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Serving Northern St. Louis County, Minnesota

School district audit shows financial “crisis” never existed

Marshall Helmberger
Posted 12/15/11

We now know for certain what many residents of the St. Louis County School District suspected from the beginning— that the district’s much-touted financial crisis never actually existed.

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School district audit shows financial “crisis” never existed

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We now know for certain what many residents of the St. Louis County School District suspected from the beginning— that the district’s much-touted financial crisis never actually existed.

As many voters in our area likely recall, during the school district’s campaign for a $78.8 million bond measure two years ago, school officials claimed that the district was facing a $4.1 million budget deficit by the end of the 2011-12 school year. That deficit, they told us, was unavoidable unless voters approved Johnson Controls’ controversial facilities plan, which called for closure and consolidation of schools. Short of approval, district officials claimed that the district would enter statutory operating debt by the end of the 2010-11 school year and would be forced to close three to four of its seven schools immediately, with the rest to follow in short order.

All of these claims are on the record in documents and publications prepared and disseminated by the school district itself.

Yet every one of these claims, we can now state with certainty, was false. And we can rely on the district’s own financial audits to prove it.

As business manager Kim Johnson reported to the school board this past week, the district’s just-completed audit shows the school district ended the 2010-11 school year with an inconsequential $137,384 deficit in its general fund. That compares to the roughly $3.8 million general fund deficit that the district claimed it was facing in the same year, based on financial projections prepared by JCI and the district’s business manager.

That’s a variance of approximately $3.66 million in case you’re following the math.

Keep in mind, the school district finished the 2010-11 school year pretty close to break-even, while still continuing to operate all seven of its schools. And, by the way, the district finished the 2009-10 school year with a $256,000 surplus, so the past school year wasn’t an aberration.

The school district ended the 2010-11 school year with a $3.77 million general fund balance, a far cry from the district’s previous claims of looming statutory operating debt.

The bottom line is pretty clear. The school district has had the financial resources to operate seven schools all along. That bears repeating: The school district has had the financial resources to operate seven schools all along. That point cannot be disputed.

We can argue about whether improvements to facilities were necessary. I happen to think that improvements were definitely in order, and I, and many others, would have strongly supported a plan that upgraded schools while keeping them in the communities they serve. Instead, the district adopted a plan that netted JCI a major windfall, but which is already harming economies in the north and has dismantled highly-valued community assets, without any tangible educational improvements.

And as we now know, the decision to close and consolidate schools has led to minimal savings to the school district. While the district finished the most recent school year at just slightly under break-even, the district’s budget for the 2011-12 school year (which operates four and a half schools, rather than seven) is currently projected to run in the red by $700,000. My guess is, next year’s audit will probably show the district actually ran a small surplus this year, but given that they were nearly at break-even operating seven schools last year, a small surplus in the current year demonstrates precious little savings from the restructuring.

We were told that the district faced financial Armageddon and that it needed JCI’s facilities plan to right the ship. In the end, there was no crisis and the promised solution has accomplished little or nothing in terms of financial savings.

One might think that this situation would prompt the school board to question the financial projections produced by JCI and their business manager, but other than a couple board members, most notably Troy Swanson, there’s an uncomfortable silence from the board whenever the subject is broached.

The business manager has tried to defend her flawed projections by suggesting that the district’s improved financial condition is the result of teacher reductions that were approved by the school board in June of 2009. On that score, the business manager is correct, but her overall argument is highly misleading.

As school officials repeatedly stated, the district had no alternative to the facilities plan, other than closing three to four schools immediately, because of the “financial crisis.” But at the time that school officials were making those very claims, they had already approved the teacher cuts that, for the last two years, have made it possible to operate seven community-based schools, three pools, and seven extracurricular programs, with no significant financial issue.

In other words, while school officials claimed the facilities plan was the only way to solve the district’s financial problems, it turns out that they had already largely fixed the problem through staff reductions approved months before the bond referendum was ever held, or even debated. Yet school officials continued to cite their worst-case scenario financial numbers right up until the vote, even though they knew their projections were no longer valid (indeed, they were never valid).

They may have believed that the ends (new or renovated facilities) justified the means (misleading the public), but in their own hearts, school officials know they were wrong. It’s no wonder that they stare at the table whenever the issue is raised.

Marshall Helmberger, ISD 2142