Duluth school district to borrow to cover for delayed state aid
August 21, 2012 at 7:00 pm in Duluth News Tribune
The Duluth school district faces another year of borrowing millions of
dollars to cover delayed aid from the state.
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Duluth school district to borrow to cover for delayed state aid
20 Comments
Between 2006=2008 they spent down the reserve funds about $7mil.
They added another 11-15mil to the Red Plan.
They waste $90,000 for a PR gal.
They spent $9mil to buy houses and kick people out of Duluth to make room for JCI’s plan of where schools should be, not neighbors.
Crowded classrooms with fewer offerings are driving students out of the district.
They’ve got more problems than a late State payment.
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“Voting Obama Out” has nothing to do with what is happening to schools in MN. You can thank your elected MN officials for that. They couldn’t fix their own budget mess by raising any revenues (kind of like getting that second job), so they chose to rob their children’s piggy banks instead, with an IOU for repayment. Thanks to Mr. Tim Pawlenty and MN republicans…..THEY are the reason your schools, and every other school in MN, is doing this.
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That is right Katherine. Old Artie has some friends here on this forum, but that appears to be about it. It is good to see that his misguided behavior is having no effect.
Hot debate. What do you think?
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People in this country just seem so blind. They are going to vote in large numbers for a man who has proven to be all about profits at any cost and who will take care of his fellow elites at the expense of most. Why?
Look at what is being done to education in this country. Remember the good old days of Clinton? This sort of thing would be unimaginable.
Ah the good old days…. remember the best social program is a job. Ah the Clinton years…. no worries just gobbs of money for everyone.
Hot debate. What do you think?
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Small minded people don’t seem capable of understanding that the seeds of today’s recession were planted over the last 40 to 60 years and there are no simple solutions. We as a country have lived beyond our means for the entire adult life of the baby boomers and have reached the point where we can’t live on the country’s credit card anymore.
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Add another $trillion to the tab this year. There doesn’t seem to be ANY sense of urgency in DC. about this. And the Senate hasn’t passed a budget in 3 years.
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Yes Ulysses let’s see…. start of big deficit; the Reagan years, deficit grows; Bush senior, Budget balanced good times for the middle class and even the poor; Clinton, such a greedy big mess we still can’t get out; W
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Robbing Peter to pay Paul. Brilliant!
Well-loved. Like or Dislike:
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From the Article: Board member Art Johnston voted against the measure, “not because we don’t need it but because I want to make a point,” he said,
It seems to me, that we need more elected officials who are more interested in doing their job than in making political “points”.
Hot debate. What do you think?
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Art’s act has become tiresome. We get it. He doesn’t like the Red Plan. He needs a new hobby.
Hot debate. What do you think?
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While I do agree that the state withholding money is part of the problem, I wish this article would have dug a little deeper. What about asking/answering some basic questions like:
– How much (percentage-wise) has the “borrowing” from the general fund for the Red Plan contributed to the shortfall? Has any of this money been paid back yet?
– What happens if last year’s deferred payment from the state is late, or it isn’t for the amount expected, or it doesn’t come at all?
– How can a district have $311 million dollars to build and/or remodel buildings, yet continually be short the money it needs to operate them?
Wouldn’t that be considered “living beyond their means”?
Just two years ago (7/10), former Superintendent Keith Dixon said in an interview with the News Tribune Opinion page, “The board couldn’t be in a stronger position. … The message is you get great buildings and you’re in a great financial position.”
So what in the world has happened between then and now, and who’s responsible?
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To answer your questions.
Q: How much (percentage-wise) has the “borrowing” from the general fund for the Red Plan contributed to the shortfall? Has any of this money been paid back yet?
A: None. There has been no borrowing from the general fund. As part of the whole LRFP, about $5 million per year from the general fund is directed to paying off the bonds. Had there not been an LRFP at least $5 million more would have been spent per year on operating costs of the old buildings. So the net is zero.
Q: What happens if last year’s deferred payment from the state is late, or it isn’t for the amount expected, or it doesn’t come at all?
A: The fact that it’s deferred means it’s already late. The state has over the past decade pushed off the payment which has required more and more borrowing by districts. But if the state were to simply not pay the money promised the district would be well and truely screwed. Roughly two thirds of the total per pupil funding comes from the State of MN. Without it, there wouldn’t be money to pay the teachers.
Q: How can a district have $311 million dollars to build and/or remodel buildings, yet continually be short the money it needs to operate them? Wouldn’t that be considered “living beyond their means”?
A: This has to do with the nature of the bonds. When the district borrowed the money to build the new schools, the loan agreement puts the new schools in as collateral for those loans. If the school district were to use the loan money for anything but the agreed to construction projects it would be in default on the loans and the bondholders could call them immediatly. So yes, there’s a pot of money, but if we were to try to use it to pay teachers or other operating expenses we’d be immedatly liable for the whole cost of the bonds. As for living beyond our means, ISD 709 isn’t a particularly expensive district per pupil and the buildings had become old. (Remember that only a couple of new buildings had been built since the 1970s and a large number were over 80 years old.)
Q: Just two years ago (7/10), former Superintendent Keith Dixon said in an interview with the News Tribune Opinion page, “The board couldn’t be in a stronger position. … The message is you get great buildings and you’re in a great financial position.”
So what in the world has happened between then and now, and who’s responsible?
A: We’re still in a strong position, the infrastructure is quite sound. That said, costs (particularly transportation) have gone up and the state did cut back school funding to the “cities of the first degree” a couple of years ago, though Minneapolis and St. Paul fared far worse than Duluth did with that cut. Then there’s us. We as a city voted down all three levy options last fall.
Hot debate. What do you think?
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Doug: Are you sure that there hasn’t been any borrowing from the general fund for the Red Plan?
What about this, from the DNT 12/13/11 article “Duluth schools’ backup fund dwindles”:
“About $4.5 million is annually transferred out of the general fund into the debt service fund for the long-range facilities plan, with the expectation that it’s replenished when properties are sold.”
If that isn’t for the Red Plan, than what is it for?
The article goes on to say that, “The Rockridge and Central properties, along with some other school property, still need to be sold. The district needs to sell about $4 million in property for this fiscal year, so only the sale of Central and the Secondary Technical Center will make up last year’s deficit. Those properties together could add up to $13 million in revenue for the district, Hanson said. The district also still must finish paying off about $2 million in debt for the Secondary Technical Center.”
In fact, the old Lincoln Park Middle School sold for $1 — instead of the estimated $610,000, according to the district’s Final Review and Comment (6/30/09).
What kind of an impact will that have on Duluth taxpayers in paying down the Red Plan debt?
And there’s also this:
“Without the sale of Central, Grover said, there is a lot of pressure on the district to replace fund balance money … The ramifications for the district’s finances, for taxpayers, are significant,” he said.”
That doesn’t sound like a strong position to me. Instead, I find it very concerning.
While most people in Duluth do value education, there are some valid reasons why the levies haven’t passed; a lot of it has to do with a distrust of the school board and their decisions — especially as it pertains to the Red Plan.
I’m sorry, but some of your facts just don’t add up for me.
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Doug: I had a couple more thoughts about some of the things that you mentioned.
“Had there not been an LRFP at least $5 million more would have been spent per year on operating costs of the old buildings. So the net is zero.”
Are you saying that in order to fix a $5 million (per year) problem, the district needed to spend $311 million?
It must cost something to operate our schools — new or not.
“So yes, there’s a pot of money, but if we were to try to use it to pay teachers or other operating expenses we’d be immedatly liable for the whole cost of the bonds.”
I think most of us understand this. However, where does that money come from? What’s its source? Isn’t it the taxpayer? How many “pots” of money do taxpayers have to fund city, state, or government wants and needs? Single income? Double? Retirement? Laid-off or unemployed?
Many of us have had to tighten our financial belts due to the economy over the last few years — some have even lost their jobs; we’ve had to decide between wants and needs. Can the same be said about the school district’s Red Plan? It’s like we’ve gotten an extreme school makeover on a modest taxpayer budget. Our “pot” can only go so far before we’re in financial trouble ourselves. Government — local or otherwise, needs to learn to live within the taxpayers’ means.
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Thank you Carol for your response to Doug’s incorrect information. You are right on with your comments. Doug is getting his information hand fed from his buddies on the Board. They still can’t own up to the fact that their decisions put us in the bad financial state we are currently in. – Lets build it with copper, lets add pool lanes, lets take a school with a pool and fill it in and take a school without a pool and add one. The list of extras goes on & on. And Doug, in case you are still with us…. Your comments about transportation costs going up and that affecting the budget is another “DUH” – When they closed neighborhood schools and began bussing everyone to the “super schools” I couldn’t help but wonder how “green” that was, – they kept saying they were putting the schools “where the students live” – and yet our transportation costs have jumped. Shouldn’t they have gone down if they put the schools closer to where all the kids live? I am STILL WAITING
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Doug Frisk, thank you for taking the time to offer solid rationale regarding specific questions presented by Carol. I used to be a fan of the LRFP, but can no longer support the ISD 709 and their decisions. LFRP is a part of life as far as I’m concerned – good or bad we are all entitled to our own opinions.
But back to the deferred payments from the State, which I believe this thread is supposed to be about, I have two words: Tim Pawlenty. As a direct result of his decision over half of the school districts in the State of Minnesota have no other choice but to continue to borrow money to supplement their already empty budgets. He’s out of MN politics now, but the legacy he created continues to affect our school systems. I wish he hadn’t made such drastic cuts all at the same time – while is intent may have been good, the results have been damaging.
Can’t help but wonder if we’d still be in this position without the LRFP. I think we would be anyway. But it’s really a moot point now, eh?
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Yet the Charter Schools are thriving. That says it all
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