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Duluth school district expected to pull $3.3 million a year from general fund

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A Duluth School Board Member says taxpayers deserve a second opinion when it comes to how the school district is paying to maintain vacant school properties.

The cost, $45 million over fifteen years. The concern, that money is coming from the district's general fund.

The general fund purpose is to provide teachers salaries, students education, and utilities within classrooms.

School Board Member, Art Johnston is bringing forth a resolution at Tuesday's school board meeting that is asking the school board and administration to investigate alternatives, rather than pulling $3.3 million a year from the general fund to pay for debt obligations.

According to Johnston, the administration has not been willing to look into other options to fund the school's buildings debt.

Currently, the administration is working under the legal financial advise from the same company that gave them advising during the Long Range Facilities plan.

Johnston feels it's worth getting a second or third opinion, if it means saving millions of dollars from the general fund.

However, Duluth School District Chief Financial Officer, Doug Hasler believes they have stressed all other options and the district has a legal obligation to pay back these bonds; the general fund being the only source of funding.

Johnston says, there is a statute that prohibits schools from using money from a general fund as a permanent solution for funding.  

"There is 127B.72 which bars schools from making permanent transfers from one fund to another fund. From a non-operating fund to an operating fund like the general fund unless you have special permission from the commissioner of education. We've never got that," says Johnston. 

However, Hasler says the decision is nothing new. "What was decided by our school board when this financing was approved was that some part of that would be paid out of our general fund. And that remains with us today and that is something that we don't believe we have options available to us under Minnesota law to change."

Bill Kiesow from the Minnesota Department of Education says he's not aware of any other districts in the state that use general funds to pay off this type of debt.

School Board Chair, David Kirby says, "the original payment system for the Long Range Facilities Plan was reviewed twice by the Minnesota Department of Education and passed review. He says at this point in time some of the money has to come out of the general fund which he thinks is unfortunate but that's the law and the board can't break the law." 

Johnston says, it would cost money to get another opinion however, he feels it could save money in the long run.

We reported, in error, the Department of Education stated the Duluth School district is misusing money from general fund to pay off debt associated with vacant school buildings. That is not the case.
Bill Kiesow, with the Minnesota Department of Education, told us that he is not aware of any other districts in the state that use general funds to pay off this type of debt.
The School Board approved using the funds with the passage of the Long Range Facilities Plan in 2009.

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