In 2008, when Johnson Controls Inc. developed enrollment projections for the St. Louis County School District, or ISD 2142, those projections pegged district-wide enrollment at 1,909 students by the fall of 2011. At the time, JCI and school district officials cited those projections of falling enrollment as a major factor behind a looming financial crisis.

But one year later, when JCI was crafting the $78.8 million facilities plan it claimed would solve the district’s financial woes, it pegged the district’s baseline enrollment significantly higher than that, allowing JCI officials to add nearly $1.5 million in extra revenue to their calculations— revenue that the district was unlikely to ever receive.

The discrepancies in both enrollment and revenue projections represent just the latest findings in an ongoing investigation by the Timberjay into the assumptions and calculations used by JCI in developing its case for the facilities plan. Voter approval of that plan in December 2009 netted the company nearly $12 million in fees.

Last week, the Timberjay documented that JCI systematically overstated savings from staff cuts attributable to the plan.

Enrollment projections

set the stage

In Minnesota, almost all school district revenues are tied directly to enrollment, which makes student numbers an important factor in the financial health of districts. In ISD 2142, the district has experienced a slow but steady erosion of student numbers, and concerns about its financial future prompted district officials to hire JCI in early 2008 to assist in development of a long-range plan. That effort ultimately led to a $78.8 million facilities plan developed by JCI.

As part of the initial planning , JCI drafted enrollment projections, with assistance from Applied Insights North. JCI officials presented their report to the school district in August 2008. The 50-page document highlights the trend of declining enrollment, which was projected to drop from 2,101 in the 2007-08 school year to 1,909 by the fall of 2011 and 1,872 by the fall of 2017.

Those enrollment declines were incorporated into financial projections, completed one month later, that suggested the school district faced a $4.1 million budget deficit within three years without major changes. That looming financial crisis created the backdrop for the facilities plan that JCI developed several months later.

But when crafting that plan, JCI officials did not use the enrollment numbers it had developed just months before. Instead, the company used a base scenario that included 2,041 students, or 132 more than it had earlier projected, a discrepancy that added more than $1.4 million in revenue to JCI’s calculations. While JCI officials acknowledge that their facilities plan— which includes school closures and consolidations— would lead to a modest loss of enrollment (approximately 41 students), it still projected district-wide enrollment at 2,000 students as of the 2011-12 school year.

The discrepancy likely wasn’t due to better than expected enrollment in the months following the release of JCI’s original projections.

In fact, the district’s decline in enrollment exceeded the pace outlined in JCI’s original projections by a significant margin. As of the beginning of the current school year, the district’s enrollment had already slipped below 1,900. According to school district documents, just 1,883 students were attending district-wide as of Nov. 30, 2010. JCI’s original projections had estimated 2010-11 enrollment at 1,962.

The school district stands to lose at least 60 more students by the time school opens in the fall of 2011, and that does not include potential losses to open enrollment stemming from the partial implementation of the facilities plan. That is almost certain to push the school district’s enrollment to less than 1,800 when the district opens school doors next fall. That would put enrollment more than 200 students below the projections used by JCI in calculating the benefits of its facilities plan.

Enrollment discrepancies affect revenue

Inflated enrollment projections used by JCI allowed company officials to include more revenue in their calculations on the effects of their facilities plan.

When it crafted its original financial projections for the district in 2008, JCI used lower enrollment figures, which resulted in a total basic aid revenue estimate of $11.56 million in the 2011-12 school year.

But in its calculations on the effects of its facilities plan, JCI officials used higher enrollment, and that justified higher basic aid estimates— a total of nearly $13.1 million.

But the district almost certainly will not see that much revenue following implementation of the plan.

In fact, the actual basic revenue is likely to be much closer than the original JCI projections, around $11.5 million.