Take a good look at these figures:
S.O.D. RESERVE
…..2012-13………..2013-14…….2014-15…….2015-16
…-$2,900,064…$1,866,209..$4,925,088..$4,183,689……..2016-17………..2017-18…………2018-19
…..$1,830,586..-$4,135,974..-$13,779,629
Year by year you can see the end of year finances of the Duluth Schools. The three bolded numbers were, or will be, years of deficit spending or S.O.D. Statutory Operating Debt. I’ll be damned if I can explain why we weren’t declared bankrupt in 2012-13 when we spent $2.9 million more than our revenues. Some fiscal trick I imagine. But it will be capped by three years in which we are projected to have more revenue than expenses. The tide turns abruptly in school year 2017-18 when we fall $4.1 million behind in our revenues compared to spending. As awful as that sounds the following year we are projected to be almost $14 million in deficit over revenue. That won’t stand. The state will intervene.
These are not my projections. They are our Finance Director, Bill Hanson’s, projections. They have not been explained to us other than to brush them off by saying they are a worst case scenario. At the moment only Art Johnston shares my concern. (A month ago when I thought I was going to have a heart attack over our teacher contract my concern verged on panic.)
In fact, this is not a worst case scenario. The contract has already made things worser. Our recent contract settlement will up the deficit by a million or more in that final year. That’s almost a sixteen million deficit. If we make no financial cuts in advance of 2018-19 we will eventually have to remedy this scenario by cutting staff. How many teachers would we have to lay off to because of sixteen million dollars of debt? I calculate that we would have to cut 177 teachers! Here’s the calculation, and I’ll admit its very crude: ISD 709 Teachers cost an average of $90,000 in salary and benefits. Divide $16 million by the salary of one teacher, $90,000 to get the number of teachers salaries that would equal a sixteen million deficit. You try it and see if your calculator comes up with a different number. If not that’s what 2018 could hold in store for us.
It could be even worse if we heed the anguished calls to bring some equity to Denfeld. Equity will require us to spend more money to hire more teachers to give Denfeld parity with East High School. If we hired five more teachers for Denfeld, a pittance, that would cost 5 times $90,000. It would add up like this year-by-year: $450,000 in year one; $900,000 in year two; $1,350,000 in year three. By year four (2017-18) it would total $1,800,000. However, this cost would have to be added to the deficit which has already been projected for year 5 (2018-19.) That would mean you would have to increase the teacher cuts from 177 that year by another 20 teachers or 197 teachers to make up for the short lived attempt to bring parity to Denfeld.
If we lost additional students year by year as they fled to other districts we would lose even more money. 18 secondary kids transferred out would be another lost teacher. Under these circumstances it is easy to imagine draconian 2018-19 teacher cuts heading well over 200 teachers.
Perhaps this would not happen. Perhaps the state would intervene and order the District to raise taxes to cover the $16 million deficit. I don’t know exactly what happens. Maybe that’s why some of my fellow Board members and the Administration are so blase about this. We could just be ordered to come up with $16 million in new property taxes and every thing would be hunky dory.
Nothing about the Red Plan has ever added up. We were mislead when we were told seven years ago Johnson Controls would only be paid $4.5 million dollars for managing it. The editors of the Duluth News Tribune were mislead when the Finance Department led them to print an editorial saying that the Red Plan would soon hand the School Board $32 million magic dollars. The Trib had to eat a little crow after publishing that claim. Now a projected deficit of $13.7 million dollars is being shrugged off as a wildly worst case scenario. Unfortunately, the Districts track record of fiscal promises has proven unreliable so many times that I have little confidence in their explanations……what little I have been offered to date anyway.
At the moment five of seven Board members have complete faith in the financial administration of the Duluth Schools.
Heaven help us!
Now I’ve got emails to answer and a wedding to look forward to. Toodle loo.
