by John Diers
The question before voters is whether to accept irresponsible fiscal
management and vote YES whatever the cost, or vote NO leaving the
class room space problem unresolved. That is the dilemma created by a
divided School Board.
A flyer distributed at Fall Fest at Prior Lake High School that read “Join
us at Fong’s Event Center in Prior Lake to learn more about SAY YES and
how you, as supporters, can help pass the ISD 719 referendum”,
sounded like it might provide answers. Apparently not.
While the event at Fongs ostensibly offered opportunity for undecided
voters to hear more about the upcoming, $109 million referendum, it
was anything but. It was reported in the American that some people
who showed up to learn more, were turned away. Why? Because they
wouldn’t sign a pledge to vote yes. In spite of the fact that there were
School Board members in attendance, the husband of board member
Mary Frantz was unwelcome and told to leave.
It’s not the first time. A similar event occurred a few weeks ago when
the Prior Lake American reported that Superintendent Staloch and Staff,
some board members and members of the VOTE YES COMMITTEE
skulked off with their consultant, Nexus, to hold a “private” out-of-town
meeting. I assume it’s a safe bet that Staloch and Board Chair Wolf
didn’t bother to mention the meeting to board members Enger and
Frantz. This kind of behavior invalidates any claim of transparency or
fiscal integrity by the board or administration. Be reminded it was
Chairman Wolf who made the blatantly false claim to this newspaper
that Citizens for Accountable Government (CAG) had hired an antieducation
Speaking of suspect claims, Superintendent Staloch’s editorial in last
Saturday’s American repeats the worn-out defense of Nexus that we’ve
heard repeatedly, that “To date, all projects have been completed on
time, on or under budget”. Let’s examine that claim.
Nexus’s most lucrative agreement with the District was initiated by
Business Director Julie Cink in a letter of authorization in December of
2012. The letter stated specifically that budget would not exceed $22.5
million, and that the contract was to be finalized not later than
January 31, 2013. Instead of $22.5 million, the final total cost to the
district was $34.8 million with Nexus getting paid $5.5 million. The
contract agreement with Nexus wasn’t signed until August 25, 2014,
shortly before all projects were completed. Since final cost and
schedule weren’t finalized by contract until the work was essentially
complete, Staloch’s claim of being on time and on budget is meaningless.
In response to a question about high Nexus costs from a board member
at a board meeting, Business Director Cink said she tracked those costs
“on the fly” but hadn’t written anything down. This model for fiscal
management going forward does not bode well for taxpayers.
It appears this latest referendum proposal includes pretty much the
same stuff as last year’s failed referendum, but packaged to look
cheaper when it’s not. That’s what the home mortgage industry did
almost 10 years ago. Long term adjustable rate mortgages, some with
balloon payments, made unaffordable homes look affordable and
millions got sucked in, but it was just a matter of time until many found
they were underwater on their mortgages.
Our school district, presumably with help from its consultant, is offering
a similar pitch to make this year’s referendum look sweeter than last
year’s failure. Borrowing some thoughtful insight from board member
Mary Frantz’s commentary in this paper on August 26, Frantz states that
“the use of Capital Appreciation Bond (CAB) financing that will increase the
time to pay off our bond and will increase our net bond payout by millions
(currently an additional $9.4 million), and a re-distribution of items off the
referendum to Long Term Facilities Maintenance (LTMF) and lease levy are
very risky tactics”.
Very risky indeed. Board Member Frantz is warning us that the
district’s decision to utilize CAB financing instead of conventional
financing will substantially increase the total cost to a homeowner over
the life of the bond, but makes it look cheaper while district leadership
is beating the drums for YES votes. CAB financing allows borrowing
more than the district’s borrower’s ability to pay would justify, by
shifting the tax burden into the future. Frantz is also alerting us to the
fact that some items removed from the referendum list have simply
been moved to another category called LTMF, which also requires indistrict
taxpayer dollars. In other words, the board’s plan is to
essentially buy what they wanted to buy last year, but pay later.
All of this is about humongous debt. Debt drives individuals and
businesses into bankruptcy, and haunts taxpayers. The owners of
Nexus were unashamed to use their involvement with the Duluth School
District building program (while employees of another company) to
persuade our District School Board to hire them, but with the Duluth
district now in fiscal agony as a consequent of the debt they were talked
into, you probably won’t hear of that connection raised again.
A lot of folks are angry to learn how many tax dollars have gone to
Nexus already, but let’s be fair. It was the school board’s and the
administration’s public responsibility to apply due diligence in all fiscal
matters, but they have failed miserably. They signed up an essentially
non-existent company, now called Nexus, to a long-term commitment
potentially worth millions, with no plausible explanation. They continue
to push open enrollment that continues to crowd our classrooms. They
continue to favor Nexus with additional consulting agreements without
benefit of any sort of competitive process, and enter into specific
agreements and transactions that defy business logic.
One such transaction led to a formal complaint against the School Board
by Citizens for Accountable Government (CAG). It wasn’t the
questionable business dealings driving the complaint, but the district’s
refusal to identify who authorized a $602,205 payment to Nexus. The
school administration has not acknowledged the complaint, nor was it
before the board at its September 11 meeting. It’s under the rug.
We have a divided board that has divided our community by its action.
Our kids and teachers deserve better.