As we reported last week, the Timberjay provided the school district and Johnson Controls with advanced copies of our report on exaggerations in savings from staff reductions attributable to the school district’s $78.8 million facilities plan.

We received a statement in time for our deadline from JCI, which was included, in its entirety, in last week’s report.

Late on Friday, we received a similar statement from Michelle Kenney, of the Knutson, Flynn & Deans law firm, which is representing the school district in these matters. Ms. Kenney’s statement is as follows:

“The School District has consistently conveyed that a Long Range Plan was needed to provide financial stability.  That Long Range Plan started by looking at the 2008-09 budget as the baseline which was then projected out to the 2011-12 budget assuming that no changes in programming and staffing (FTE) would take place.  By doing nothing it was projected that the budget deficit would increase to $4,131,829 in 2011-12. 

 “It appears that there are two main complaints regarding the School District figures.  First, it is alleged that inflated salary figures were used to compute staff reduction savings because an average salary amount was used instead of the lowest salary amount.  Staff reductions, however, are realized in many forms such as retirement, resignation and layoff.  Because staff close to retirement earn more than beginning teachers, the School District utilized an average salary taking into account all costs attributable to the employee.  Second, it is alleged that staff reductions made in the intervening years should not be attributable to the overall savings projected in the Long Range Plan.  However, the Long Range Plan was meant to evolve over time and not simply maintain the status quo for four years and then make all of the changes at once.  Because of annual budget shortfalls, the School District could not sit back and wait to implement all of the staff reductions, especially where declining enrollment was occurring.  However, all of the reductions are a part of the overall Long Range Plan to reach the result of an annual budget surplus.  Therefore, neither the savings nor the staff reductions as a result of the Long Range Plan were exaggerated as alleged.”

Ms. Kenney’s statement reveals a number of things, including that she has apparently been misinformed.

Throughout her statement, Ms Kenney refers to a Long Range Plan. She states that the Long Range Plan used 2008-09 as a baseline and that any savings achieved from that point on were all part of an “evolving” plan. It sounds reasonable, except it isn’t true.

As we reported, and as JCI and school officials maintained to voters and to the Department of Education from the outset, the plan was not an evolving long range plan that could include any cuts achieved along the way. The plan presented to state officials and to the voters was a Long Range Facilities Plan, that involved $78.8 million in capital bonding and that would purportedly achieve $5.6 million in operational savings as a result of school closures and consolidations.

In the Review and Comment document JCI prepared for the Minnesota Department of Education, the company stated:

“Implementation of the long-range facilities plan will result in operating and staffing expenditure reductions. With the reduction from four PreK-12 schools into two PreK-12 schools, the district will gain a large savings in operational cost due to the closing of four old oversized buildings into two new “right-sized” buildings. The district will also realize a large impact from staff reductions due to the consolidation.” In the chart immediately below this statement, JCI includes a chart purporting $5.622 million in cost savings resulting from the plan.

That’s an exact quote from a document prepared by JCI and paid for by the school district. School officials and JCI unquestionably purported that the savings were attributable to the facilities changes they were proposing and for which they were seeking state and voter approval. Keep in mind, the district would not need MDE nor voter approval for implementation of a long range plan. It is precisely because this was a facilities plan that MDE and voter approval was necessary. The $5.6 million in savings was to be achieved, according to JCI, as a result of implementation of the facilities changes.

Yet Ms. Kenney wants us to believe that staff reductions approved in June 2009 for a school year that ended more than six months ago are somehow attributable to a facilities plan that was never scheduled for implementation until this coming fall. It’s absurd.

And there’s more distortion in Ms. Kenney’s response. As she states, JCI used the “average” cost of a teacher in calculating savings because some older teachers were likely to retire and those retirements would save the district more than the average teacher.

First of all, JCI did not use the “average” teacher cost, as Ms. Kenney claims. As we reported last week, and as we can fully document, JCI systematically used figures well above the average.

But just as importantly, Ms. Kenney’s rationale for using “average” costs is untenable. It is certainly true that some teachers in the district will retire next year. Some teachers retire every year, but this has nothing whatsoever to do with the facilities plan. This is simply part of the normal transition that occurs in any workforce.

Here is the important fact: any and all layoffs achieved as part of the facilities plan will take place as stipulated in the district’s various employment contracts. And those contracts establish the same first hired, first fired principle in effect in most public employee contracts. There is not one senior teacher who will be laid off as a result of the facilities plan. And Ms. Kenney is fully aware of this fact.

This response is incredibly revealing. It demonstrates just how shaky the school district’s case really is. When presented with credible allegations that school officials were the victims of a complex fraud, they can only resort to distortion of the record, and arguments that don’t withstand a moment’s reflection. It’s time for the school board to put an end to the hollow rationalizations and start judging JCI’s financial discrepancies with the degree of gravity they deserve.