The cost of education

Loren Martell

Photo by Richard Thomas

In fiscal year ‘19, Minnesota’s public schools received revenue totaling $13.494 billion. The state contributed $9.525 billion, $3.762 billion came from local property taxes and other local-source revenue (endowments, fees, etc.) and federal government threw in $754 million.

The State of Minnesota’s total general fund spending in fiscal ‘19 was about $22.5 billion, meaning public school spending comprised 42%. If we accept the argument made by the people who control our school board that ISD 709 is a fiscal basket case because of inadequate state funding, a few questions need to be asked: How much do they want? How much would be enough? 

Would 50% of the state’s general fund spending be enough? 60%? $9.525 billion is a pretty hefty pile of dough, and doesn’t include the state’s long-term pension liabilities. What is the breaking point, here?

Measures of value

When it comes to government fiscal responsibility, I put a pox on both political parties. The evidence for my point is the national debt clock, spinning completely out of control. I think both parties have abandoned us on this flinty terrain, but in Duluth – especially in our school district – the Democrats run the show. The Democrats are married to the unions, and this political marriage has been a problem in reining in district costs and attaining some reasonable changes in how our money is spent.

The DFL/union political powerhouse constantly beats the drum for more education spending. DFL and teacher union advocates place themselves on higher ground, by arguing that spending for education is – in and of itself – a key measurement of our social values. They want the purse strings loosened and billions more pouring into education across the state. But if nothing changes in the way the money is spent, will there ever be enough to satisfy their needs and desires?

“All those years of teaching,” former teacher and current Governor Tim Walz exclaimed to a rally organized by the union group, Education Minnesota, in front of the Capital building in May  2019, “I wondered who the hell was at that table (advocating for more state education funding). Well, guess what, 80,000 teachers sat at that table today!”

Mr. Walz’s predecessor, Mark Dayton, was no skinflint in education spending. He increased K-12 funding $2 billion during his eight-year tenure as governor, repaid the $1.8 billion the state had shifted from school districts to balance its books and allowed 165,000 Minnesota children to start benefiting from all-day free kindergarten. State coverage of kindergarten freed up $1.4 million in the Duluth district. More than $90 million dollars ($90,587,777) of state tax money poured into Duluth public schools last year, and the teachers’ union, the Board of Education and the Superintendent continue to describe the State of Minnesota as too chintzy.

How much do they want? Would $100 million do the trick? $150 million?

Gotta love teachers, but …

I wish we could pay teachers what we pay doctors, and much more than we pay lawyers. Getting pre- and post-pubescent emotional whirligigs (aka, children) to settle down and learn something has to be one of the greatest challenges on earth.

Teachers deserve respect – consider-able admiration – for their patience, beneficent mission and classroom knowledge. When it comes to money issues, however, does the teachers’ union really have the answer? 

I would remind everyone that the Duluth teachers’ union backed the Red Plan. Several of the pro-Red Plan letters to the editor in the News Tribune were signed by teachers. One letter, signed by 40 teachers, praised school board candidates promoting the Red Plan in an upcoming election: “Teachers support these incumbents because they understand the needs of our students. They have shown they value our students by their actions in supporting the long-overdue facilities plan…They do not waste the scarce resources provided to ISD 709 by the Legislature and governor.”

Really? There weren’t any scarce resources wasted here, and more waste yet to come, if the teacher’s union DFL partners get their way and Central High is torn down?

After the Red Plan’s self-destructing financing structure began creating havoc with the district’s budget, former President of the Duluth Federation of Teachers union, Frank Wanner, reversed course and complained on the record in the News Tribune: “We can afford state-of-the-art (what the Trib described as two “Olympic-sized”) swimming pools, but we can’t afford the teachers we need in our classrooms.  I think that’s sad.”  

The union boss also tipped his hand about district 709’s wasteful priorities in a union newsletter in Sept, ‘13:  “80-90% of the reduction in the district budget (over) the past five years has come from a reduction of the number of teachers. That reduction in the number of teachers is helping to pay for the cost of the Red Plan.”

Wanner obviously came to figure out that the consolidation project was directly and seriously hurting the district’s operating budget, but I’ve only been able to find one instance of him speaking the damning truth to the general public – and he used that opportunity to wash his and the union’s hands.

This is the way former board member Harry Welty described what happened in his blog: “Frank Wanner was a member of the Citizens Committee that signed off on the Red Plan with its mega-schools, which are driving people out of Duluth. He didn’t attend many meetings. He just signed off on the Keith Dixon’s extravagance…Teachers got behind the Red Plan (because) they had to stay in good stead with Duluth’s languishing construction unions. (Teachers) supported the ruinous Red Plan that diverted so much local levy into building bonds at the expense of a couple of hundred teachers… Wanner (later) ridiculed the school board after the damage was done – for not knowing better.”

Education Minnesota is the political arm of the NEA and the AFT teacher unions. The organization is also affiliated with the AFL-CIO. Reporting on the rally Gov. Walz held with Education Minnesota last May, MinnPost observed that the group “has a strong lobbying presence at the Capital every year.”

The teachers’ union exerts a lot of political power locally, as well.  Last year, the local union funneled $7,486.76 into the school board race: $300 for each of the union’s endorsed candidates, $1,982.01 for a fund raising event at Clyde Iron Works, and $4,604.75 for printing and mailing promotional literature.

When you pay out money, you generally expect something in return.  Former Duluth teachers’ union President Wanner complained in a 9/13/13 union newsletter that the initial offer put on the table by the district during contract negotiations in 2013 was a betrayal.  

“Some of the people on the school board are no longer the same people we helped get elected,” he told fellow union members, but it was the DFL-endorsed board members who got the message.

I have sympathy for the teachers, and do not begrudge them, but the district narrowly averted statutory operating debt status in ‘13 and couldn’t afford the contract approved in ‘14. At the minimum, some reasonable concessions in health care contributions were needed or the budget would slip into more deficits, and then the salary and benefit-con-cessions the teachers won would hurt them more than help them – because a broke budget would continue to leave them short-staffed and overworked.

Because the negotiations didn’t conclude until fiscal ‘14 was virtually over, the union did forgo a raise for that year. Teachers instead opted for a 3% increase in fiscal year ‘15.  The 3% raise jumped total teacher salary compensation $2,109,971, not counting step-and-lane and longevity increases. Salary/wage compensation for all other district bargaining units – which mimic the teachers’ contract – increased $2,139,087. Total expense, just for salaries/wages alone, jumped in the neighborhood of $5 million in one year. Annual deposits into district employee HRA (Health care Reimbursement Accounts) jumped the following year.

The district’s minimum reserve balance, under policy, should have been about $9.5 million in fiscal ‘15. It’s actual unrestricted reserve, while the board handed out this kind of largess, was less than $2 million: $1,696,987. ISD 709’s own reserve worksheet predicted the organization would crash into statutory operating debt again by 2017 – exactly what happened.  

Wasn’t always like this

“Teachers really respect our administration, and it wasn’t like that for many years.” Former teacher, and board member, Judy Seliga-Punyko, crooned in a 7/21/10 News Tribune article.  “We were able to settle contracts (and get everything we wanted) without acrimony,” Union President Wanner said about Keith Dixon’s new attitude and approach towards the union’s demands.

Dixon tore a rift through Faribault, Minn., where he was previously employed as superintendent. That district also careened into statutory operating debt status after he left. The teachers’ union gave his leadership skills a 66% vote of no confidence, and the school board started debating buying out his contract. The cotton-topped hustler was shrewd enough to understand what would likely happen if he stepped into Duluth and started all the disruption and destruction of the Red Plan without first winning over the teachers – so he put on a Santa Claus suit and started giving them everything they wanted.

Mr. D. blew through our reserve fund and broke the bank in every imaginable way. True to the template he developed in Faribault, he left a fiscal and social catastrophe in his wake.

The pattern Dixon set in motion in Duluth is going to be very hard to get out of. Teacher protests and strikes, erupting in West Virginia, Arizona, Kentucky, Oklahoma, California, Colorado in recent years, displayed the power of angry teachers – very sobering for anyone focused on education to observe. A teachers’ strike in Duluth could very well be the final nail in the coffin of a public school district that has made so many foolish decisions and depleted its once bountiful reserve.

During the April school board meeting, member Eder asked the district’s CFO a question about the recently announced increase ($1.1 million) in the employees’ HRA accounts: “Does the $1.1 million go to an increased amount in the HRA account, or is that $1.1 million going to an increase in paying the premium – or am I way off?” The CFO responded: “This is actually a contribution into each individual account.  We are also expecting a health insurance premium increase.”

Next year’s preliminary budget es-timates employee benefits to consume nearly a quarter (24.8%) of the district’s General Fund spending. The dollar amount is more than $28.5 million, with a couple of pennies tossed in: $28,525,637.02.

In response to member Eder’s question, board member Loeffler-Kemp jumped to the union’s defense with the oft-repeated claim that the district saved a lot of money when the teachers agreed to transfer their health coverage to the state’s Public Employee Insurance Program. Loeffler-Kemp – an intense union supporter – went on to claim health care coverage shifted to the program “a few years ago…provided large cost savings to the district.”

The transfer to PEIP happened a decade ago and any savings have been eclipsed by cost increases. In a closed-door meeting, during the last contract negotiations, HR Manager, Tim Sworsky, called the union’s “running total” of savings “flawed logic.”

During the same meeting, Superintendent Gronseth remarked about the district’s failure to get the union to share more of the insurance premium cost: “In the last negotiating sessions (2013-14,) 20% on single-payer was our charge, and well, (he chuckled,) we didn’t get there. Then we tried for 10%, and we didn’t get there either.”

Board member Johnston asked then-CFO Hasler: “So, have you figured out what that 10% savings (in single payer premiums) would be for us?” Hasler replied that it would be “in the ballpark of $200,000.”  

I immediately knew this figure was inaccurate and was astonished no one in the room challenged it. In 2017, the district’s total annual cost for single payer health insurance premiums was $4,467,053.80. A 10% employee contribution would have saved the district $446,705.38; a 20% contribution would have saved $893,410.76.

The school board basing its negotiating stance on inaccurate information is obviously a problem. No attempt was made in the 2017 negotiations to get any concession.

“To have totally paid health insurance, whether it’s single or family, is totally unheard of in this day and age,” HR Manager Tim Sworsky stated with some hard realism during the 2017 meeting, then added: “It’s kind of become the cost of doing business.”

With the DFL – the union’s consort – running the boardroom, this cost will continue to spiral upward. We can’t keep cutting from the kids’ education, so the question becomes: How long can taxpayers (many of whom have very expensive, poor or no health care coverage themselves) keep covering it?