Duluth School Board members’ response: Running fewer schools results in savings that are applied to repaying bonds
Duluth is nearing the end of a facilities project that reduced the number of Independent School District 709 regular school buildings in operation from 18 to 13.
By: Ann Wasson and Bill Westholm, for the News Tribune
Duluth is nearing the end of a facilities project that reduced the number of Independent School District 709 regular school buildings in operation from 18 to 13. Those 13 schools were modernized through nine building updates and four newly built schools. Bonds sold for the project are paid for through a combination of a tax increase that began in 2008, property sales and general-fund savings resulting from reducing the number of schools in operation. None of this is new information.
What is new is the idea that running fewer schools and using the savings generated to repay bonds is a direct cause of ISD 709’s annual general-fund deficit, as claimed by School Board member Art Johnston in his Nov. 16 column in the News Tribune, “The Red Plan: Where did the money come from?”
His assertion would be accurate if there were no savings and money was being taken arbitrarily from the general fund to make bond payments. However, that’s not the case. Running fewer schools has resulted in about $5.3 million in annual non-teacher savings that are then applied to the bonds.
During public School Board meetings, we’ve had bond counsel and other financial experts talk with us about Johnston’s concerns and ideas. While the savings could be used to offset the deficit (which is different from causing the deficit) the bonds still would need to be repaid. That means either properties would have to sell for more than projected, or property taxes would need to increase to replace the savings.
Johnston suggested calling the 20-year bonds early and attempting to refinance. Even if that were possible, doing so would not prevent a deficit. Instead, it would further increase borrowing costs related to the project.
General-fund deficits have been a fact of life for Minnesota school districts for at least 20 years, well before the school construction projects began. In Duluth, as in most school districts, general-fund deficits occur simply because operating costs are rising faster than
revenues. School districts have little control over revenues, so strategies to reduce deficits generally center on controlling costs and making budget cuts.
Each year school and district leaders work with people inside and outside our schools to identify ways to reduce spending without impacting classrooms. Duluth schools have made tens of millions of dollars in reductions in general-fund spending over the past
20 years. Reductions have been realized at various times to district and school administration, health insurance premiums and as many non-classroom areas as practical. Unfortunately, we’re well past a time when cuts can be made without impacting the classroom, as evidenced by an increase in class sizes this year.
In addition to actively and cooperatively controlling costs, a change in the district’s revenue stream through increased state funding or a successful operating levy would help immensely.
Gathering the very best thinking and creativity from people inside and outside our schools is key. Progress already has been made in this regard by bringing together teachers, staff, parents and community leaders to
provide advice regarding budgets, student achievement and school climate. City, business and higher-education leaders are providing invaluable advice and support as schools step up to meet challenges.
Organizations often work with the community to develop a common vision that can help identify priorities and make the best and most efficient use of resources. This winter, members of the community are being invited to participate in a community-wide conversation regarding education in Duluth. People will be asked to talk about what’s going well with Duluth schools, what could be improved and what specific needs should be addressed. A detailed list of meetings and other ways to participate in this important discussion will be released by mid- to late December.
Schools are part of our community; some would say they are the heart of a community. We appreciate everything members of the community do to support education and look forward to further conversations this year as we continue to take on the challenges of public education in Duluth.
Ann Wasson represents District 1 and is the chairwoman of the Duluth School Board. Bill Westholm represents District 3 on the Duluth School Board.
