The least understood of two referendums on the November ballot

Besides a tax levy referendum, another referendum question on the November ballot will ask the public to approve restructuring some of the school district’s bond debt. A lot of fine print is layered into these kinds of financial moves, and I wouldn’t count on the school board to make all the details public. If you are interested in seeing some of the fine print from the last time bond restructuring was broached in the boardroom, google “Reader Duluth Archives, Martell” and read my articles from April and March, 2019, titled: “One more illusion” and “Can you see the red rainbow?”

I would also recommend reading an article from the 4/23/19 edition of the Duluth News Tribune headlined: “Duluth School Board approves debt refinancing and restructuring.”

During the March ’09 meeting, district administration tried to keep all the focus on the “savings” of restructuring: a reduction in the amount of money coming out of the general fund annually to pay Red Plan bond debt–a benefit for the district, not the taxpayers. Only the persistent efforts of two former board members revealed the taxpayer cost as $4.3 million, to extend payments of the 2009b bond out until 2034. Sally Trnka and Nora Sandstad were the two school board members who actually performed their role as public watchdogs. Board member Josh Gorham joined Sandstad and Trnka in coming out against the move.

During the next meeting, in April, district administration revealed that it has somehow miraculously reduced the cost to $1.5 million, prompting Josh Gorham to change his mind on the proposal. In the News Tribune article, Gorham (who eventually resigned his board seat due to disillusionment with district dysfunction) also reportedly changed his mind because as the paper put it, he “liked the idea of being able to pay the bonds off early with money from the sale of property.” The property revenue specifically referred to was the sale of Central High School, being marketed at the time for $7.9 million.

The district recently tore the high school down at the taxpayers’ expense and sold some of the property on the campus for $7.8 million, but none of that money is being used to make debt payment on bonds, as promised. According to a 7/14/23 News Tribune article, school district officials “said they hope to put proceeds from the $7.8 million sale of Central High School toward new computers and software over the next 2 to 4 years.”

The money, once promised as tax relief, has been added as more revenue for the district’s technology wish list. When the school board pushed through its massive consolidation project a decade and a half ago, the public was told that “due to savings (generated by the plan) and sales of unused property, almost half the total (cost) is already paid for.” From the beginning this vanishing promise was nothing but smoke and mirrors. I’m not sure what “they hope to” means in this context, or where else the money from the sale of the Central property might now be spent, but local taxpayers have no hope that the promise made to them will materialize in the form of debt payment.

The same pattern has held true for years. Whenever revenue and debt has been “restructured” in our school district, taxpayers have been the losers.

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