The cost of the Duluth school district's $1 million playground mulch replacement project has been reduced by about $48,000.
School Board members were shown final costs at a business committee meeting Monday night, since the project was completed mid-October. The board put off a decision on a $12,475 increase, also known as a change order, for the project this fall. That increase was incurred when unforeseen conditions led to more work to ensure the project was done properly. In that work, it was discovered the project would carry a slightly cheaper price tag. The actual decrease was nearly $61,000, but the approval of the change order would lower that to $48,000.
Most board members seemed ready to approve both the change order and the reduction next week, with the exception of Art Johnston, who said the decrease in project costs didn't justify paying the change order, and questioned whether the engineered wood fiber that replaced the controversial rubber mulch was what the contract specified.
CFO Doug Hasler assured the board it had the relevant tests and documentation specified by the contract, ensuring the district got what it paid for, and board member Annie Harala said that if problems arose later, that documentation would protect the district if that was proven otherwise.
The owner of a southern Minnesota wood products company, who is also an attorney, sent a report to the district claiming that the material paid for wasn't what it's been portrayed as, among other allegations. Johnston cited that report for his reasoning.
The board approved replacement of the rubber mulch for most district playgrounds last school year, prompted by advocacy from a parent group concerned about potential toxicity. The Minneapolis school district is following suit, using the same landscape architect Duluth used, SAS Associates.
The board was also given an update on the sale of two bonds, which it's set to vote on next week. The district is expected to borrow about $4.2 million altogether to pay off over five years. The money will pay for renovations to Lakeside's Rockridge Elementary and a new roof for Lakewood Elementary.
Rockridge is becoming Rockridge Academy, where the district will educate clients of the Hills Youth and Family Services. The borrowed money is not meant to pay for the mulch project, but that project ate away other money meant for facilities, which was a factor in the decision to borrow. The district's credit rating was recently downgraded by Moody's Investor Services to one that shows substantial credit risk. Financial adviser Steve Pumper told board members Monday that because school districts that borrow are backed by the state, the lower rating isn't as risky for investors.
Interest rates are likely to be higher because of the rating, but not as high as for commercial borrowers, and because the borrowing is meant for a shorter period, will cost less than 10- or 20-year bonds, Hasler said.