Category Archives: Economics

Condescension in politics

I’ve mentioned to others that Hillary Clinton’s “deporables” comment was a catastrophic mistake.

The great irony of the Trump election is that blue collar workers who once voted in a mighty Democratic bloc now vote for the Republicans who are trying to tamp down Social Security, National Health Insurance and a dozen other protections that make the Koch Brothers think America is becoming socialist.

I was a Republican and a socialism supporter for years when my Mr. Russ, my high school social studies teacher told me in 1968 that America has a mixed economy – a little socialism and little free enterprise.

Back to the “deplorables.”

Here’s an important NY Times think piece that explains what Democrats must do, and do fast, before the Republicans use their former voters to cement in the Koch ideal.

And here in Duluth I’ve seen plenty of condescension from Red Plan supporters who ignored the uneven financial burden it placed on poorer voters who shouldered an unfair share of our shiny new schools. Many local elitists can’t wait to get rid of Art Johnston who keeps reminding them of the bone-headed financial planning that went into the plan which has hollowed out the teachers we need to teach our children.

Many of them stood on the sidelines cheering as he was called a racist, a bully, with a conflict of interest. All lies by my reckoning and made by folks some of whom were everything that they accused Art of being.

I don’t particularly want to conflate national politics with local politics but if the shoe fits…………..

Lifehouse CHUMS and their alter egocentrics

I gave up trying to fall back asleep at 3 and padded downstairs to read the third chapter of Dark Money. The first two chapters gave me the background of the 800 pound gorillas of the big money movement to turn us back to the Middle Ages. They covered the Kochs and Richard Mellon Scaife. The third covered both the Olin Foundation and Milwaukee’s Bradley Foundation. This book is reminding me of forty years worth of sporadic reports and tying them into a comprehensible bow. I certainly believed there was something behind Hillary Clinton’s “vast right wing conspiracy” and this book lifts the veil. The “conspiracy” is all perfectly legal or at least legalish and court rulings like Citizens’s United have vastly if I dare use that adverb, enhanced the power of the big spenders.

I dimly recalled a news story about about some rich guy, (it was Richard Mellon Scaife) putting up a sign in his neighborhood announcing the loss of his dog and wife and offering a reward for the dog. But now I know more about this bonvivant. His rich and conservative Grandfather, Andrew Mellon, was the Secretary of the Treasury for all three Republican Presidents of the 1920’s. He also was a prolific tax cheat and his grandson took up his motto, “Give tax breaks to large corporations, so that money can trickle down to the general public, in the form of extra jobs.”

This philosophy makes for an interesting contrast to last night’s fundraiser for Life House which takes care of discarded young people. Scaife and his silky ilk generally decry coddling the weak putting a much higher premium on protecting the assets of America’s aristocrats. The hundred’s of million Scaife donated to “charity” largely went to maintain his and other rich folks wealth not to the needy.

Claudia and I sat down with some of the people she has been working with at the CHUM homeless Center. Spending the last few months checking people in has been eye opening for her. Seeing someone released from a hospital near death’s door looking for a place to sleep on the floor has a way of impressing itself on the imagination. A young couple sitting next to us volunteer at Life House as I did three years ago. We were a jolly crowd. Our speaker Famous Dave of Rib fame gave a rousing talk and I learned he was half Choctaw, a much larger percentage of that tribe’s heritage than my grandson has but enough for me to some kinship with the Rib Master.

I suspect the billionaires club would consider the Rib magnate an exception to their rule. Milwaukee’s Bradley Foundation financed the infamous 1994 book the “Bell Curve” which posited that blacks were intellectually inferior to white folk. Indians probably didn’t fare much better in the analysis.

There is no end to the unpleasantness emanating from Milwaukee. Its not just my old nemesis Johnson Controls, its Governor Tommy Thompson’s call to make poor people work for their welfare while Republicans happily outsourced decent factory jobs overseas. (Bill “Triangulation” Clinton latched onto both of these planks for his Presidency.) Its also the Milwaukee County Executive, Scott Walker, union buster extraordinaire and Koch Brother favorite. Its also a dreamscape for Secretary of Education Besty DeVos’s world of public education vouchers. I wonder where Billionaires fit on the Bell curve?

Famous Dave, who is a generous contributor to the needy, showed us pictures of his vast and messy library. He told us he reads for hours every day and gives his faithful reading credit for the half-billion-a-year enterprise he built off of a $10,000 business loan. That’s quite a contrast with our current President who can barely squeak through a teleprompter but then again, Trump inherited his start in life. I’m afraid Trump gives billionaires a bad name but the Koch’s are stoked. It was reported today that they are following up their $800 million investment in the 2016 election with a $300 million push to pass Trump’s tax decreases on the wealthy and ending the estate tax before Trump’s impeachment after which the GOP might be hard pressed to help the filthy rich.

The fifth “C”

Last night I decided to skip singing in our church’s Maundy-Thursday service to attend Denfeld’s meeting where parents concerned about their children getting the short end of the stick reported back findings after a similar meeting a month earlier.

Much of the meeting was a repeat but I did note some information that I will keep in mind for future reference. In particular one MOAB. Mother of all Bombs (for you current events fans)

One of the speakers of glittering generalities listed their group’s “four C’s,” Communication, Collaboration, Creativity and Commitment. But then the bomb dropped. It was a fifth C that I remember well from my early years – 1996 through 2003 – on the School Board – Compensatory Education.

This is one of the extras in state funding for public schools to address serious needs over and above their “base” needs. Do you have a vast school district with long bus runs? The state gives your district extra money for gas. Of all these extras Compensatory Education funds are perhaps particularly important, especially in this day and age where we wring our hands over the achievement gap between have and have-not students.

In my first two stints on the School Board my western colleague, Mary Glass, complained bitterly about how comp Ed dollars were spent going to schools in the east that did not generate much of the funds. I talked to administrators I trusted and learned that they were abiding by the laws which gave District’s a lot of discretion about where to spend the money. In ISD 709 we use some of this money to keep class sizes down across the entire school district.

In my old days we had much smaller class sizes, better funding. I wasn’t convinced that a tilt toward the East was all that outlandish. But that was then. Red Plan financing has forced us to take $3.3 million each year out of the General fund to pay off building bonds (something Art Johnston was irritated wasn’t mentioned in this otherwise excellent budget story.) And our voters are so jaundiced about the Red Plan that they have refused to pass a fully fleshed out operational levy which could add another three million to our budget. That’s at least $6.3 million dollars which @ $96,000/average teacher salary would allow us hire an additional 66 teachers. HOLY COW!!!! Thank you old school boards for short changing today’s school children.

The achievement gap in Duluth has never been any wider than it is at present. And last night for the first time ever I saw a side-by-side list of which Duluth schools children generate State Compensatory funds and which schools consume them. Talk about adding kerosene to the fire.

For the uninitiated – Compensatory Education funds are simply called “Comp Ed.”

School……………Comp Ed Earned…….Comp Ed received

Denfeld……………$852,007.00……………$684,128.00
East…………………$136,555.00……………$518,212.00

Lincoln Park……..$973,192.00……………$496,264.00
Ordean/East…….$203,578.00……………$436,741.00

Congdon………….$ 95,567.00……………$400,548.00
Homecroft……….$ 79,622.00……………$295,671.00
Lakewood…………$ 70,212.00……………$181,315.00
Lester Park……….$ 65,506.00……………$324,110.00
Lowell………………..$287,330.00……………$440,228.00
Laura MacArthur..$849,445.00……………$503,071.00
Myers-Wilkins…….$971,153.00……………$573,732.00
Piedmont…………….$715,138.00……………$532,207.00
Stowe………………….$446,994.00……………$402,512.00

What ISD 709 is doing is perfectly acceptable under the language of State Statute. Whether it fully comports with the “spirit” of the law is another thing.

That hotel cleaner you didn’t tip

“Maybe she wipes your child’s face at day care. Maybe he mops the floors at your church. Maybe she makes the beds in the hotel you stay at. Maybe he trims your shrubbery and mows your lawn. Maybe she lifts your elderly aunt in and out of her wheelchair each day at the nursing home.”

My wise school board colleague, Alanna Oswald, shared a column on what it means to be poor with the rest of us. It rings true to her. I recommend it. Here’s another sample:

“But today all that was about to change. She had landed a new job — still minimum wage, but this time with dental coverage. She sat in the waiting room, praying that today would be the day the pain finally stopped for good.

The dentist called Nicole into the exam room, poked and prodded a bit, and listed some treatment options. Nicole crossed her fingers.

But then he stood up and shut her file abruptly, not even trying to hide his disdain. “Look, there are plenty of things we could do,” he said frostily, hand on the doorknob. “But if you’re just going to let everything go to hell like this, there’s really no point.”

And the door clicked shut behind him.”

“Big Trump” or “Little Trump?”

My Buddy sent me this thoughtful appraisal of how the stock market in the US is taking Donald Trump in stride. The Atlantic column takes no stand on Trump. It just lays out the possibilities for Trump either cratering our economy or being irrelevant. Its not very long.

My guess is that he will hurt significantly especially in the huge swath of Red States that depend on Agriculture. Foreign travel is down too. Foreigners have always been hyper sensitive to the idea that the US is the wild west with gunfights breaking out everywhere. The news from my old Homestate, Kansas, today won’t help that perception. That story is already running on Indian media.

I’ve read enough stories that suggest doom and gloom in various economic quarters that I find the idea of a “little Trump” imprint on the economy wishful thinking. Maybe that’s wishful thinking on my part.

“The Little Trump hypothesis regards these fears and declares: “meh.” Instead, it posits that the president will be a loud yet minor figure, sound and fury signifying nothing; a wannabe superhero hemmed in by the limited powers of the executive branch. Rather than rule like a populist demagogue, he will mostly sign bills written by his pro-business staffers and approved by a pro-business Congress. There are extremely smart people who believe in each hypothesis. But the theories are mutually exclusive. They cannot both be true. No matter what happens in the next few years, a lot of people are already wrong about Donald Trump.”

The Big Short

I put this movie in my memory bank over the last year when some economic analyst on NPR gave it a big thumbs up. Last night I saw that it was available on Netflix and Claudia and I watched it. It was Economics made fun and every bit as disgusting as a Zombie Apocalypse movie.

The Housing meltdown roughly coincided with the start up of the Red Plan and its purveyors shared many similarities to the get off scott-free, big money folks who pushed replacing almost all our facilities at a single stroke. They got rich and left the District to draw down its reserves, cut teachers, and compound it all by sucking millions of dollars annually out of our local tax levies in the General Fund to pay off Red Plan borrowing. Their supporters herd-like thinking reminded me of the people in the Big Short who stood back in disbelief as investment bankers cost six million Americans to lose their homes.

I’ve mentioned this before but that meltdown was part of the reason I had a heckuva time fighting the Red Plan. My family got caught up in the housing mania and a massive loan was taken out on my Mother’s house even though it was only a decade away from being paid off in full with very modest house payments. I’ve recently patched up my differences with the family members who lost that house and left me to spend months and months trying to get City Bank and Wells Fargo to let us short sell the house at a loss (for the banks) who eagerly permitted the misguided loan to go through. Our “short sale” took my brother and me months of calling the banks daily to find a human behind a phone. It was all I could do to find time for two simultaneous battles. When the sale neared completion and I finally pulled out of the Red Plan fight I took a vacation with Claudia. I faxed the last papers to the bank while traveling through, Lincoln, Nebraska, on our way to the Colorado Plateau. I was desperate to get out of town. I was so worn out that I got violently ill at the Grand Canyon. One morning Claudia heard an elk bugling outside our cabin and she thought it was me in my deaths throes. That’s what you get for burning your candle at two ends.

This post needs a good editing but that can wait. Claudia and I are going out to see Hidden Figures. That should be a good film too.

Editing is now complete…….

Hidden Figures is great.

Could Trump become a successful President?

My “Buddy” recently sent me a critique of Hillary Clinton and a prediction of her failure to beat Trump written by a nemisis of the Republican Party – Michael Moore. I thought it prescient and replied to my Buddy in this way:

An excellent prediction that was very much aligned to my way of thinking. And I don’t rule out the possibility that Trump may luck into being a successful President. But I will feel compelled to be one of his many tiny nettlesome critics. I hate it when some Napoleon takes the crown from the Pope to put it on his own head especially when the Napoleon is like a spoiled fourth grader.

Today my Buddy sent me a link to this page about Berkshire Hathaway’s famous invester Charlie Munger. I found it reassuring because I mostly agreed with his investing strategy but then I noticed a link to the three things Munger and Trump agree about. To my great surprise I mostly agreed with them too – 1. the dangers of untrammeled free trade, 2. the termination of the Glass Steagall Act, and 3. the drawbacks of corporate income taxes.

It would be amazing but not unprecedented for the embodiment of a spoiled fourth grader to succeed.

How yesterday started

Yesterday I got a lousy night’s sleep. They seem to have come back again with the beginning of the School Year after a relatively blissful summer. Coincincence I’m sure.

During one of my sleepless hours the night before I’d made up my mind to visit Congdon Elementary School that morning at the beginning of its school day. I’d gotten the sense that the school was a little more disordered in recent years due to myriad changes in the School District. But all those sleepless hours resulted in me waking up at about 7:15. (I don’t often set alarms anymore) By the time I’d fed the cats, completed morning chores and cleaned myself up it was ten to 8. I was afraid the busses had long since dropped off the children but I drove over anyway. For the past six months I’ve been making up for the hideous first two years of my service on the School Board. I had stayed away from schools lest employees be brought under suspicion for being seen in my presence. I know that sounds, well paranoid, but it was a concern I had. Twenty years ago I used to joke with another school board member that our school board’s slogan ought to be “Just because you’re paranoid doesn’t mean people aren’t out to get you.” If its any comfort to my readers, and it shouldn’t be, I always worry that everyone in the District is paranoid about me especially what I might write about them in my blog. Mostly I give our employees a pass. As for my fellow elected officials……..I just write what I see, experience or hear tell about them. We are the elephants fighting in the African proverb about trampled grass.

When I got to Congdon it was quiet as a mouse. I’d only seen one parent I knew crossing the parking lot to get to the school. I signed in and introduced myself to the Office denizens and explained my intention and my failure to get to the school before the busses. I told them I’d walk the halls for a few minutes and make sure to get to Congdon earlier next time. On my way out of the office I followed one of the staff members to her office. When I asked her what she did she told me she was working with the homeless children. That rang a bell. I asked her if it was her name on the new emmployee list I’d perused at Monday’s Human Resources Committee. She affirmed that this was the case.

I asked her how many homeless kids went to Congdon. Forty she replied mentioning that there were about 80 such children at Myers-Wilkins (the old Grant School) and some more at Piedmont Elementary.

We spoke for about fifteen minutes before I went on my way. What I was assured of was of great importance to me. These kids going to Congdon, Myers Wilkins and Piedmont are allowed, encouraged even to continue on at the same schools no matter where they may move to while living in Duluth. That’s called stability and transient children need this desperately.

This is a vast improvement over the situation that existed when I was first on the School Board. I’d agonoized over “transient” children in those old days. These were kids who might find themselves in a half a dozen different school within a single school year as their rootless, homeless families wandered from residence to residence or even the back seat of a car – if they had one. Back then Congdon, being situated as it was in the posh Congdon neighborhood, didn’t have many homeless kids. Today it does and even handles more than its “share.”

My walk around the hallways afterward reminded me of the old orderly Congdon. Some of the teachers from Congdon I’d met at Denfeld on August 30th averred that class sizes were a little too generous but I saw no evidence of chaos in my walk through. Whew! That “Whew” said, its still early in the school year.

Among the news stories mentioned in the previous post that had me in their grip was one about Minnesota’s poverty rate reported by Minnesota Public Radio. The story reports that Minnesota has the second lowest poverty rate among the fifty states at 9.1 percent. Having mentioned homeless students I should add that Duluth’s poverty rate is significantly higher than the rest of Minnesota’s rate and that poverty affects children on average more than the adult population.

The DNT had a chart of National poverty rates going back to 1960 that I couldn’t help but contrast with the Op Ed piece the Tribune commissioned from the conservative blogger, John Hinderaker, of Powerline.

Hinderaker makes the case that the reason for Minnesota’s falling from the top to the middle of prosperous states is because of a couple decades of high taxes. I’m not so sure. Republican legislators have managed to fight state tax increases pretty successfully for the past fifteen or so years of this new century. A case could be made that the taxes not spent in education and fixing up old infrasctucture blunted our economic growth. As evidence I’d offer Minnesota’s economy from the 1970’s through the 1990’s during which Minnesota’s growth exceeded that of most other states while we were one of the five or six highest taxing states.

Furthermore, the MPR story about the nation’s declining poverty that ran in the DNT also included an intesting graph showing the decline and leveling off of the nation’s poverty rate from 1960 to today.

Hinderacker might be advised to look at the steep decline in poverty from 1960 to 1970. That was during LBJ’s War on Poverty and judging by this evidence it did a marvelous job lowering poverty rates until 1980 when the Reagan Revolution, with its War on Welfare Queens, left us with a mildly fluctuating poverty rate plateau of 12 percent. That’s half of what it was when Jack Kennedy was elected President. Its been stubbornly stuck there ever since.

Will 709 still be able to refinance our Bonds and get a 3% savings?

Loren Martell’s column written before yesterday’s stunning Brexit vote noted that our Bond Advisers warned us that the economy was fickle. Today the stock markets are about to take a steep plunge. What will this mean for the municipal bond market? It couldn’t get much lower than it currently is which makes a reduction in interest rates possible. If it begins to rise I think ISD 709 will find refinancing our bonds untenable. If stocks become less attractive investors may want to hedge their bets by moving to municipal bonds or avoid them all together. The switch could be almost immediate and I can’t predict the consequences.

In addition to soiling our own community the World is busy turning upside down while Donald Trump cheers it on from his Scottish Castle. (Vultures always live it up when an elephant dies) My Buddy sent me this cheering email:

For those of you who are looking for a tall building from which to jump.

From http://www.bloomberg.com/news/articles/2016-06-24/nightmare-coming-true-for-stock-bulls-blindsided-in-brexit-shock:
While the majority of forecasters see less impact in the U.S. than in Europe, the consequences for American investors could be severe, as Brexit’s passage joins a host of other threats that have weighed on equities. Profits are falling, valuations are the highest in a decade and the U.S. just reported the worst hiring since September 2010.

The BIG objective

This will be so brief my readers will wonder why it took me so long to compose it. Well, the reason is that I expected to write War and Peace with footnotes.

Just now I got another email from a parent who wants me to replace the rubber tire mulch. Frankly I’d spend the $400,000 just to offer parents peace of mind at a time when so many think our administration and school board don’t care about them. Losing 40 kids more would cost about $400 grand at $10,000 a kid. But that kind of reasoning my not cut it with a school board that just turned up its nose at $14.2 million. It has also turned up its nose at Qcomp and Alanna Oswald just showed me the document that demonstrates our do nothing legislature just pulled the plug on our getting any of the million plus we were once entitled to.

So the little objective was saving one or two teachers (about $180,000) to keep a Zero Hour while the News Tribune is editorializing that we should spend ten million to fix up Old Central – $18 million if we don’t get a grant to help us.

The Big Objective is finding one, two or three million annually to put back into our budget. It could be used to fund a seven period day. There seems to be one obvious way to do this and it would be great because the Red Plan promise to save $5 million a year has proven to be a bust. Our Finance Director, William Hanson, has told us repeatedly – for six years – that there is no way we could do this and for six years we have used what should be classroom money to pay off Red Plan Bonds.

I find it hard to believe Mr. Hanson. I see no reason why ISD 709 can’t do what any homeowner has traditionally been able to do – refinance our loans. Art Johnston has worked up amortization tables which suggest that if we took twice as long to pay off our remaining Red Plan debts we could keep a million or much more in our General fund each year. The trade off would be paying for the Red Plan an extra ten or twenty years. But right now we are hemorrhaging students from our half billion investment in new school buildings. We need to stop that and make our schools the magnets they once were – before the Red Plan.

If I learn that we have had this opportunity for the past six years and sat on our thumbs. Well, let’s just say I won’t be happy.

Holy COW – Committee of the Whole

As we contemplate putting an end to, among other things, the Zero Hour due to an anticipated $3.3 million shortfall I’ve been noticing a lot of email, mostly from parents, decrying the potential losses. I hope they are being read by my colleagues on the Board with more attention than the email we recently received about another hot button issue. I’m a glutton for feedback and consider this blog something of a feedback loop to a more general audience.

I sent some political pointers to one of the students who wrote to me recently about zero hour. This is what I told the student to do:

Be sure to tell them [fellow students] that a push on multiple fronts eg. Letters and emails will catch more public attention. I think my colleagues on the Board would like to avoid another controversy following so shortly after the issue of the Central sale.

We have one adm leader who says of the zero hour that it is unfair “inequitable” to poorer kids who can not travel as easily to school. This is no doubt true but I would argue that at a time when we face a lot of concern about class offerings and an exit of students we have to stop the exodus first in the same way doctors at a triage unit at a battle target the most critical injuries first.

Besides this cost is almost negligible in the context of the $3.3 million shortfall we anticipate.

Email and letters to the editor. Don’t neglect these avenues of communication. School board members are susceptible to public pressure. Except for me. Too much scar tissue so that numbness has set in.

My friend from church choir who says I have a penchant for stirring the pot is undoubtedly right. He just failed to note that I’m in the soup too with all the potatoes, carrots and cabbage.

I have the sense that our Administration has neglected to inform school board members about the fiscal realities that we face. I’ve repeatedly attempted to make sense of our finances first two years ago when we approved a teacher’s contract, the negotiation of which I was prevented from sitting in on, much to my chagrin. A little after that Art and I tried to dig into the Red Plan finances in hopes of tagging Johnston Controls with some responsibility to help our District out as so many of its initial promises proved illusory. That just seemed to drive the rest of the Board to remove Art from our midst and I lost my bead on finances for the year-long fight that followed. More recently the non sale of Central has had me looking at money issues.

I prepared a document for the rest of the Board about the plan to sell buildings to finance the Red Plan which has only yeilded $3.6 million of the $27 million we had hoped to raise to defray bond costs. In addition to that part of our current shortfall I looked at another PR document from early on in the Red Plan which mentions that Energy and operational efficiencies would account for up to 13% of annual savings. I’d noted that this had not materialized to the extent we had hoped. One of my alert readers sent me an article I’d forgotten all about that I’d put in my blog. It notes that:

“Red Plan manager Johnson Controls estimated in 2007 that roughly $830,000 would be saved annually in heat, electricity and water bills from the closure and consolidation of buildings and the use of new and renovated schools. In 2012, the district saved less than half that: about $395,000. Once schools like Central High School and Morgan Park Middle School are sold and the Red Plan is complete, annual savings should total about $700,000, said Kerry Leider, property and risk manager for the district.”

$440,000 annually is better than the cost of four teachers a year. These things add up. I’ve mentioned before that since 1997 we put about ten million less annually from our local property taxes into the classroom. That’s about 111 teachers. And more recently an old School Board member, Rich Paulson, who has been bird dogging our finances for the past six years told me that our health insurance contracts changed in 2009 in such a way that the District saw a jump of $3 million the following year as we began HRA’s for our staff or “Health Reimbursement Arrangements.” I came home with lots of information to review before we meet next Monday for a Committee of the Whole on our Budget. Three million a year is another thirty teacher’s worth of expense.

If ever a school board needed to focus on finances its the Duluth School Board. Unlike most school boards in Minnesota our Board has had precious little experience in negotiating our contract and probably even less in understanding the finances of our District. If we, as a Board, ever hope to get a handle on class sizes and course offerings we need to up our game.

Money isn’t just the “mother’s milk of politics.” Its the Mother’s milk of education. I’d call it a holy cow.

Visit Duluth

My first order of business today was to head up to the church men’s group meeting and introduce the CEO of Visit Duluth, Anna Tanski. I am a pretty nominal member of the group but I end up writing the promos for our speakers to the church bulletin and often leading the group in church hymns to start the meetings.

I’d seen Anna on Almanac North a week ago but managed to forget to mention it during my introduction of her to the group. I didn’t forget to zing her for being a Packer fan however so I got the important stuff mentioned. Anna passed out the pamphlet that visitors to Duluth get and I marveled at the pictures. What a photogenic city we live in. There is a lot to do in our area and Anna said that area taxpayers are able to reduce their taxes annually by $300 because of the taxes paid by tourists. As I think about that now I can’t help but wonder if ISD 709 couldn’t justify raising taxes next year using that as an excuse. Times 30,000 households that would be $9 million bucks. That’s about how much we have diverted from our general fund to pay off Red Plan Bonds. It would be nice to have that money back for the classroom. Sorry, Visit Duluth. That’s the kind of heretical thinking a desperate man clings to as he faces the ocean pouring over the edge of the Earth.

This comes from our tourism taxes on the 3.5 million visitors Duluth attracts each year although I presume some portion of this comes from Duluthians who eat out at area restaurants. Don’t get me wrong. I’ll take it and much more if we can boost our tourism numbers.

As we closed our meetings and wandered off I passed on an idea that had been rattling around in my head for ten or fifteen years. I suggested to Anna that it might be a good idea to offer a booklet like the National Parks (and even Minnesota State Parks) give out to their visitors modeled after a passport. They encourage visitors to get their “passports” stamped each time they get to a new national park. I suggested Duluth could do the same thing. We could have area white water rafting, companies or ski hills or the Zoo or the Vista King stamp passport books of our area attractions. Then for people who fill enough slots we could offer some premium, a discounted meal at an area restaurant perhaps, although I think just filling up the booklet would be its own reward.

We might even have a “club” for people who get the entire booklet filled in with checkoffs or an award for the people who get the most area attractions visited in a single year. If we boosted lodging and restaurant taxes enough maybe ISD 709 could justify a cut of the action.

Of course, the subject of the Central site came up. What might it do for tourism? Anna mentioned that one developer had come up with the idea of cable cars or a tram or something but shelved the idea because of the fear of liability. Its an interesting idea but I have to admit it might be serious competition for Enger Park which already has a spectacular vista to Central’s west.

Anna commented with a nod to me that I might know something about the difficult politics of this town on the subject of the Central site. I told Anna I had no idea what she was talking about.

I am stalling a bit, sorry

The last few posts have been fun digressions which are helping me pass the time while I try to address the second big question I asked in the post that revealed that our White Elephant on the Hill is probably only worth $7 million dollars. That question is how desperately do we need to sell that building?

The answer is, we are very desperate. We need to stop the flood of children out of ISD 709 and do it today. A couple hours ago a parent sent me this information to my school board email address:

Hi Harry

thanks of getting the hearing on mon.

late this wk the district sent emails to students saying they were eliminating zero hour in the high schools. were you aware of this?

this will make many students have to choose between music and language

this should put a new twist on the edison sale debate

The XXXXXXs

Geez. No kidding! I wrote them back explaining that I mentioned this very cut in my upcoming Monday column in the News Trib.

I’m almost at a loss to explain the obvious – that the emperor has no clothes. The three board members who retired should have been aware of this for crying out loud but they retired from the Board spouting the old line that the Red Plan had led to massive savings. I wish our Finance people would explain this to our Board but we still have this nonsense designation we call “savings” which is nothing more than millions of dollars of cuts to our program and staff. Its like describing starvation as a “diet.”

I just wrote another helpful soul this about what I would do with the proceeds of the sale of Central:

An important part of that answer relates to the District adverts for the Red Plan suggesting that half of it would be paid for by savings, efficiences etc. That, of course, is bullshit and we are still drawing money out of the General fund to pay off debt service. (BTW I for one do not want to put the Central sale money into Debt retirement. I would rather ask voters for their permission to do it when I run for reelection. In the meantime I’d like to use the Central sale money to shore up our offerings for a few years to stop the loss of students.) But that’s beside the point of what I need to tell the Board members.

Meanwhile, as I struggle to give the four members of the Board my analysis I’ve finally figured out how to show you the nonsense documents that our District used to hype the idea that the Red Plan was largely paid for by “savings” and putting an end to “inefficiencies.” No, No, No. It was paid for by classroom cuts and teacher layoffs. The imminent loss of the zero hour is just the latest victim of this flim flam…….Oh how to convince the doubting Thomases that this is true. Woe is me. Woe is me.

Check here for the three documents. And as you peruse them remember the old slogan, “WHEN YOU SPEND LOTS OF MONEY AT OUR STORE THINK HOW MUCH MONEY YOU WILL BE SAVING!!!!!!!”

This one is my favorite:

Gambling on Central

I will have a busy morning of blogging once again based on stories in today’s Trib. But first an old story from 2012 sent to me once again by my old Let Duluth Vote ally. Its part of the continuing story related to decisions made by the City of Duluth for development of the Central location. I found this sentence near the end particularly interesting as it ties in with one of today’s Trib stories related to the threat of the Fon du Lac Reservation becoming a tax free cancer inside Duluth:

“One resident brought up a popular rumor about the site, that it could become home to a casino. Hamre said the business park classification would not allow for such a use. It’s a protection city planners were careful with after public discussions last year, Hamre said.”

NOTE: This 2012 article begins at the end of this post and is posted in full.

I am troubled that the Feds are allowing Fon du Lac the power to buy up downtown Duluth and make it soverign reservation land free from Duluth’s taxes or regulation. Of course, on the one hand I think to myself of the poetic justice this inflicts on the larger europeanized culture that “stole” the land from native Americans but on the other I can see a devastating threat that such a tax loophole would pose. It would advantage all manner of developers who the Casino might bring in to build in what may become a prime tourist area in the years ahead. Under this Federal restriction, the City would be powerless to prevent Fon du Lac from waging a potent economic war against the City and non Reservation businesses.

I’ll be the first to admit that the original agreement thirty years ago to let the Casino be set up in Duluth’s downtown was not an act of charity on the City’s part. I will also acknowledge that some of our politicians of that Era may have been condescending towards their Fon du Lac partners. But that hardly excuses the Reservation being granted the power to be equally contemptuous of the needs of Duluth. I’m not sure our new Mayor Emily Larson has what it takes to defend the City’s rights in court where the fight against this threat should be made. BTW. I’m pretty sure that Wally Dupuis, who took over from Karen Diver used to be a student of mine in the Proctor Schools.

Not that losing tax base is all that big a deal. Central is likely to be sold to someone as a TIF District which could exempt it from paying property taxes for up to a quarter century or more. And today another story demonstrates how eager Rep. Simonson is to give the site away to a developer by excusing them from paying sales taxes on any construction they undertake on the site.

I see that Chair Harala accompanied Supt. Gronseth to St. Paul to defend the deferred sales tax. She’s a busy person having also stayed with the rest of the Board through over three hours of testimony last night on the possible threat of rubber mulch on our playgrounds.

I could thoroughly understand her lack of enthusiasm when I handed her the prospective call from three minority members for another long meeting next Monday night over a renewed discussion of our policy forbidding a sale of Central to a competing school. Unlike one of the Board members who breezed into last night’s meeting fifteen minutes late and left a little over half way through the meeting Chair Harala doggedly sat through the entire discussion with the rest of us sans Alanna Oswald. Alanna drove down to St. Louis to watch the Denfeld Robotic’s team on which her son is a member and which she helps coach. Here’s today’s Trib story on that.

Ms. Oswald will not be the only local in the cheering section. Rep. Simonson is flying down today NOTE CORRECTION with Principal Sconiers to witness the achievement and competition. I guess Erik is now the official savior of Denfeld although I don’t know how preventing an agreement with the DPSA Charter Board to put a cap on its future enrollment gives Denfeld any long term protection. My email Buddy sent me an email with a link to this story in the Trib asking me if this wasn’t some sort of “shell game” over taxes. I told him I didn’t thing shell game was the most apt description. The glorious Central site is fast becoming the School District’s white elephant. The original “white elephants” were sacred elephants that the Siamese King gave to his rivals in the Kingdon knowing that their upkeep would bankrupt them.

Here’s that story from the

DNT, April 27, 2012

Duluth school district officials say they’re encouraged by revisions to the city’s plan for redeveloping the former Central High School site after an early plan left them concerned the site would be hard to sell. Continue reading

Tough email 1

I have been challenged in some recent email. Here is one email with my reply. My comments are Bolded:

You’re the numbers man! This is why more people should be listening to you!

So, another way to word the question: Why sell a valuable asset to pay for operational expenses, when the land isn’t going to depreciate and is subject to rises and falls in market value?

The land costs us nothing but an empty building costs $170 grand a year to maintain. It will cost either a buyer or us, the seller, to demolish it as it is only useful as a school. That could be up to $2 million.

When I served on the Board before I learned we had scads of land from the baby boom days that had been acquired, often through tax forfeiture, that we held in reserve for future building of schools. That land cost us nothing.

But remember, the Red Plan financing was based in part on selling old schools. We were to raise $23 million to offset bonding expenses. So far we’ve sold $3 million leaving us $20 million short.

Worse, we predicated our spending on savings of $5 million a year. That has been a fantasy. So we are supposed to be realizing savings and selling off old buildings to pay for the bonds and it ain’t happening. Something has got to give and so far that something is big classes and fewer courses.

Sure we could sit on the land but we are being sat on by heavy duty bond repayments. We don’t have the luxury I enjoyed as a Board member before the Red Plan was adopted.

Nobody sells their land to pay their daily expenses. That’s what I was getting at. You’ve got the best land in the city. Why sell such a valuable asset to pay operational expenses when that money is simply going to be poured through the existing “hole” in the general fund “bucket”?

People who are bankrupt sell their land. Besides, no one is nibbling. Hardly anyone has nibbled for five years. We are so desperate that Rep. Simonson is pushing legislation to save any developer of the Central land by scraping their sales taxes on building supplies.

In fact one of Mike Mernicki’s selling points is under threat – selling the land to put back on the tax roles. But we have already talked about setting up TIF’s which would defer all property taxes for perhaps 20 years. Goodbye property taxes.

School District’s are just not set up to realize big profits on land sales.

It’s not solving the problem any more than if I sold my house to buy bread. Nobody does that. Sure, this is the best offer you’ve gotten and maybe the best you’ll get for a while. But considering the reserve fund was depleted to pay for the Red Plan, isn’t that land your new reserve fund (so to speak)? What will that land be worth in 10, 20, 30 years?

If the land could be sold for $50 million in 25 years that will do us little good now. Besides it won’t be all that momentous in the future either because the same thing will be true of that sale then as a sale for $14.2 million today. It will barely cover a single year’s operating expense which presumably will be a lot more in a quarter century.

We should put some of the sale’s proceeds in to a reserve fund but only to avoid unnecessary future borrowing and the attendant interest charges. We don’t need to put all of it in the Reserve. When I was on the Board we set up a policy mandating a 10% reserve which made sense at a time when we could earn interest. In fact, for a few years we were earning a million bucks a year off our reserve and it all went back into our operations budget. God knows when we would be able to earn interest like that again.

I guess in a way my objection is more to how the money will be used than to the sale itself. If the talk was selling and investing that money, then using the interest to begin repairing the hole in the general fund….well, then, I might feel differently about it, even though I’m sure there are counterarguments to that too, and maybe it’s already even been discussed.

One point about investing……public bodies are limited. We all operate under laws of “arbitrage” which forbid our raising taxes and using the proceeds to invest in the stock or bond market.

Here’s another question that might sway me over to the pro-sale side: What are you (or, more properly, WE) going to do once the money from the sale is gone? How will those teachers be paid and those classrooms maintained once the money from the sale of Central has been spent? And then what happens the next time there’s a crisis and the piggy bank has already been smashed and emptied?

It is true that this is one time money but its one time money that couldn’t fall in our lap at a better time. We just ran out of a recent legislative cash infusion and are facing several years of fiscal draught. We have cut so much lately that we are driving even more students away from our District. We need to assure our voters that we have a handle on things before we go to them asking for more operational levy referendums.

Our turning down this sale puts any future referendum at grave risk. A failure to pass a renewal of the last referendum plus the ongoing costs of Central and not using the sales proceeds as the Red Plan promised spell very tough times for us.

From today’s DNT coverage of the Duluth Schools

It was good to see the Trib’s Education reporter back covering yesterday’s Education Committee meeting. She’s back after having recently delivered a prospective new student for the Duluth Schools. The Trib’s story covers the critical issue of our Reserve funds which have shrunk to a week’s worth of cushion should we face financial calamity. That means we have one week’s worth of spending in the bank. If we have to cover an unexpected expense or even an expected expense we will have to borrow money and pay interest to our lender. Not good!

When I was first on the School Board we had a year’s worth, not a week’s worth, of spending in our reserve fund. Ask yourself, as we board members will be asking ourselves, how we can address the concerns of our East High School teachers with so few resources available to alleviate their problem.

In defense of the liberal arts

My Buddy sent me a good read from Fareed Zakaria panning our current political fad for STEM education. The quote he sent me to tempt me into reading the column had to do with computer billionaires who started out in Liberal Arts but I like this quotation as much:

For most of its history, the United States was unique in offering a well-rounded education. In their comprehensive study, “The Race Between Education and Technology,” Harvard’s Claudia Goldin and Lawrence Katz point out that in the 19th century, countries like Britain, France and Germany educated only a few and put them through narrow programs designed to impart only the skills crucial to their professions. America, by contrast, provided mass general education because people were not rooted in specific locations with long-established trades that offered the only paths forward for young men. And the American economy historically changed so quickly that the nature of work and the requirements for success tended to shift from one generation to the next. People didn’t want to lock themselves into one professional guild or learn one specific skill for life.

I’ll go further: Zakaria explains exactly what I’d like the Duluth Public Schools to be able to provide for its students.

You don’t see a vagus nerve response in upper class people

Maybe that explains why well-to-do Duluth doesn’t seem to mind that the fancy new schools of the Red Plan have shortchanged some children.

A lot of them would rather shut Art Johnston up with character assassination than listen to his complaints about this. If only they knew it shortchanged all Duluth Children by ten million a year. That might make them open their eyes a little wider.

Where to begin?

Not with that by now ripe and ancient and unedited series………. I know I promised to do it. It was more of a promise to myself and not to my readers so I’ll just hang that rationalization out there for you to smirk at.

Its been one of those mornings with me waking to a hundred blogable thoughts that sort of started by my thinking about the Author William Styron who, it strikes me, staved off depression by writing important work about depressing truths. I recall vividly reading the rape scene, startling to me as a Senior in High School, in his Book “The Confessions of Nat Turner.” That led me into two directions…..a fascinating series of responses to Andrew Sullivan’s Blog from women writing him anonymously about their experiences of rape and to thinking about one of Styron’s subsequent books “Sophie’s Choice.” It was an illusory choice that drove the plot and the life of the woman who made it and it.

The one place my lying awake did not take me to was any determination to pour three or four hours into proofreading old posts. So where to begin.

As it happens I was thinking about posting my Buddy’s terse question to me on the last post I wrote the one preceding this, of course. Its about economics and race. We’ve argued about both. So when I checked my email I found among the four unasked for solicitations one from Amazon with a book offer. These are usually more miss than hit because between my wife and I we got all manner of books nearly beyond any algorithm to deduce our interests. This one caught my attention however and the blurb in it sounds intriguing.

By the publisher of the prestigious Grant’s Interest Rate Observer, an account of the deep economic slump of 1920-21 that proposes, with respect to federal intervention, “less is more.” This is a free-market rejoinder to the Keynesian stimulus applied by Bush and Obama to the 2007-09 recession, in whose aftereffects, Grant asserts, the nation still toils.

James Grant tells the story of America’s last governmentally-untreated depression; relatively brief and self-correcting, it gave way to the Roaring Twenties. His book appears in the fifth year of a lackluster recovery from the overmedicated downturn of 2007-2009.

In 1920-21, Woodrow Wilson and Warren G. Harding met a deep economic slump by seeming to ignore it, implementing policies that most twenty-first century economists would call backward. Confronted with plunging prices, wages, and employment, the government balanced the budget and, through the Federal Reserve, raised interest rates. No “stimulus” was administered, and a powerful, job-filled recovery was under way by late in 1921.

In 1929, the economy once again slumped, and kept right on slumping as the Hoover administration adopted the very policies that Wilson and Harding had declined to put in place. Grant argues that well-intended federal intervention, notably the White House-led campaign to prop up industrial wages, helped to turn a bad recession into America’s worst depression. He offers the experience of the earlier depression for lessons for today and the future. This is a powerful response to the prevailing notion of how to fight recession. The enterprise system is more resilient than even its friends give it credit for being, Grant demonstrates.

My Buddy and I heatedly debated Obama and Bush’s rush to fix the Depression that began the Obama years. He was the hand’s off libertarian I was the John Maynard Keynesian big government fiscal interventionist. Still am, but I’m willing to test my theories with a good dissent. Sadly I’ll have to wait for other reviews of the book because I’m not likely to find time what with all the other unread must-reads gathering dust on my bookshelves.

As for my Buddy’s terse response to my Nightmare Economics Post. This is it:

Harry:

From http://lincolndemocrat.com/?p=12032:

Our politics today is mentally stunted. We need more minorities to wrest the economy from the old white folks who were given so many economic protections during LBJ’s Great Society that today they live well and long while one-in-five American children go to bed in need.

What the hell does that mean? Are you suggesting that only white folks who are now old were given many economic protections during LBJ’s Great Society? What evidence is there of that? If there is no evidence of that, why do you ascribe those protections to only white folks? Do you need to visit an ophthalmologist for the purpose of eliminating racial bias and bigotry from your vision?

[Your Buddy]

I had no more time to respond to this question than I did to proof old posts. Had I attempted it I might have referred to some of the histories that describe how the white south and the Congress crafted social welfare policies that left blacks out of the New Deal. But I doubt my Buddy would have been impressed. I just sent him a one word reply relating to my need to visit an ophthalmologist:

Probably.