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Not Eudora
By Harry Welty
Published May 9, 2008

(This column was not published, with my permission, by the Reader  because I quoted email Nancy Nilsen had sent out without her knowledge. The email was sent out to people as official replies from the Chair of the School Board and dealt with District business. Still, Nancy was not aware they would be sent to me.)

Fuzzzzy Math

As Mike Jaros’ bill to require a vote on the Red Plan proceeds through the legislature, much to the Duluth News Tribune’s surprise, a debate has grown about how much the Red Plan will actually cost Duluth taxpayers. There is no denying that it will cost taxpayers $407 million dollars. That is the amount that includes the $293 million cost of the plan and the interest which must be paid back to finance it. Let’s say the District sells old buildings for $23 million and the total cost is $407 minus 23 million. That’s $384 million dollars to pay for the Red Plan. That’s my math.

Before I go any farther - I’d like to remind readers that this discussion is a minor point for some of us in Let Duluth Vote. Remember, we organized last year to guarantee that our vote on the Red Plan wouldn’t be stolen. Now that that’s off my chest I’ll pull out the old calculator and do the math the way the Red Plan’s supporters do it.

In response to our claim that the Red Plan’s true cost is $407 million with more levying to come, Dr. Dixon wrote an op ed piece in the Budgeteer. District taxpayers would, he said, only pay $125 million for the Red Plan. This cry was taken up by the School Board Chair Nancy Nilsen. It was passed on by David Ross, CEO of the Duluth Chamber of Commerce. Most recently it was sent out in a letter by Senator Yvonne Prettner Solon to all the State Senators. She was advising them to vote against the Jaros bill. (As a side note, Yvonne’s late husband, Senator Sam would be rolling over in his grave at the thought that Yvonne was leading the charge to close Central High School .)

Here’s how Nancy Nilsen refutes me in a recent email:

“The cost of the project is $257 million. With inflation over the 5 years [I think Nancy means 20] 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.”

So far so good. We both agree that the total cost will be $407 million. But Nancy goes on:

“What we need and have levied for is $125 million. The reason we don’t 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”

OK, I guess I can follow that. We sell old school district property for $23 million and subtract that from the total. That gets us to $384 million. Hey that agrees with the math in my first paragraph. Now about that savings…….

The School Board keeps saying that the Red Plan will give us $5.3 million in annual savings for twenty years. That would be $106,000,000. So let’s subtract that from $384 million. That leaves us to pay off $278,000,000. Now were getting close to the fuzzy math.

Finally, let's subtract that $125 million that Nancy and the Superintendent both say is all we will have to pay in taxes for the Red Plan. OK...take away $125,000,000 from $278,000,000 and we’re left with...WHAT! Another $153 million that still needs to be paid…..Wait a minute. I thought Nancy said that there would be no additional taxes. Who is going to pay for this additional $153 million in Red Plan expenses?

At last December’s Truth in Taxation meeting the School District ’s financial advisors, Northland Securities, passed out a document showing how the Red Plan would be paid off. It showed that $59 million will be borrowed in 2011 for the as yet to be approved western middle school and west end elementary. It showed that $16 million will be borrowed in 2011 for an additional Lease Levy and $35 million borrowed for an Installment lease. Although not the $154 million I’ve gotten us to its still $111 million more to be added to our taxes. It will add over $6 million each year.

Maybe Nancy ’s math skills are better than mine. She does work for the County Auditor . Of course, Nancy might be off the School Board in 2011 when these additional taxes have to be levied. Maybe that’s why she doesn’t count it.