Bumpy Budget and a Resignation

Loren Martell


Photo montage: Ted Heinonen
Photo montage: Ted Heinonen & Tip O' the hat to Alfred Gerald Caplin (Al Capp)


ISD 709 is the organizational embodiment of the character, Joe Btfspik, in the old Li’l Abner cartoon strip, who walked around with a perpetual dark cloud over his head. If you talk to the people controlling the boardroom — Superintendent Gronseth and the DFL-endorsed majority — they attribute the lion’s share of the blame for their misery on external forces beyond their control. They claim bad actors from the State and Federal level are fouling them up with too many mandates, not enough funding. Internally, on a local level, they are scapegoating the CFO, who has been put on administrative leave. 

I still can’t determine what, exactly, the charges are against the district’s CFO, Doug Hasler, except that he apparently is in the dog house because the 2019 budget was not completed in a timely manner, as well as vague charges by the Superintendent that “some inconsistencies” were discovered in the financial work that had been done. 

As for the claim that all the fiscal problems are due to mandates and inadequate funding, as the Superintendent pointed out during a recent Committee of the Whole budget meeting, “enrollment is the building block of the entire budget.” If you’ve invested half a billion dollars into a plan that is a 1000 students below its enrollment projections, you are going to have some homegrown budget problems. 

The bottom line worry for the district at the moment is that it needs the public to bail it out, but why would the public be inclined to do that? If a company in the private sector was in a fiscal mess like this — the very epitome of the hard-luck loser — what fool would just blindly and trustfully hand it millions more? 

Good money after bad? Without some changes in the way our school district operates, the citizens of this city may as well start using their money to start bonfires in their backyards. 
Committee of the Whole budget meeting, 6/26/18

In the absence of the district’s CFO (who I suspect was sticking pins in voodoo dolls while live-streaming the event from his home,) the district’s Finance Manager, Peggy Blalock, took over as the lead presenter during this meeting. Ms. Blalock is a pleasant women, with a calm, organized demeanor. I’ve often wondered what it would be like to be the district’s Finance Manager. 

I assume the job would be roughly comparable to being a fire marshal tasked with controlling a fire in a large building insulated with oily rags. 
About six years ago, Ms. Blalock’s Finance Manager predecessor told the Board that without deep cuts, the district’s budget would “fall off a cliff.” Recently the district pulled the former F.M. out of the sweet bliss of his retirement, to “consult” on the budget numbers. When our eyes met in the boardroom, he gave me a big grin and said, “hi.” He looked light on his feet. Instead of a couple of years older, he looked like he’d gained ten more years of life. Had the poor fellow continued working on ISD 709’s financial books, his friends would have probably already heard his eulogy. 

For those not closely following this saga, the meeting this evening was called because administration did not have next year’s budget ready for the Board to vote on during its regular June meeting. The Board reviewed and passed a preliminary budget, outlining spending parameters in March/April. As early spring moved towards summer, our representatives remained in the dark about specific details regarding spending shifts and cuts in expenditures, even though they kept begging administration for “updates.” 

When those specifics still failed to materialize for the Board’s review during the June Business Committee meeting, frustrations boiled over and the district’s CFO found himself sitting home on administrative leave. 
The Board is required by state statute to pass some kind of budget by June 30th, so this evening it gathered to gawk rather pointlessly at a faux budget--a thin little wafer of a document, still bereft of any specifics at all regarding their earlier directions to administration. The efficacy of the whole spectacle was best expressed by the Board’s most assiduous current public watchdog, Alanna Oswald:

“This budget (document) tells us even less than we voted on in April. I don’t feel comfortable voting on this — but I can affirm that I voted in April to see the further-developed budget.” Member O. went on to explain that she questioned whether or not the document the Board was given really “represents what I’d hoped it would represent.” She added: “I can’t see the correlation between what we approved in April, and what this looks like, now. I really have no frame of reference, (and) that’s really a hard thing to comprehend. I am putting my trust in you (looking at the superintendent) that this (scanty little outline) represents what it is supposed to represent. I still don’t know if I would approve the changes in the (actual) details, yet. So — I’m kind of torn as to what to do. And I hope that (what I’ve just said) explains why I’m kind of torn, because this (document) is so generic, and so not-specific in any way, it’s hard to understand.” 

“I would like to remind everyone,” the district’s top managerial figure, the Superintendent, responded, “that a budget is really an estimate, and that the ‘actuals’ are yet to come.” The conductor of this fiscal carnival ride, a death-defying twister best named after himself — the Super G — added in his trademark saccharine, lilting voice, “And so, it (this budget) is fluid, it is responsive…(which relieves me from being responsive in any specific way at all, and allows you to just lay your heads gently down and go back asleep, Board. As has been the norm for boardroom business since Mr. D. came to town, daddy clearly has it all under control.)” 

The Board was given two days to ruminate over a bare-bones document, aptly described as “generic.” Then it was supposed to report back and vote during a Special meeting, scheduled for that purpose. A still-undisclosed amount of money will be picked up by Duluth taxpayers, so ISD 709 can hire an outside firm called ARCC (Arrowhead Regional Computing Consortium) to come up with a real budget sometime in July. 

Two days later

No suspense, here. The Board trudged back into Old Central today, Thursday, 6/28/18, to vote to approve a faux budget and keep the State of Minnesota happy. One of the district secretaries, who has been monitoring Board meetings for the better part of two decades, told me it was the shortest meeting she could ever recall. It lasted 7 minutes. One amendment was added to the resolution, stating that the Board would “review” the real budget when it finally sees it, sometime in July. 

I don’t know how many people in Duluth are going to sleep better now. Our elected governmental body, responsible for fiscal control, has failed to “review” anything in a broke school district for months; and, come July, it will find itself under great pressure to rubberstamp whatever it is handed.
Adios, amigo

Following the action inside ISD 709 is like trying to keep track of a pack of spooked hominids swinging through the treetops of the Amazon forest. The Board met again, four days later, on Monday, 7/2/18, to conduct some secret business behind closed doors. The only people in the boardroom were myself, one other citizen, a reporter from the Duluth News Tribune and the district’s tech specialist. 

The DNT reporter sat by himself. The rest of us, grouped in the same general area, mulled over various district issues while the Board met in closed session. Taking advantage of having the tech specialist’s ear, I questioned him extensively in regard to all the issues surrounding the district’s recent decision to phase out all its SMART Board technology. 

SMART Boards and School Boards (Smart, and not-so-smart) were the original focus of the closing part of this article, but once again the ever-clamorous drama in the jungle’s treetops captured my attention. After about an hour, the Board reappeared from its hidden chamber behind the dais. The show began, and I knew I was going to be rewriting the end of my article. 

It was a short skit again, another seven-minute wonder, but every word was weighted and layered with meaning. 
“We’d like to reconvene after this closed session.” Chair Kirby announced to the room, then addressed his colleagues. “Board members: one of the options presented to us in the closed session was a resignation and release agreement. It was recommended to us that this was one of the most favorable outcomes in this matter. Would anybody care to make a motion to accept this agreement (to tear up a contract and part ways with our Chief Financial Officer)?”

There was a bit of confusion — tree branches rustling in the jungle — as one Board member tried to point out that they had to take an attendance roll call before voting on anything and Chair Kirby again asked for “a motion to accept the resignation and release agreement,” while two secretaries bustled into the room.

Once the secretaries were settled, the Chair repeated: “Once again, anyone care to make a motion to accept the resignation and release agreement?”
“I will.” Member Oswald volunteered.
“So--a motion’s been made to accept the resignation and release agreement. Is there a second?”
The Chair looked both ways, across the dais. Receiving nothing but blank expressions, he said: “I will second it. Is there any discussion?”
Again receiving no response, the Chair turned to the district’s HR Manager. “Mr. Sworsky, perhaps you would explain the financial terms of this agreement.” 
The district’s chief of personnel began to read these important figures without the amplification of a microphone, but was stopped by the only non-media citizen in attendance, who objected: “Use a mic!”
“He doesn’t have one!” The Superintendent and others objected, but the citizen, much to his credit, commanded: “Well, give him one!”
This was a perfect illustration of why it’s important for citizens to pay attention to their government. If this sharp citizen hadn’t spoken out, the terms of this agreement likely would not have been picked up on the YouTube recording. After the meeting, I shook the hand of this individual (who prefers anonymity,) and thanked him for sticking to his guns. 

Microphones were only functioning on the dais, so Mr. Sworsky climbed up to Mount Olympus, sat among the elected gods, and started rattling off the rules of the game: “Any payment to a highly compensated employee for settling disputed claims, whether or not the claims have been filed, or any payment to a highly compensated employee for terminating a written employee contract must be approved by the governing body at a public meeting.”

Mr. S. explained that both the district and the soon-to-be-ex CFO have “15 days after the public meeting…to reject or rescind” the agreement, then got down to describing the details of the buy-out: “The value of the financials for salary of this agreement for the terms of the agreement would be $63,817. The continuation of non-salary benefits, exclusive of HRA contributions, would be $12,220. 

The departing CFO, Doug Hasler, will draw half his $127,000 annual salary, plus continuation of his benefit package — health insurance, except for HRA contributions, and all other benefits--on the taxpayers’ dime. No longer a district employee, Mr. H. will still make nearly $20,000 more than the average income in Duluth, which is about $45,000. The $12,220 non-salary benefit part of his severance package is about what a minimum wage worker would earn in a year. 

What the Board had to say

Board member Gorham put his light on first: “I understand we have to a difficult decision to make. For me, it comes back to students, providing our students with as many resources as possible. My personal feeling is that my vote will reflect that.” 
It all sounded very high-minded, except that he neglected to tell the room what that vote would be. 
Member Sandstad said: “I really don’t like being in this position, and that probably — I don’t want to speak for all of my fellow Board members, but I think none of us really like being in this position. And we’re weighing financials; and we’re weighing trust; and we’re weighing the perception of this in the community. And I’m pretty mad about this, and this situation, and I’m not going to support this agreement today. And I don’t — I don’t believe it’s in the best interest of the district.” 

Member Oswald turned her light on next, and said: “I will be voting ‘yes’ on this agreement. I made the motion, because it’s the most reasonable offer that we had to choose from. I find no satisfaction from it. I also agree with member Sandstad that we shouldn’t be put in this position, and hopefully a vote will be--a vote. We’ll decide and we’ll move on, whatever our vote is.”

Chair Kirby made the last observation: “I agree that that this gives us no satisfaction, and it’s a difficult position. I agree with both of those things.” 
The Chair looked around and found no more lights on, so the Board voted: 4-2 in favor of the agreement. Members Sandstad and Trnka voted in opposition. Member Lofald was a no-show for the meeting. 
I would be remiss if I didn’t point out that the all-star DFL team this town’s ruling establishment painted as our boardroom salvation during the last election is getting off to a pretty bumpy start. No satisfaction, bad position? I also agree with both those things. For months, little but bad news has emanated from the local embodiment of Joe Btfspik. The district now has no reserve fund, no maintenance fund, no technology fund, no budget and no Chief Financial Officer. 

Thousands of taxpayer dollars are flying out the window, so a financial firm can come up with a real budget and the ex-CFO can float away on his golden parachute, without anyone even knowing precisely how he allegedly screwed up. 
Maybe this was the best option on the Board’s plate, but it made me wonder what the really bad options looked like.