible in the 150 children at Congdon that qualify for free and reduced lunches. And with our 613 students, we already have such large classroom situations that students can barely move desks around, much less deal with the physical and emotional constraints of so many students. More and more students are experiencing anxiety…

Because of the age of the school (recently upgraded at a cost of $16 million by JCI to be ‘new or like-new,’) our physical classroom space is smaller than most schools--900 square feet, on average--making increases in class size that much more impactful. And with the loss of this (comp-ed) funding, we may lose as many as three teachers and could see class sizes rise as high as 35...

I do know that large class sizes will take a toll on our children’s education. This is a fact. It’s been studied and proved. You may not see it this minute; it may not be on this year’s test scores, but rest assured it will come.” This concerned citizen asked: “How can we expect our teachers to pick up this slack?” In a passionate tone, she added that the move of compensatory funding out of the school “has been a dirty trick on us.” 

According to enrollment statistics gained through a district information request submitted by a reader of my column, the elementary school with the highest individual class size in the system currently is Lester Park: 33 second graders. Congdon Park and Lester Park, both eastern schools, are tied for the highest average class size. 

“North Shore Community School sends 2 buses into Lakeside every day…” The engaged reader of my articles informed me in an email. “These buses are full--3 to a seat. How many students is that? 140? Many more families car pool out there each day. People are making this choice due to crowding and class size. They bus and drive ISD 709 kids out to North Shore Community School, while Lakewood sits out there wishing it had more kids.”

Lakewood elementary, with a capacity of 350, currently has 223 students and is projected to have 220 next year. Congdon Park, with a capacity of 600, is projected to have 624. Lincoln Park Middle School — an extravagant, copper-sided palace located on a ridiculously inapproachable hilltop on the western end of town — has a capacity of 1089, but is only projected to have 25 students more than Congdon, at 649. 

We were told running up a bill of half a billion dollars on a massive consolidation project would “right-size” our schools for many years into the future. We were told many outright lies around the dirty trick called the Red Plan, and the whole town should be up in arms about it. 
 
The fiscal situation as it stands 

One bit of good news came out of this meeting: the district’s remaining deficit from the current year (fiscal ‘18) has disappeared due to a bump in revenue and a decrease in expenses. Just a week earlier, the Board faced the inauspicious prospect of rolling the remaining fiscal ‘18 red ink ($1.3 million) into fiscal ‘19, ballooning next year’s ‘base deficit’ to over $3 million. Administration at this point anticipates a positive balance of $200,000 at the end of fiscal ‘18, dropping the starting point of the fiscal ‘19 deficit (before adding in budget ‘adjustments’ required for ‘new investments,’) to a mere $1,637,102. 

Make no mistake, our public school district remains completely broke. Asked by the Board, CFO Hasler admitted the district “does not have a reserve fund at this time.” Superintendent Gronseth said he hoped to edge the reserve into “a meager, but positive balance,” while also acknowledging the district’s contingency fund is almost gone. Mr. G. calculated the remaining $300,000 contingency as ½ of 1% of operations, but it is actually closer to ¼ of 1%. With no backup for operations, there is almost no margin for error in the upcoming year. 

“The outlook on Duluth ISD 709 is negative, representing our belief that the district’s already depleted reserves and liquidity may continue to deteriorate.” Moody’s Investors Service wrote in its assessment of our public school system’s financial health last spring, as it downgraded the organization’s bond rating to sub-prime. 

Building from a base deficit of $1,637,192, Option A.2 added $3,021,400 in ‘new investments,’ effectively creating a total deficit (or, using the district’s euphemism: ‘total adjustments’ requiring cuts from other parts of district operations) of $4,658,592. Option C required cuts totaling $4,140,229.

Pressed into more clarity by Board questions, Mr. G. explained that “in option A.2, each site would have 80% as discretionary; in Option C, each site would have 70% as discretionary,” meaning educators would have more leeway to use money as they see fit in A.2.

The primary difference in outcomes between the two options was that Option A.2 raised the student/teacher ratio by 1.5, while C raised it by 1. Option A, from a week earlier, spiked the ratio by THREE students per teacher, so there was some relief in the room by these lower teacher losses--sort of equivalent to being given the opportunity to hobble around on a peg leg, rather than losing your head. 

 
The Board’s wonderful options

Board member Sandstad led the debate in favor of Option 2.A. Member Oswald thought Option C was the best (or least bad) way to go. 
“For me,” member O. said, “Option C costs less money overall. We have much less of a deficit to deal with, because it costs about $550,000 less. We don’t have to make as many cuts. That’s important. We increase minimum FTE (full-time staff positions) for every school in the district, and allow schools to spend their discretionary money on focused efforts to help their basic needs. Whereas, if they have less FTEs, they may use more of their (discretionary) money to cover staff, rather than for their targeted programs meant to help the basic learners catch up.” 

“The amount of money that we’re — I don’t want to say ‘playing with,’ because that is a horrible way to put it — ” Member Sandstad argued, “that we’re manipulating here, is the same in both options. (No new revenue was involved, just a bigger shell game played in one option than the other.) It’s just whether or not we are unequally distributing the General Funds building by building in Option C, or if we are equally distributing the General Fund money, and then laying the additional funds on top…”

“I’m hard-pressed to see how we can always talk about class size,” member O. countered, “and then make a decision to raise class size (even more.) That really doesn’t make any sense to me.” 
A vote on Option A.2 lost 3-4. In a second vote, the Board passed Option C 4-3, with Sandstad, Lofald and Trnka voting against. 
Member Loeffler-Kemp actually voted with member O., a very rare boardroom occurrence. Some of us in attendance nearly fell out of our chairs to hear her say: “I am in agreement with you, member Oswald.” Another interesting moment was Chair Kirby’s speech. In the two years-plus he’s been on the Board, David Kirby has been a man of few words, but tonight he spoke with some ardor. 

Mr. Kirby told his colleagues he’d recently heard from an East High School teacher who’d had “42 kids in each of his four classes.” Broaching an issue very fraught in society of late — school safety — the Board Chair argued for keeping class size as low as possible, because a teacher can’t form “a good relationship in a class” with such large numbers. 

Members Sandstad and Trnka and Mr. G. trotted out the usual DFL talking points about how all fiscal problems were due to a lack of adequate aid. Member Lofald tried to advocate to include more positive enrollment projections in next year’s budget: 
“You’re conservative!” She exclaimed to administration. “I’m saying, I’m NOT!!”
The Board’s DFL majority has long labored under the fruitless illusion that a stirring up a bunch of positive hype will stop people from putting their kids on North Shore Community School buses, as if those good people don’t know what they’re running from. 
But — hey! — if we’re going to promote, we should go all in and get the Duluth News Tribune to run one of its “positive” headlines: 

Down with the Doubters: Red Plan Promises Projected To Come True!
“According to our always reliable district sources,” I’m sure the Trib’s editorial page editor would be glad to write, “school officials are confidently projecting a jump of 1300 students next year: a mighty nice problem.” 

Besides “stabilizing” enrollment at 9600 students, the Red Plan was supposed to generate millions of EXTRA dollars from alleged operational efficiencies. 

$4,286,529 (and sixty-eight cents!) is listed as “available after Installment Lease payment” for use in next year’s budget. The budget option the Board passed at this meeting — Option C — requires operational cuts of $4,140,229. If the projected savings — $4,286,529 — were really available as promised, the Board would not only have the $4,140,229 covered, it would be left with nearly a 150 thousand dollar bonus. 

A capital investment costing hundreds of millions of dollars cannot go south in every aspect of its financing and every one of its projections without some blowback on the budget, but the DFL Boardroom Lords will hear none of it. For years, spewing happy talk and spinning excuses, they’ve circled around the big RED elephant in the room while our public school district has circled down the Dixon drain. 

De(nile) ain’t just a river in Egypt.