The Zenith article accurately explains that no one, apparently not even Bill Westholm a recent top ISD 709 Administrator, much understands the District’s financing. The question implicit in many critiques of the Red Plan is that classroom money is being used to foot the construction bill. My loyal readers know my blog has rolled in that accusation like a pig in mud.
So here are some random thoughts to help make sense of, if not explain, what’s been going on……….I think! (Note that last caveat)
When the District submitted the Red Plan it made it extremely complicated in order to justify avoiding a referendum. There were three school building finance laws it had to contort its plan to meet. Its been years since I reviewed this but I seem to recall that health and safety improvements was one, alternative facilities was another (and I can’t recall what the Alternative Facilities law was all about any more) and there was the famous law that gave Cities (not school districts) of the First Class the right to raise money. One of these was the law that Jaros helped pass for the purposes of promoting integration and that he decried the District using to justify itself.
These three laws required that each of its new or remodeled Red Plan buildings was to be funded on the basis of three separate pots of money authorized by the three laws. If a building got some money for health and safety improvements then the building plans would have to demonstrate that x percentage of the building cost met the requirements of the health and safety finance law. Somehow the entire 300 million got approved by the Pawlenty Dept. of Education with each building getting different proportions of funding from three separate legislative authorities. Imagine the bureaucratic mess untangling the separate funding streams that this would lead to. How could a builder hope to stay true to the three laws as change orders altered construction building by building? It would be such a Gordian Knot that no one in our understaffed and underfunded State Department of Education would even attempt it. That meant that Johnson Controls Inc. and the Dixon Adm could simply tell the State “Oh, by the way we’re making changes to the Red Plan but don’t worry…..it will still meet all the legislative requirements,” and the State would oblige by saying, “I know nothing!”
As the Zenith article rightly points out there is supposed to be a separation between operational (classroom) expenses and capital (building) expenses. It dawned on me a few weeks ago why the District has seemed to so magically move money back and forth so that (not mentioned by the Zenith article) the School board borrowed $5 million recently from the classrooms and used it to pay for construction bonds.
Here’s what I think is going on and it does me little credit that I didn’t have this figured out years ago:
The District said the building plan would cost $297 million and the State Okay-ed this. The District said “But it won’t really cost this much because one fourth of the cost – $5 million a year – will really come out of school operations. We simply won’t bill taxpayers for this at all because we won’t need that operations money any more for the classroom. Why, shucks, we will save $2.5 million each year on the incredible energy savings JCI will build into the schools for us and we will be so efficient at staffing that we won’t need secretaries and janitors and traveling teachers and that will save us another $2.5 million. We can used this $5 million to lower taxes. Hooray! Of course if we have miscalculated we could still use that unneeded operational savings to build the Red Plan. But really! What are the chances of that happening?”
The state seems of have responded with an accounting like comment…..”We’ll, if you say so. Not our problem. Go ahead and tax the hell out of your public because we all think local elected officials should make these decisions even though our Governor raised hell in Duluth a couple years ago saying Duluth voters should have a right to vote on the Duluth Arena which will cost them only one sixth as much as this behemoth Red Plan that is twice as large as any other school building plan in state history!”
Dear Readers, Never mind my apology for saying I never understood this before. I’m beginning to realize that I did understand this from the beginning. I’m just getting old and I forgot about all this hocus pocus. Gosh. I was prescient. Too bad I’m barely sentient anymore.
SO…. This means that while the District didn’t initially raise that $5 million from operational expenses it has the authority from the Pawlenty Administration to do so at the drop of a hat or at the first major sign of a fiscal calamity. Doing this, of course, would mean breaking a promise and Dr. Dixon wanted to be able to patch the holes in his operational budget by getting voters to pass other “excess” levies. He managed to talk voters two years ago into renewing an old levy but they did not vote to increase it much to the Superintendent’s chagrin.
I suspect, because I suspect Dr. Dixon of a great many devious things, that what Dr. Dixon hoped to do was get his increase in the operational levy passed and then to talk his loyal School Board into levying the extra $5 million authority the state had given him to pay for the Red Plan. Let’s call it “mad money.”
Dr. Dixon had authority to levy an extra 5 million. He wanted more operational levy authority from voters. He had a plan so complicated that no one in the state could ever hope to audit what the District was doing, AND…..
… meanwhile the District kept getting the OK from its pliable school board to make changes willy nilly in the building plans. Expensive new swimming pools were added; Properties were acquired for vastly more than they were appraised and don’t forget the change orders. Change orders are pure gold to contractors. Their original bids might have been stingy but once a client wants to make changes the client is at the mercy of the contractor. The sky is the limit.
Dr. Dixon, is of course, the man to blame for this confetti but he has gone on to his great reward – another superintendency.
He has left the explanations for what has happened to his many loyal accolytes who, judging by the Zenith article, don’t have a clue what the Hell is happening. They do have a Finance man, Bill Hanson, to explain things but good luck understanding anything he says..
