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State Auditor Reviews Duluth Schools Red Plan

Updated: 07/22/2014 10:17 PM
Created: 07/22/2014 9:25 PM WDIO.com
By: Travis Dill
tdill@wdio.com

The Duluth School Board hosted state auditors at a special meeting on Tuesday. The auditors presented a review of the district's long range facilities plan, which was prompted by a citizen petition. However, Board Member Art Johnston said the review left him with more questions than answers.

The officials from the Office of the State Auditor introduced their report by saying state law limited the scope of their review. That upset Johnston who has supported the citizens asking for financial information on the school district's Red Plan.

“It doesn't seem quite fair to me that a lot of these questions maybe weren't asked. Try to help me, why again, why all the questions that a petitioner asked weren't answered?” Johnston said.

Audit Manager Dianne Syverson said the Office of the State Auditor often cannot answer everything petitioners ask for. She said the auditors limit their analysis to the numbers to remain unbiased.

“We typically don't respond to issues in terms of, for example, is this a good decision or a bad decision. We look at things you can measure against criteria,” Syverson said.

However, her team's review showed the Red Plan did fail to meet initial expectations presented by Johnson Controls. The review states that operating fewer schools was expected to save the district $5.3 million every year, but the auditors said those savings only amounted to about $7.6 million over the last four years.

The auditors' review also showed the district was able to sell only about $4 million of unused property. The Red Plan estimated property sales would make five times that much revenue or over $23 million.

Syverson said those failings led to a deficit that impacted the district's general fund.

“At the end of June 30 of 2013 is almost $9 million as a deficit so other general fund resources have offset the deficit in this account,” Syverson said.

The review also looked at over $84 million of costs not directly related to construction. Johnson Controls received over $56 million of these soft costs for work the company did or to pay third party contractors. The review shows the money Johnson Controls received is 18 percent of the plan's total cost of $308 million.

Johnston said the district shouldn't be paying some of the soft costs.

“I can't imagine why we would give them another $600,000 to do the testing and the balancing when it's clearly laid out, I think, in their contract,” Johnston said.

The review may not have answered every question for those concerned with the Red Plan, but the auditors have broken down how the district paid for the plan.

The auditors said they received the financial information from the district, but their review only includes money spent up to the end of last year.

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