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Duluth School Board moves forward with debt refinancing

The Duluth School Board voted Tuesday to move forward with refinancing and restructuring of debt services related to the Red Plan.

The board was unanimously in favor of refinancing two bonds, which based on current market values, could save taxpayers nearly $1.7 million over the next eight years.

When it came to restructuring a third bond and extending its life by five to six years, the board was split 4-3 in favor of the resolution, with board members Josh Gorham, Nora Sandstad and Sally Trnka voting no.

Extending the life of the bond could cost the district nearly $500,000 more in the long run, but it could free up about $700,000 annually over the next 10 years in the district's general fund.

The administration recommended the approval of restructuring the bond. Superintendent Bill Gronseth said for the 22 years he's been in the district, it has been in reduction mode, and the district needs to find a way to balance the budget.

"Year after year, we've put off buying buses, we've put off buying cafeteria tables, technology and any number of things that come up on our list of needs," he said. "Every year we make very difficult decisions because we also want to make sure that we have as many people in front of our students and working with our students that we can. This money, although it's not a huge amount, when we see $700,000 a year over the next 10 years, that could be a bus this year or we can add that to our curriculum budget to get materials."

District CFO Cathy Erickson said the debt that would be restructured is less than 20 percent of the district's overall debt.

Board member Jill Lofald said she voted for the resolution because she's "looking for any opportunity to help us right now."

"I feel like our budget right now is in crisis. We have no reserve funds right now to lean back on," she said. "I believe that $700,000 over the next 10 years can help stabilize and actually put in some opportunity so that in 10 years we will be (more stable)."

Though Trnka agreed that the budget is in crisis, she said it's nothing new.

"We've been in budget crisis for 10 years and at some point we have to put barriers in place," she said, adding that she struggled with how the district would use the funds.

Board member David Kriby said budget stabilization is necessary and the potential for an extra $700,000 annually in the general fund could help do so.

"I've been in several schools lately and have talked with staff who are in crisis mode for lots of things. Take technology, for instance, I think an investment in technology is necessary," Kirby said. "It's not something that we can put off anymore and we need the money to do that."

Sandstad said the $700,000 shouldn't be looked at as a savings.

"It's money that we are borrowing from the future and any idea of a savings is an illusion," she said. "It is money for us to play with currently that we will then have to pay back for five to six additional years."

The School Board will have another chance to vote on the restructuring and refinancing the debt before the sale of the bonds are made official.

Adelle Whitefoot

Adelle Whitefoot is a Michigan native who moved to Minnesota in Sept. 2014 when she started as a reporter for the Lake County News-Chronicle. She graduated from Northern Michigan University in Marquette, Mich., in 2012 with a bachelor's in English writing and has been a professional photographer since 2011. Whitefoot is the night general assignments reporter for the Duluth News Tribune. 

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