I didn’t go and I didn’t watch but I got several reviews of last night’s meeting. The Board was positively giddy by all reports at having approved the final bonding for the Red Plan. This is their press release:
LRFP Bond Expense Less Than Projected
kathleen a. kaufman
Sent: Thursday, September 17, 2009 8:33 PM
From Bill Hanson, Director of Business Services:
During its regular meeting September 17 the Duluth School Board approved two final bonding packages for the Long Range Facilities Plan. According to district officials, cost for the bonds came in at $3.9 million less than originally projected.
That’s due in part to the district’s excellent bond rating, which means we can borrow money at a lower interest rate. Interest rates are low to begin with and by purchasing Build America Bonds provided by the federal stimulus package we saw more savings.
The tax impact related to this funding was anticipated and is already reflected in property tax statements. The bond sale included certificates of participation for $71 million and an installment lease of $35 million. To date, overall debt payments for the LRFP have come in $17 million under original December 2007 projections.
There is little doubt the bond market is primed for low interest rates. Likewise building supplies are available on the cheap because of the economic downturn and contractors are eager to work thus holding down their bids. But taxpayer’s are going to get the same savings an enthusiastic shopper would at a sale where he buys stuff “on sale” that he already owns and that is in good repair.
I’m one of the few people in Duluth who has personally tuck pointed (replaced the mortar between the bricks) his entire brick house. I did it about ten years ago and there’s a long story behind my doing this which involves a guy who could have been a stand in for JCI’s sales reps. He started it. I finished it. It took months. In the process I discovered several dozen small spots where the mortar had failed because of water. They were mostly behind rain gutters and below the roof line. If I had simply patched them up it would only have taken me a couple weeks. But once I began putting in a different colored mortar I had to decide whether to do the whole thing or simply put ugly patches all over my home that stuck out like sore thumbs. I opted for vanity doing the tuck pointing myself to keep it affordable.
I mention this because I drove by Ordean and East High many times this summer and watched the entire exterior of these schools given a new tuck pointing. Huge portions of the exterior of these schools are just ten or twenty years old. I’m sure we got a good deal on the tuck pointing but give me a break! My house was eighty years old when I tuck pointed it and most of the mortar was just fine.
This is what I could see of the Red Plan’s construction and it was completely gratuitous. How much of what I couldn’t see was just as unnecessary?
All the “savings” this School Board touts is built on the conceit that these new buildings will save us $5 million a year which is over and above the good deals we are getting on the bond sales. But its the bonding companies that are getting the good deal. Unlike homeowners who bought home mortgages they couldn’t afford the taxpayers of Duluth will have no choice but to dig deep into their pockets to pay off these bonds. They are risk free for the banks. No wonder the bond company’s are eager to sell debt to Duluth.
Of the five million in savings about $4 million comes from staff savings. When we lay off teachers (and other staff) we save money. The damn thing is that we could lay off teachers without the Red Plan and save the same money if we didn’t care about having over crowded classrooms. In fact, that’s just what the District is doing now by “borrowing” operational money to pay for construction. I’ve already heard many complaints in the first week of this school year about classes of 35-45 students. For twenty years Duluth’s school administration’s have struggled to get the class sizes down. Not any more.
The other $1 million will supposedly come from energy savings. Yup, yup, yup. Installing energy hog air conditioners in all our schools will really save us energy costs. Two Harbors recently discovered they couldn’t afford to run their air conditioning. About the time they made this discovery they had to sever their business relationship with Johnson Controls.
I suspect in the next few years the Duluth Schools will wake up and discover that JCI’s projected energy savings will be every bit as empty as the promises JCI made to the City of Duluth for upgrades to the Duluth Steam Plant. The City is currently suing JCI over three million in promised savings which will never come to pass.
Of course, we can’t be completely sure about JCI’s promises to the Duluth Schools because at no point has the School District turned over one iota of the public data which might support this promise. We have to rely on the common sense of a few engineers and architects who aren’t beholden to Duluth’s construction industry for Red Plan jobs for this conjecture.
I’ve mentioned before how odd it was that the original Review and Comment for the Red Plan presented to the State Dept. of Education was never shown to the existing School Board before it went out. A staff member of the MDE was very puzzled to hear this. Well, history has repeated itself. For six months the MDE has been pouring over a Review and Comment Document for the last two parts of the Red Plan – the new Western Middle School and Piedmont Elementary. The Duluth School Board was not shown this document until a week ago. These Board members don’t even rate the sobriquet “rubber stamps.” Eunuch seems more appropriate.
So how giddy should the School Board have been last night at putting the keystone in their Styrofoam arch? Well, if the promised savings do not materialize their actions last night will force Duluth School Boards for the next twenty years to take $2.7 million out of the classroom to pay off the bankers. Whoopee! (My Dad once told me that was the punchline of one of his Father’s favorite jokes. “What did the Indian princess say when she sat on a wet blanket?)