Weep because there is no editor at the Duluth News Tribune like Marshall Helmberger, the publisher and editor of the Tower-Soudan Timberjay. Mr. Helmberger wrote this editorial in anticipation of next Tuesday’s election for an $80 million building plan in the St. Louis County schools designed and championed by JCI.
Things to ponder before you head to the polls
On Tuesday, voters in ISD 2142 will head to the polls for an important decision on a proposed $80 million bond referendum that would, if approved, close four of the district’s schools, build two new buildings, and remodel the three remaining schools, converting Tower-Soudan’s to an elementary-only facility in the process.
How you or anyone votes on Tuesday is not my main concern. My goal is to ensure that readers will go to the polls with a full understanding of the issues and the facts surrounding this decision.
Readers have certainly heard the arguments of the consultants at Johnson Controls, which have been repeated time and again at public meetings, in press releases and brochures, and by board members who have been convinced that Johnson Controls’ plan represents the district’s salvation.
Over the past twenty years, I’ve reported on the work of far too many consultants to believe for a minute that they have all, or even a few, of the answers for the problems facing our rural communities. That’s particularly true where consultants have a vested interest in their own recommendations.
That is clearly the case with Johnson Controls, which stands to reap millions of dollars in engineering and design fees should voters approve this measure on Dec. 8. As conflicts of interest go, it’s a big one, and it’s made all the more disconcerting by the fact that Johnson Controls, rather than the district, has largely controlled the information and the message that has been disseminated to the public.
According to Johnson Controls, the district is facing a $4 million budget gap that will put ISD 2142 in statutory operating debt by the end of the next school year. And the only way out is to approve a giant bonding measure or to dissolve the district.
It’s a compelling story line, but as with many stories, the authors in this case have taken a few liberties with the facts. Here is just a sampling:
The $4 million budget deficit does not exist. The looming shortfall was never more than an unrealistic financial projection created by Ehlers and Associates, working with Johnson Controls. It assumed that the district would operate largely on autopilot, with no staff cuts, while health care costs rose eight percent a year and wages three percent.
It assumed that fuel prices would double every seven years, from the record high prices we saw in 2007-08.
As we report this week, the district hasn’t operated on autopilot. Administrators, to their credit, have been quite aggressive in their pursuit of cost reductions. A new, less expensive health plan was adopted this year, and that is saving the district about $400,000 annually. The positions of many retiring staff and teachers have gone unfilled, while other positions were simply eliminated. Fuel prices, thankfully, have fallen substantially since Johnson Controls prepared its original projections. While state funding increases have fallen short of expectations, other sources of new funding have made up for that.
Johnson Controls had predicted a $2.7 million shortfall in the 2009-10 school year, but that was trimmed to $833,000 in the budget the board approved earlier this year.
And the actual deficit is closer to $600,000 because some capital spending this year won’t be reimbursed until next year, which makes this year’s deficit appear larger than it actually is.
I’ve requested more updated financial projections from the district, but I was told those projections are still being developed. They apparently won’t be available before Tuesday’s vote, which is unfortunate, because it means voters won’t know the district’s true financial picture when they go to the polls.
The savings touted by Johnson Controls are exaggerated.
Much of the $5 million in savings that Johnson Controls claims will result from this restructuring plan has already been achieved through cuts we detail in our front page story this week. While Johnson Controls has touted operational savings of $380,000 from constructing more efficient buildings, such savings are actually quite modest, at least when compared to the district’s overall budget. They are also optimistic, since they are based on energy prices in effect in 2007-08. Run those same calculations at current fuel prices and don’t expect the savings to top $300,000 a year. While such savings would be real, they represent less than 1.5 percent of the district’s budget and such savings certainly don’t justify the expenditure of $80 million.
Older buildings aren’t the huge financial liability that Johnson Controls claims. In fact, the district’s facilities costs are well below statewide averages.
None of the $80 million from this measure can go to the classroom. From the beginning, Johnson Controls has sold this bond referendum as means of enhancing educational opportunity, and that is a big reason that many good people are offering their support for the measure.
The public needs to understand that not a one dime raised through this referendum can go towards the classroom.
By law, this money can not pay for curriculum development, hiring additional teachers, new books, field trips, or new buses.
Johnson Controls has promised that the restructuring made possible by this capital bonding will reduce operating expenses and generate a million dollar surplus that could go towards educational enhancements. But that goal, worthy as it is, can only be achieved if the savings and enrollment growth (yes, enrollment growth) imagined by Johnson Controls are actually realized. If their projections prove inaccurate, there may be no surplus at all.
And even if some modest surpluses are achieved, promises of educational enhancements also require that board members and administrators are willing to spend any surplus actually achieved on those improvements. In the past, surpluses have been used mostly to build up reserve funds and pay for increases in salaries and benefits, even as education suffered from outdated books, phasing out of field trips, and reductions in course offerings. Current board members may be committed to changing that if voters say yes, but future board members may not be so committed.
In the end, this bond measure does not guarantee a single penny for improved education, and that is a fact.
Johnson Controls’ enrollment projections don’t add up. As of right now, the district’s total enrollment is 1,988. After reducing the number of school sites from seven to four and a half, Johnson Controls predicts that enrollment will increase, to 2,000.
That would be a remarkable achievement, since traditionally the closure of community-based schools leads to greater losses to open enrollment, not gains. But the numbers get more questionable the closer you look.
Johnson Controls, for example, is predicting 150 students will attend the K-6 school in Tower following restructuring. As of today, 114 students attend the elementary there, and the district’s own projections put next year’s elementary enrollment at 120.
While new housing on the Vermilion Reservation is likely to boost student numbers in the Tower area, don’t look for 30 additional elementary students for at least several years.
Some of the other estimates are just as questionable.
Currently, 597 students attend the Orr and Cook Schools combined. Yet projected enrollment at the new school north of Cook is put at 630.
District officials claim these extra students will come from Greenwood Township. Yet, there aren’t that many kids in Greenwood, and most of them already go to Virginia. That’s unlikely to change. In addition, these projections assume no additional losses to open enrollment from the Orr area, and they assume that Nett Lake students will attend the new school. While I think Nett Lake students will ultimately come to a new school, if they opt for a different solution, the financial impact would be major.
The projections are also optimistic at Babbitt, where Johnson Controls puts enrollment at 345 post-restructuring.
That assumes that 30-40 students from Tower-Soudan will choose to attend there. All together, the district is assuming that at least 70 percent of high school students from Tower-Soudan will choose to attend in either the new school north of Cook, or in Babbitt.
And they call that estimate “conservative.” A better description would be “pie-in-the-sky.”
And yes, it gets worse.
Johnson Controls’ restructuring plan, remember, allowed for the option of a charter high school in Tower-Soudan. But Johnson Controls assumes that no students will actually attend a charter school there.
If, in fact, a charter school does open (which is a distinct possibility) and is reasonably successful, Johnson Control’s enrollment projections are wildly optimistic.
