Local view: Instead of Red Plan answers, we have been hustled and bilked
On July 10, 2013, in an editorial, the News Tribune announced that, “At long last, and once and for all, we’ll find out. Did the Duluth school district overspend our tax dollars to accomplish its Long-Range Facilities Plan? Did its consultant, Johnson Controls, fleece district taxpayers? … Or was the spending that gave Duluth efficient, state-of-the-art school buildings legit and justified?”
I also would have liked those questions definitively answered.
Had the Opinion page asked me before running the editorial, I would have shared my communications with the state as the person who led the petition drive that precipitated its action. I would have pointed out we were unlikely to get the answers we were all looking for.
We didn’t even get an audit.
Yet some valuable information did surface from the abbreviated review the State Auditor’s Office called an “engagement.”
In another editorial, this one published July 24, the News Tribune contended the review “produced no red flags.” I disagree.
The auditor checked School Board member Art Johnston’s numbers on Red Plan soft costs, expenditures for architectural design, etc. Johnston’s expertise as an engineer always has been undervalued. The auditor confirmed Johnston’s total soft cost figure almost to the dollar: $84,184,982. Soft cost expenditures ran at 27 percent, well above industry standard.
Also, the itemized list of soft costs was very suspect. Even School Board Chairman Mike Miernicki questioned property acquisition being listed as a soft cost.
Another point that came to light with undeniable clarity in the auditor’s report is that Red Plan savings are well below what was promised. During a conference I had with the State Auditor’s Office, the audit manager was open and frank on this point: “It was clear from the information you sent that savings claims are an issue, that there might have been a lot of things done and presented that things were going to be a certain way that are not coming to fruition. In relation to the savings claims, those are based on estimates and assumptions. The minute one estimate or one assumption changes — and clearly that has happened — the whole projection is skewed,” the audit manager said. I recorded the conversation.
In a detailed report I filed with the State Auditor’s Office along with the petition, I listed, analyzed, and fully documented several erroneous estimates and assumptions made about Red Plan savings. The savings package was supposed to funnel
$125 million into bond payments. In a survey commissioned by the district before the Red Plan was approved — a survey used to support the decision not to send the Red Plan to a public vote — a price quote given for the Red Plan was followed by this statement: “But, due to savings and sales of unused property, half of that total is already paid for.”
If that projection is skewed (and clearly that has happened), the people of Duluth have been hustled and bilked.
The News Tribune Opinion page has accused me and others of “creating confusion.” It’s fair to ask: Who’s been confusing everyone?
In an editorial on July 23, 2010, the newspaper claimed the Red Plan was $32 million in the black. That was just 10 months before it was revealed to be
$19 million in the red.
Further, the News Tribune reported on June 19, 2007, that the district’s consultant, Johnson Controls, would make “about $4.5 million” from the Red Plan. The state auditor verified in its limited engagement that more than $56 million went to Johnson Controls. One of the shortcomings of the petition engagement was that it did not break down how much of that was paid to subcontractors. Common sense, however, suggests the company’s take was more than $4.5 million.
Also, last April, the News Tribune reported that the new tile roof being installed on Congdon Elementary School was being paid for with Red Plan money. It was my dogged persistence that finally forced the newspaper to publish a correction that brought accuracy to the record.
I continue to be involved in this issue despite surviving a heartbreaking personal tragedy over the past year because I believe the public has a right to answers about what is happening in its town. How foolish to suggest I would have spent so many hours of precious time just “riling up” anyone I can.
Loren Martell is a longtime critic of the Duluth school district’s long-range facilities plan and ran twice for the Duluth School Board.