Bonds, Debt and Taxes

I want to thank both Steve Diaz and Dale Ostergaard for having an open dialog.  It is refreshing to get more from a school board director than just, "Call my cell phone to further discuss." Thanks, Dale. I hope you aren't getting any grief from the others for your willingness to communicate.  And Steve, always a pleasure to read your eloquent letters.  Thanks.

Dale:  I respond to your message (text below).  It makes no sense to present a "millage equivalent" from non-millage charges, and there is nothing in your chart to hint at such an approach.  If, again, as you did in your last email to me, you are telling me that the figures provided are not transparent, you underscore the problems of stewardship and credibility under which the school board labors -- problems of the board's own making.  

I will not comment further as this has become a game of district officials consistently offering a moving target, never standing in one place even by the clear implications of their own numbers.  It is another example, just as you may remember the district's reference to "20 year" enrollment projections--which do not exist--during the Act 34 process.  This is part of what is wrong in this district.

The other most significant part of what is wrong in this district is reflected in your complete failure to address the "renovation" issues.  It is beyond cavil that the school board postures and games the public, and then attempts to blame everyone from it's own paid advisers and consultants to a virtually non-existent "inflation" for its own failures of judgment.  This nonsense has to stop: take responsibility for your own performance.  You yourself ran on a platform opposed to the then board-majority's blind support for the renovation plan, but in the face of pressure from your new colleagues you capitulated and caved-in.  Now, the public is not supposed to notice or hold you to your own pledge of independence?  And what of the other matters that no one on the board will discuss as to the failed renovation?  You saw how James Fraasch was bullied and intimidated, and you just bent in the wind to avoid the same fate - and make no mistake that is exactly how it looks to those of us who voted for you, including me.  When does the board accept any culpability for the decisions it makes?  

Let's take a concrete example.  You say that the near $70 million in bonds for the "new building" should never have been sold when they were, and you are absolutely correct in that.  We could not spend the money at that time, nor since for years afterward.  We are paying what is clearly too high a rate of interest and we are paying now, on funds the district cannot use for a project that may never happen and will most certainly not approach the scale for which the school board thought it was borrowing.  Moreover, there is a threat of a Federal arbitrage penalty looming in a matter of months because of the board's imprudent rush to raise money.  It is not unnoticed that you have chosen not to answer such funding, arbitrage, and financial stewardship questions as posed in my email, nor to address what, if any, action alternative(s) the board may be considering to deal with the matter.  The board is like a dog chasing its own tail: no one else sees any benefit in the motion.  How much would this district have saved if the bonds had not been prematurely sold?  Why does not the board admit responsibility for a clearly foolish and improper decision to issue bonds when it did?  It is a classic case of taking a mortgage before you go looking for a house, then only to find that you cannot buy the house after all.  Unfortunately, you used this community's credit to "buy a mortgage" - that is, to issue bonds - because it was other people's money at stake and you thought you could use the borrowing to justify a project for which there is overwhelming community disapproval (remember The 4,000).  A clear example of gaming the community and trying to coerce acquiescence in a project in which most of us have no faith and frankly see as counter-productive and wasteful.  Does the board still insist that the "essential" elements of the building project as extolled in the Act 34 submission, the board's sales brochure for the public, and in its published "FAQs" are "essential"?.  If you do think that, how can you throw yourselves, as you have, into an exercise of jettisoning the LEEDS certification, the 3rd gym, the "crystal tower", the replacement of the entire theater building and the flex-space building "C", etc. etc.?  How can you not answer these questions in simple declarative sentences?  What are you doing and why are you doing it?  Why does no one on the board have the courage to ask the obvious questions about the board's own conduct and stewardship?

The lack of introspection or open-mindedness on the school board are its most salient features.  Note, for example, that when James Fraasch left the board for work-related reasons, an otherwise unanimous board, cognizant of the petition of The 4,000 and the obvious majority sentiment of the community in opposition to your building plans, rather than acknowledge that Mr. Fraasch had been elected by a significant constituency that would have no voice whatever on the board in consequence of his leaving, and that the board, in turn, would have no internal insight into the concerns and interests of that constituency, chose a new member to replace him who, on the contrary, opposed all of the ideas and positions Mr. Fraasch represented on behalf of that constituency so you would be a monolithic "Leviathan" (to borrow Edmund Burke's famous phrase).  This was thoughtless for a local governmental entity, although it was quite consistent with your president's unconscionable commencement address to our graduating seniors this year in which she told them that they should only surround themselves with people who agree with them. This board is as anti-intellectual as it is anti-social and anti-democratic.  We seem to be governed by megalomaniacs.

It is increasingly clear that excuses and explanations are more important to a self-justifying board of politicians than any reasoned accounting of the handling of the public's business in this school district.  It is no wonder this board has failed in its own self-defined mission, and is failing by all objective standards in every aspect of its responsibilities.  In the process, you are also offending and frustrating an entire community of your neighbors.  If this board cannot handle the job, as it now appears, the members should voluntarily step aside and resign so that more insightful, effective and representative members of the community may take a turn to serve (to answer your question:  no, I would not be among those ever seeking a seat on this or any other public board as I did that already, for some 40 years).  

Dale, these are plain words, not disrespectful, but reflective of the facts and realities of the community relations situation developed by this school board as either a conscious policy or by social/political ineptitude.  It is time for someone to say:  "the Emperor wears no clothes".

With Due Respect.  Steve Diaz

                          

--- DOstergaard@mtlsd.net wrote:

From: Dale Ostergaard To: "Steve Diaz, School Board Email list, Lawrence Lebowitz

CC: Ronald Davis Subject: RE: Bonds, Debt, and Taxes...
Date: Wed, 13 Jul 2011 03:14:15 +0000

Mr. Diaz,

I want to clarify the numbers I provided you concerning the PSERS rates and millage.  The "Budget Required for Pension" column represents the total amount payable to PSERS. That includes the District contribution and the state contribution.  The state reimburses 50% of the total cost back to the district.  So the cost to the district is half of what you see in the chart. You are also seeing the total cost, not the incremental cost year-to-year which is a fraction of those numbers.

I calculated the "Millage Eqv" column simply by dividing the Total amount payable to PSERS ("Budget Required for Pension") by the current millage rate to arrive at an equivalent  millage value.  It was not calculated by the District, does not represent the millage imposed on our community for pension costs, nor does it represent any increment in millage to the community for the coming years. The possible millage increment year to year above our current contribution is more in the range of .3 mills to .6 mills depending on the PSERS rate and is already reflected in the Forecast  the District puts on the website.

As part of our annual update of district financials, this forecast will be updated and posted in August with the latest projections .  Our debt service forecast will also be updated.

Sincerely,

Dale Ostergaard