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The Debate we should have had
if there had been a referendum
Below is a vigorous debate
which started with a column by Peter Langr and subsequent emails between Peter
and Harry Welty.
Peter Langr Column
Breaking news: the City of Duluth, along with the Chamber
of Commerce, Visit Duluth, and the group Let Duluth Vote, have presented a new
marketing plan for the City.
The plan will promote Duluth as the “Adequate City”
says a Chamber spokesman. “We’ve got a lot of adequate things in this
town”, he related. “No one has ever thought to promote it before, but
there’s a whole lot of people who are satisfied with adequate, and they just
might like to come here!”
Along with the plan, Visit Duluth will place billboards
with the slogan “Duluth, We’re Adequate” on I-35 north of the Twin Cities,
while all future promotions will feature the phrase.
At City Hall, an assistant to the mayor spoke of the
impetus for the plan.
“We’re great at adequate,” he glowed. “Our
roads are fine, if you don’t mind a few potholes. Our sewers don’t overflow,
except when it rains. Our zoo is good, except it’s not accredited and we
can’t buy more animals. If Let Duluth Vote manages to keep our school
facilities just adequate for the next 20 years, we’ll have the whole ball of
wax!”
“We’re great at adequate,” he glowed. “Our
roads are fine, if you don’t mind a few potholes. Our sewers don’t overflow,
except when it rains. Our zoo is good, except it’s not accredited and we
can’t buy more animals. If Let Duluth Vote manages to keep our school
facilities just adequate for the next 20 years, we’ll have the whole ball of
wax!”
OK, I admit it. This whole thing is just something that
came to me like a bad dream. Except for the part about Let Duluth Vote. Sadly,
their effort to derail the school district’s “red plan” is bizarrely true.
According to de facto spokesman and school board
candidate Harry Welty, the Let Duluth Vote group hopes to create “a lot of
confusion” by proposing to voters a school facilities plan that does little
more than bring the existing facilities up to the level of “educationally
adequate.” The cost of those renovations last year, according to Johnson
Controls, was $41 million.
In reality, the idea that Duluth could solve its
facilities problem with just $41 million is indicative that “a lot of
confusion” has already been achieved, perhaps mostly among Welty and Let
Duluth Vote. A look at the numbers shows why.
First is the actual cost of implementing the $41
million “adequate” plan. As Let Duluth Vote has insisted, once a plan is
approved there are added inflation costs, and there are interest costs. Using
the same rates as the School District has used for the red plan, the cost of the
“adequate” plan grows to $71 million.
That’s not all, however, since a major reason for the
red plan is to decrease inefficiencies in the current school facilities. Those
inefficiencies, which last year were estimated at $5.3 million, won’t be
solved by the “adequate” plan. They will grow, at least by the rate of
inflation. The total of those costs, using the same 20 years that it would take
to/0 pay for the red plan and a 3 percent inflation rate, is over $147 million.
That’s $147 million taken from programming and wasted
due to inefficient facilities. Millions of it, literally, will go up in smoke.
(Welty tells us that taxpayers will vote down the next
excess levy if the red plan is completed. Does he think that taxpayers will
continue to vote for levies knowing that 100 percent of those monies effectively
are wasted on inefficient facilities?)
Add it up - $71 and $147 million - and the minimum
total for the “adequate” plan would be $218 million.
In reality though, it’s unlikely that the
“adequate” plan will get us through the next 20 years without more costly
inefficiencies, more costly lost students, and costly piecemeal construction
projects. Welty himself has said he wishes to close East High School and do
major (read: expensive) renovations at Central. A million here and $10 million
there, and we could easily end up paying as much for the “adequate” plan as
for the red plan.
When people ask poor questions, they get the wrong
answers. Such is the case with Welty and Let Duluth Vote. They want to ask us if
we would like to spend more than $400 million on the red plan, or just $41
million on their “adequate” plan. That’s the wrong question.
The real question is whether we would like to spend
over $400 million to solve our facilities problems with the red plan, or whether
we would like to waste $218 million to solve virtually nothing, and then pay
millions (likely hundreds of millions) more down the road.
I, for one, expect better than temporarily adequate for
my money.
Or should we just have Visit Duluth start putting those
billboards up?
Harry Welty's reply
Mr. Langr,
You posit that stopping the Red Plan would cost
the Duluth School district hundreds of millions in wasted money through
inefficiency. The numbers the red plan partisans have been throwing around is
something like this: spend $20 million a year and we can save $5
million a year. That's not a very good spending to saving ratio.
You obviously don't know much about the politics
of excess levies. I've had a hand in trying to get the last four passed in
Duluth. The notion that people will vote against them because they are mad at
permitting the inefficiencies to continue is just silly. The notion that they
will vote against them because their taxes went up too high is not. You will
be sacrificing money for the classroom to have nice shiny new buildings with
crumby, gutted programming. Dr. Dixon will be gone when that happens but
my grandchild will suffer from Dixon's legacy. When the 2001 excess levy
failed we lost a lot of music programs, the seven hour secondary day, and
crowded more kids into classes. Two Harbors, which built a shiny new High
School hasn't been able to pass excess levies and they just laid off 25
teachers. If we lose our $5 million a year how many teachers will the much
larger Duluth lose? I used to calculate that teachers cost about $54,000. Of
course, we won't be losing the highest paid teachers but the new teachers on
the bottom of the payscale. Divide a $30,000 salary into $5 million and you
can begin to see how big a hit the young teachers could take. I calculate
166 teachers. Do you still feel like being cavalier about my worry?
You have put tremendous faith in all that Johnson
Controls has spun about the red plan. What ever happened to good old fashioned
skepticism?
Here's a portion of what I told the State
Department of Education last week and I'd match my figures against yours
any day.
"According to the information coming out of JCI
and the
Duluth
School District
the average
Duluth
household will only pay between $9 and $11 per month in property taxes if
the Red Plan is adopted for a maximum of $132 annually. Let’s test this.
If you multiply $11 dollars, by 12 months and then
multiply that by 20 years you get $2,240 per household. If you assume that
there are 2.5 people per household this would result in $896 in taxes for
the average resident of the
Duluth
school district over the course the Red Plan.
But if you multiply this average individual tax burden
by the 94,000 residents of the Duluth School District the resultant taxes
over twenty years would yield only $84,224,000 a far cry from the $437
million it will take to finance the Red Plan..
If you simply divide the $437,000,000 figure by the
District’s 94,000 residents you come up with a considerably higher per
person tax over twenty years - $4,649. As some wag once said, “figures
never lie, liar’s figure.”
JCI has had a long history of working with school
districts on issues relating to air quality and construction. It advertises
itself to school districts as an expert in helping pass bond referenda. It
must be very annoying for JCI to put in lots of work with a District only to
see a referendum voted down. In fact, half of the
Minnesota
school referendums failed in 2005. It must have been tempting for JCI to
search for a way around this unprofitable work and since JCI’s attorneys
have so much experience with school finance law its not all that surprising
that they would discover a way to avoid referenda all together...." You
can read the rest here.
And its that last point which a lot of you
don't get. Your vote is being stolen. I'm an old Civics teacher and I believe
our votes are precious and should be defended. It will take a lot more than
your snarkiness to derail my train.
Sincerely, Harry Welty
Peter's riposte with Harry's
inserted comments
Dear
Mr. Langr,
It’s
late and I’ve had a long day so I won’t do justice to your reply but I’ll
insert some comments throughout the body of your reply.
PETE
LANGR <PETELANGR@msn.com> wrote:
Dear
Mr. Welty,
Thank
you for your comments. I appreciate
that you took the time. I was
hoping someone would critique my numbers.
I
fail, however, to see how you have shown my numbers to be false.
Unlike
what you say, I do not advocate spending $20 million per year to save $5
million. I believe I showed that
the minimum cost of not doing the red plan is well over $200 million, or $10
million per year. So in a worst
case scenario (as a defender of the red plan) I advocate spending $10 million
per year to save $10 million per year, and then spending another $10 million per
year to buy new or like new facilities, and solve the facilities problem.
I think $10 million per year over 20 years to solve the facilities
problem is reasonable, given the large amount of work that ought to be done.
One
of the first conversations I had with the State Dept. of Education revolved
around the skepticism they had for the “savings” figures offered by JCI and
the District. Some are highly speculative. One of the savings comes from the
elimination of “specialists.” from the payroll.
When
Gary Glass pointed out that these were teacher he was surrounded by JCI suits
who said he was misusing their figures and that “specialists” were not
teachers. They are wrong.
I
understand how the elimination of an assistant principal or a janitor, or a
secretary from an unnecessary high school can save money but I’m not sure that
eliminating teaching positions is a very good way to save money. I’m also
skeptical about the transportation savings as well.
I
have always advocated closing a high school because I knew maintenance costs
could be cut down and put into programming. When I was on the Board the public
wasn’t in a frame of mind to give us a blank check so I wanted to close a high
school to save money. Never in my wildest dreams would I have expected it to
cost a quarter of a billion dollars to close a high school.
As
for the necessity for tearing down and rebuilding so many schools…..I don’t
see it. While I was on the Board we had a very carefully constructed ten year
plan that was updated to fix major problems. It would have been nice to pump
more money into the buildings but we weren’t letting them fall into disrepair.
Some of the buildings slated for destruction have had major building renovations
in the last twenty years such as Nettleton. It makes little sense to me to
destroy it and doing so will destroy the center of the city for the sake of
“savings.” Phooey!
Remember,
this is a small town. We are only about the 286th biggest city in the
US
. We are also a city with a high proportion of elderly on fixed incomes and a
much larger percentage of folks in poverty than most cities. The recently
released bankruptcy numbers are also alarming. We’re in a housing bust at the
moment. Why we are contemplating offering up the single biggest building program
in state history when construction costs are at an all time high. That makes no
sense to me.
You
mention the politics of excess levies. I
have been involved as an observer in several excess levies, one fairly
intimately as a teacher. During the
passage of Duluth's most recent excess levy I seem to recall several letters to
the editor, and I have also heard personal comments, from people who stated that
they would not vote for the excess levy until the school board had quit wasting
so much money on its inefficient facilities.
I too, am much less likely to vote for a future excess levy if the red
plan does not go through and I know that my money will just be wasted, and not
really applied to programming at all.
Some
of what you say is true. We were criticized by many for not closing a high
school. Ironically, the people who felt that way were my disciples. I had over
the years convinced them of the value of this position after years of stubborn
refusal by the Board to consider this. Bevan Schraw, a fine fellow who I helped
two years ago by personally passing out 6,000 flyers for his school board
campaign, told me that his wife had voted against the 2001 excess levy for just
that reason. Never, however, did a single person complain because they wanted us
to spend a ton of money to rebuild our facilities. That was in no way part of
the discussion. My disciples wanted us to close a high school because they
wanted more money in the classroom.
A
critique of some of your numbers, some of which matters to the overall debate
and some of which does not. I hope
you will correct your information, since you have stated that you are opposed to
information that is misleading.
First,
the cost of a teacher, even a new teacher, is much more than $30,000 per year
when benefits and other costs of the hire are factored in.
I believe (from my teaching days, where my school district would require
teachers to budget for the overall cost of their salary) the costs may be as
much as 60% higher, but you can check on that.
Its probably largely irrelevant to the overall discussion, but your
number is well off and if you believe in accuracy you should check it.
As for your worry about not passing the excess referendum if the red plan
goes through, I remain unconvinced that it will be any harder to pass if the red
plan goes through than if it does not. That
seems to be more of a he said/she said than anything.
You
are right about these numbers. I hastily threw them together when I emailed you.
Frankly, I am a little rusty on some of the stuff I dealt with four years ago. I
believe that $54,000 was about the top salary for our top teachers and now that
I reflect on it, it was the cost of a new teacher plus benefits. Obviously, if
this is correct my dire numbers for layoffs would be cut back considerably. Even
so, they would be significant and I believe we made some serious staff cuts
after the 2001 levy failed. I recall taking calls from distraught staff but I
can’t remember the total layoffs any more.
I
believe you make a fundamental error in your analysis of the per household cost
of the red plan, and therefore the $84 million number that you give as the total
property tax levy is incorrect (as would be your implication that somebody is a
liar). You state that the average
Duluth
household will pay about $10 per month for a total cost of $132 per year.
I believe this is incorrect. I
believe that the District has said that the median household will pay about $132
per year. As you know, there can be
a huge difference between average and median.
Median means that half of the citizens will pay more, and half will pay
less. However, those that pay less
won't pay too much less, since there is a limit to how cheap a home can be
(there aren't many homes below $90,000 any more).
However, those that pay more can easily pay much more, for example for a
$400,000 home. Since there is an
equal amount of families paying significantly more as compared to the number of
families paying a little less, your number is skewed low - probably very low.
Your $84 million number could be much more, depending on the range of
home values in
Duluth
, but you would need to get some better data to find the actual number.
In any case, you are misleading the public by using the $84 million.
If in fact the $84 million is significantly increased, then that, plus
the efficiency savings, along with other sources of revenue that the District
has we would get near the $400+ million. In
any case, it makes little sense for you to use a number that you now must
suspect is significantly wrong.
The
District did indeed say that the $125,000 home was the “median” home which
would mean that half the homes in
Duluth
would cost more and half would cost less. And yes, we don’t have many two or
three thousand dollar homes. However, in the infamous survey that JCI paid to
have done 46% of the participants said their homes cost more than $125,000 and
only 15% said their homes cost less than $125,000. If the people being surveyed
had been typical the split would have been much closer to 30%/30% that is, if
the $125,000 really was the median. I suspect the people surveyed were typical
and that this indicates that house prices are considerably higher than JCI has
let on. The $125,000 figure, even if it is a median number, has been thrown
around as though it meant an “average” home. You and I know that there is a
difference in statistical nomenclature on this point but most people reading
this won’t understand that fine point.
I’m
not sure if you are right about whether the taxes would be that much greater
because the expensive homes would skew them higher. I suspect there is truth in
your observation but I doubt that it would make up for the difference I pointed
out - 437 million minus $84 million. If I was a school board member it’s the
sort of question I’d be intrigued to ask. It would take some legwork to ferret
it out but, of course, I’m not a school board member and am dependent upon the
numbers coming out of JCI and the District. On that score I’ll just mention
that Gary Glass has been trying to get information of a financial nature from
the District but that he has been stonewalled. I told
Gary
it will be different once he is on the school board.
(Just
as an addendum to this question, do not businesses pay property tax also?
Maybe not for a school levy. But
if they do, this would also significantly increase the $84 million.)
Yes,
you are absolutely right. This is something that occurred to me shortly after I
presented this simplistic figure. I have not attempted to find out how many
businesses there are in the Duluth District but I’d bet it would be between 5
and 15 % of the number of residences. Commercial and Industrial taxes are
steeper than residential property taxes but they can’t come near raising three
times as much revenue as residential taxes or no one would do any business in
Duluth. Just what proportion of the
taxes raised come from C&I I’d like to know just for the sake of
curiosity.
Duluth
also has about 33 TIF districts. My guess is that the businesses that aren’t
in the TIFs will really get socked hard.
(On
your website you make the same mistake when you say that JCI says that the
median priced home in
Duluth
is $125,000, but the Duluth City Assessor gives the average price as $168,000,
and you imply that JCI is misleading the public.
They are not. They simply
know the difference between median and average.
Also, there is often a very significant difference between assessed value
and actual value of a home, which you no doubt know from reading your property
tax statement.)
That
$168,000 is the average sale price of
Duluth
homes over the last three years. I make no claim as to whether it reflects the
average price of a home. I use it merely to undermine confidence in the claim
that the “median” priced home is $125,000.
So
much for numbers. You asked me what
happened to good old fashioned skepticism.
I will tell you. When the
facilities planning and public meetings were going on (over more than a year) I
paid fairly close attention and attended meetings.
I was skeptical, and in fact several times remonstrated the
Superintendent and representatives of Johnson Controls to not have preconceived
notions. After the data was in I
looked at it myself and came up with my own facilities plan based on the data
and what I know of the schools from personal experience.
I expected Johnson Controls to come up with a plan far different from
mine. I was wrong.
The "two school" plans were essentially what I had determined
on my own. So far from becoming
more skeptical, I was instead given the idea that those plans were reasonable,
and would solve our facilities problem for a price that is reasonable, given the
magnitude of the problem. I don't
think skepticism is particularly productive on this project anymore.
It
will be the voters who decide what a reasonable price is. They won’t get to do
it in a referendum but they will have an excess levy next year. We’ll see
whose prediction comes closer to fruition.
And
no, I don't believe my vote is being stolen.
I voted for the school board to implement a facilities plan, and they
did. I'm proud of them for having
the guts to do so.
Had
it not been for Johnson Controls it would never occurred to our school board to
skip a referendum. They did it because they were afraid a referendum would raise
doubts and cause the red plan to be defeated. This is not
California
. This is not a damned initiative. People in
Duluth
have always been able to vote on major school building projects. Skipping a
vote is a duplicitous way to avoid answering questions. The questions we are
raising would have been discussed in a referendum and the
School District
would have been quick to answer them. Our current campaign is a left handed way
to get the same debate going. Not voting on this is unprecedented. Yes, sadly,
it appears legal but if it is, it is almost certainly unintentional. And just
because it may be legal doesn’t make it right. This is the School Board as
“thief in the night.”
If
you would define snarkiness I would appreciate it.
The context makes me think it is a bad thing, and I would correct it in
the future, but I am not sure what it means.
I
believe snarkiness is a new slang term for being snide. I
know you are passionate about the red plan but the tone of your piece undermines
your case. It’s what I expect from people who have nothing but contempt for
others. Because I think I’m going to win I actually prefer it to having the
Superintendent laugh in my face about how there was nothing I could hope to do
to stop the Red Plan’s approval by the state. That arrogance is a lot like Tom
Hustad’s telling one of the Let Duluth Vote people to “shut up and sit
down,” last spring. for which he later wrote an apology.
I
believe this plan at this price was a forgone conclusion the moment JCI realized
they would be able to skip a referendum.
Unless
I am much mistaken in my numbers, the email that you sent me and put on your
website holds several inaccuracies in the numbers.
I hope you will correct them on that site, or place this email on that
site, or else if I am incorrect in my numbers please show me how.
I do make an effort to be accurate.
I
will not correct my numbers on the website but I will put this email with my
replies on it. This is a poor substitute for the debate which we should have had
on the Red Plan but I guess it will have to do.
Thank
you again for your comment.
Sincerely,
Pete
Langr
And
thank you for your comments.
Harry
Welty | 
