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I glossed over part of my article published in the last issue of The Reader.
I did this for two reasons: (1) the article’s length was already taxing The Reader’s space and (2) my years in the public arena has taught me that most citizens have a very limited capacity for enduring government minutiae.
The surest way to put most Duluthians asleep is to start lecturing to them about school district finance and state statutes. Within seconds, you will have to reach out to break his or her fall, as he or she collapses into a boredom coma.
If you want good government, however, you have to hang in there from time to time, and try to figure out just what your government is up to.
Our school district is using (the more-correct word may be “abusing”) some state statutes, with the help of some very slippery legislation slipped into a special legislative session, to shove through a multi-million dollar construction project in the center of our city without a public vote. Long-term maintenance revenue is being used to fund the project.
The first state statute involved in this artful maneuver is MN123B.595. This statute governs the use of long-term maintenance revenue.
The dos and don’ts of 123B.595
Subdivision 10 of the statute lists the “allowed uses for long-term maintenance revenue.”
Four uses are listed:
(1) deferred capital expenditures and maintenance projects necessary to prevent further erosion of facilities,
(2) increasing accessibility of school facilities,
(3) health and safety capital projects, and
(4) the statute also gives the school board authority to pass a resolution to “transfer money from the general fund reserve” to pay principle and interest on general obligation bonds issued for maintenance work.
Subdivision 11 lists the “restrictions on (the use of) long-term maintenance revenue.”
That money cannot be used for CONSTRUCTION OF NEW FACILITIES, re-modeling existing facilities, or the purchase of portable classrooms. It also cannot be used to “finance a lease purchase agreement.” (ISD 709 is still paying debt for these types of Red Plan bonds, called lease-purchase C.O.P.s, out of its general fund budget.)
LTFM revenue cannot be used to finance any fiscal agreement that creates installment or deferred payments. It also cannot be used for “energy-efficiency projects,” or to pay for “postsecondary instruction or administration,” or for any other purpose “unrelated to elementary or secondary education.”
One more catch-all clause in the statute lists “violence prevention,” “facility security,” “ergonomics” and “emergency communication devices” as other forbidden uses of this taxpayer money.
As all these do and don’ts clearly indicate, long-term maintenance revenue is not supposed to be used for anything but MAINTENANCE. The money is not supposed to be channeled into new construction. It is also clearly not supposed to be used for administrative facilities, or any other project not directly related to elementary, middle or high school education.
How are district power players get-ting away with using maintenance money in ways expressly forbidden by 123B.595?
How are they bypassing a vote and channeling maintenance money into the construction of new buildings for administration and transportation, buildings that have nothing directly to do with elementary, middle or high school education?
The simple answer is: Party Politics. The political network that works the levers of power in our school district is like a big extended family that reaches up through the state.
The DFL and teachers’ union-endorsed members completely dominate the boardroom and the district’s chief lobbyist, Jeff Anderson, is a former Duluth city councilor and prominent DFLer. Anderson has connections and access – the ability to huddle up and scheme with the DFL/union people who own all the local state legislative seats.
State representative Mary Murphy, who shepherded the legislation through the Minnesota House (and actually lives in Hermantown) is a retired Duluth teacher and long-time union member.
Former Superintendent, Bill Gronseth, who shoved this extension to the Red Plan through before he left town, was also a former Duluth teacher, still very sympathetic to the union and very openly pro-DFL.
Gronseth would show up at the DFL endorsement convention and work the room – hugging all the DFL and union bigwigs. The State Education Com-missioner is a former Education Minnesota (the powerful teachers’ union coalition) board member and president of the St. Paul AFT teachers’ union.
What the DFL and the unions want in Duluth, especially in our school district, the DFL and the unions get. It doesn’t matter what the rule says, the whole political system will bend and grant this power clique any EXCEPTION they want to any rule they desire to exploit or bypass.
As we saw with the Red Plan, nothing stops this group from getting what it wants. Rules, democracy, a public vote: All of it be damned. WE WANT THIS! We have the political muscle to do this, and might makes right.
This power group does always know what it’s doing when it comes to politics, however. By slipping this legislation into a bonding bill, all restrictions in 123B.595 are overridden.
This is the way you use power
MN Statute 123B.595 normally governs the way long-term facilities maintenance money is supposed to be used, but the statute used to “create the authority” for bonding, as the CFO called it in the boardroom, is MN Statute 475.
In the state legislation, approving this project and authorizing its financing mechanism (lines 152.21 through 152.26, subdivision 4, Bond Authorization,) it states: “Independent School District No. 709, Duluth, may issue general obligation bonds in an amount not to exceed $31,500,000 under this section to finance the school facility plan approved by the district and the commissioner of education under subdivision 1. The district must comply with Minnesota Statutes, Chapter 475, EXCEPT (caps added) Minnesota Statutes, sections 475.58 and 475.59.”
Watching this process makes me wonder how nice it would be to have such powerful family connections, relatives who can finesse exemptions to rules. MN Statute 475.58 covers “obligations, elections to determine issue.” 475.59 covers “manner of submission, notice.”
These two sections outline the proper way to go to the public for bonding authorization: how to give notice and how to hold an election to give the public a vote before issuing bonds and borrowing money for a project.
The legislation that was slipped through, under the radar, during a special legislative session, allows our school board to completely bypass these two messy problems. The school board does not need any bonding authorization from the public.
Twenty days before issuing the bonds, the school district just has to provide notice of the project to the public, as well as announcing the “amount of the bonds to be issued.”
The school board is currently scheduled for a public meeting on March 2, to get feedback on the sale of Old Central, a meeting ridiculously being held after the Project Manager contract has already been approved and signed.
Back to 1/29/20
During the school board meeting that launched all these political machinations, district CFO Erick-son declared that “we (district ad-ministration and its lobbyist, on behalf of the board) would be asking for an amendment for lease-levy authority.”
Again, leasing is a use specifically listed as forbidden for maintenance money under 123B.595.
Board member Oswald asked: “Could we ask the voters to approve this, if we really wanted to, rather than asking the legislature?”
CFO Erickson answered: “Yes.”
Of course the public could and should be asked. The reason the public isn’t being asked, just like with the original Red Plan investment that is now being extended, is because district leadership knows the public would not vote to approve this scheme.
The majority of Duluth citizens would not give their OK to being taxed for millions of dollars of maintenance money and then using the funds to tear down a 228,826 sq. ft. 50-year-old building and constructing another building (new accommodations for administration) in almost the exact same spot – a foolish project that won’t do ANYTHING for elementary, middle or high school education.
Board member Oswald asked Erick-son if taking this money out of the long-term facilities maintenance fund would “take away from other buildings that need to use LTFM facilities’ money?”
“Our intention is that it would not impact that,” the CFO respond-ed. “That this would just allow for additional uses of LTFM money. That would be our request for this particular legislation.”
“Would it increase our LTFM fund?” Oswald asked.
“Our LTFM fund – anything that qualifies – we are currently available to levy for.”
“And so, we would levy for that,” Oswald continued her inquiry, “and that’s what we’re asking the legislature to do? Is to levy for that money, added to our LTFM fund?”
“To utilize our LTFM process.”
Guiding Oswald’s query, Erickson put a very fine point on the spin: “There is a component to LTFM, but we already maximized that through our yearly entitlement. So, there is an aid portion (from the state of Minnesota) but that’s already been utilized for our yearly project costs.”
A considerable amount of government doublespeak, omission and spin muddied up this exchange. If you pass legislation that will “allow for additional uses of LTFM money,” of course using LTFM money for other projects (like tearing down a building and constructing a new one) is going to take that money away from its original intended purpose: maintenance.
The answer to Oswald’s question about whether this “amendment” to the rules for maintenance money would increase the district’s LTFM fund is: “No, it won’t.”
What the district did with this legislation is finesse a legislative end-run to “utilize the LTFM process” and raid the maintenance fund for other uses, so it could avoid asking the public directly for the money. No additional funding is created by this. No money is “added to our LTFM fund.”
All the matching state aid for the fund was already swallowed up, before this legislative maneuver was even hatched.
Subdivision 5 of the legislation states that “the commissioner of education must ensure that the long-term facilities plan under Minnesota Statute 123.595 reflects the savings outlined in the plan.”
I wish our worthy Commissioner would take a look back at all the “savings” we were ensured would materialize from the Red Plan: $122 million dollars worth, to be exact, and another $28 million from the sale of properties.
We were told these clever machinations would produce big savings for our town’s taxpayers and half the plan would be paid for. Instead the district’s tax levy rose from $11,940,373.81 when Keith Dixon stormed into town, promoting himself as our Fiscal Messiah, to $39,837,624.11 just 14 years later, in 2019.
This extension to Dixon’s flawed no-public-vote vision is the same as the first iteration: a lot of smoke and mirrors.
Using the maintenance fund in this manner will only leave ISD 709 even less prepared for the huge maintenance tsunami that keeps building up higher and higher.
Roofs on some Red Plan buildings are approaching a decade-and-a-half old. In the not-too-distant future, the tsunami of our school district’s maintenance need will burst like a huge Red Wave over the poor drowning taxpayers of Duluth.
When that happens, blame it all on Party Politics.
In the meantime, if you want to weigh in on the sale of Old Central, the public meeting starts at 6 pm on Tuesday, March 2. Use the East Third Street entrance and signs will direct you how to get to the gymnasium.
One person at a time will be allowed into the boardroom to speak during public comment. Only citizens who want to speak are asked to show up.
The school board wants commentary only about the Old Central sale.
Technically, as I understand it, citizens aren’t even supposed to bring up how the maintenance money saved by the sale of the old venerable building will ultimately be used by our school district.
I don’t yet know when, or if, we’ll ever get a chance to weigh in on this whole multi-million dollar venture that is moving quickly on the greasy skids of government, with no chance for a public vote.