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School Board Chair Nancy Nilsen vs. Harry Welty

Harry Welty wrote the following post on his blog. 

We found out last week just how much more we can expect our property taxes to go up because of the Red Plan. So far St. Louis County is only levying 46% of the $407 million cost of the Red Plan. The public will not be happy when, not if, the other 54% is levied.

This is now being treated with kid gloves by the Superintendent who has his allies saying that heíd like to make a ďdealĒ with the citizens. This is the deal. The District will only raise taxes by $125 million. (Heís not counting interest) Of course, the whole plan will cost $407 million so we have been scratching our heads trying to figure out what he means.

What Dr. Dixon is suggesting is preposterous. He is saying that this Board will guarantee that the $11 million additional annual costs of the plan (including interest) over the next twenty years will come not from further increases in the local property tax but from the school operations budget. The Red Plan supporters have been claiming that school operations will save $5.3 million annually but thatís less than half of the increased $11 million annual cost.

So, beyond the reported $5.3 million savings (and I maintain that only about a third of it is savings the rest being staff cuts) future school boards will have to cut an additional $6.7 million from school operations to pay for the Red Plan every year for the next twenty years. Dixon may be able to guarantee that his supine school board will do this while heís still around to mesmerize them but there will be nine more elections over the next 19 years of the Red Plan and he will have no authority to reach into the future to force those school boards to do the same thing. Oh, they will have to pay for the Red Plan but by doing it Dixonís way they will cripple the school system.

The 46% of the Red Plan costs that is already being levied against Duluth district voters is $9.6 million a year. That includes interest payments and over twenty years it will total $192 million dollars. The 54% which has yet to be levied will be $11 million a year more and it too includes interest payments. Over twenty years the $11 million increase will add up to $220 million dollars. Dixon is promising that this $220 million will not actually be levied against the taxpayers because it will all be taken out of school operations. Together the $9.6 million already being levied and the $11 million add up to $412 million. Iíve rounded out these numbers so they are off by a couple million at the end. The Districtís finance people originally sent in their cost estimates to the State Dept of Education which showed the costs of the Red Plan to be $437 million. This calculation is on page 79 of their proposal for the Stateís review and comment. Some months later they announced that they had figured out how to structure the debt so that they could save $30 million thereby reducing the total cost to $407 million. The figures Iíve just given you are off of this by five million dollars.

The property tax information Iíve just outlined came from Donald Dicklich the St. Louis County Auditor.

The ďpromiseĒ that Dixon has made canít be kept. The school staff is already nervous about this yearís cuts. The promise guarantees future annual cuts of an even more draconian nature. Such is the promise of the Red Plan.

The School Board got its first bids in for the first two summer projects last week. They came in a few thousand dollars below initial estimates. There is rejoicing in the Administration. Its a little like a couple of chipmunks running out on the highway to grab an acorn and giving themselves high fives for their accomplishment a few seconds before they are flattened by a truck.

When it was sent to the School Board by a member of Let Duluth Vote the Chair of the School Boar,  Nancy Nilsen, wrote back to explain away Welty's "misinformation." This is the document that outlines 2011 borrowing.

Hello *****,

There is definitely some misinformation in this article. We have levied for all of it. There is not another levy for 54%. We levied for the whole amount last year and it is what is being seen in your current property tax.

The cost of the project is $257 million. With inflation over the 5 years that it will take to implement it, the cost is $293 million. Just like when you purchase a home and pay interest over the life of the loan, we have to do the same thing. If you take the interest into consideration, then you get to the $407 million. The reason it is lower that originally stated is because we got such a good bond rate when we sold the first set of bonds back in January. Interest rates are excellent right now, which is allowing us to save millions in interest expense.

With that said, what we need and have levied for is $125 million. The reason we donít have to levy for the whole $293 million is because we will be selling all the property that we will no longer need and we will be taking the savings from building closures and applying that to the project. For example, we will not need as many overhead type staff such as principles, vice-principles, secretaries, ect. The money saved from not paying these people and from increased energy efficient systems will go to help pay off the project.

If we donít decrease the number of buildings we donít get these savings, so it is not like we have that money to use for programming now. Once the debt is paid off, those savings can go back into programming.

We have said all along that we are going to need an operating levy passed this November. The state does not give us enough money to operate our district. We could close every building in this district and not have enough money to operate. So there will be some difficult decisions coming up soon, but hopefully the citizenís will allow us to pass the operating levy in November to help with the operating side.

I hope I have answered your questions. If not, please donít hesitate to let me know. Thank you for your interest.

Nancy Nilsen


If you care about Duluth and its schools 
don't put your faith in the Duluth News Tribune
The last word on the Red Plan can be found on Harry Welty's blog:
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You never can tell what you'll find.