School learns about Statutory Operating Debt

CLOQUET - While the faces of the children holding a bake sale outside the Carlton High School last Thursday were all sunshine and smiles, the atmosphere inside at the Carlton School Board meeting showed signs of impending thunderheads.

CLOQUET - While the faces of the children holding a bake sale outside the Carlton High School last Thursday were all sunshine and smiles, the atmosphere inside at the Carlton School Board meeting showed signs of impending thunderheads.

Thursday's school board meeting started out on task. Two representatives from the Minnesota Department of Education (MDE) began by explaining to the board and about 30 audience members exactly how state statute defines Statutory Operating Debt (SOD), what the state requires of schools in SOD and why Carlton is being asked to provide four instead of the usual one plan to get out of debt.

Janna Duffy, MDE program finance supervisor and a former business manager for the Carlton School District in the 1990s, outlined the basics of SOD and state trends - fewer schools in SOD - before discussing exactly what the MDE is requiring of ISD No. 93.

Carlton must submit four plans - plans A, B, B-1 and C - detailing every contingency because the district has been in SOD seven of the last eight years and because Carlton hasn't had an approved SOD plan since 2007.

Plan A must detail how much money a referendum proposed for next November will ask for and what the district will do if the referendum passes. Plan B should detail what actions the district will take if the referendum fails. Plan B-1 will describe district actions (staff reductions, etc.) in case the referendum fails and student numbers go down. And Plan C is supposed to tell the state at what point the district will begin the process of dissolving itself or consolidating with another school district, and specifics where the students would go in that event.


"Districts do come out of statutory operating debt," Duffy said. "It takes a lot of work, it takes a lot of planning, but it can happen."

The district does have a small amount of breathing room. Carlton Superintendent Peter Haapala was verbally notified June 16 - he received the written letter earlier this week - that the MDE had agreed to grant the district another extension to submit its SOD plans. The agreement stated that Plans A, B and B-1 must be approved by MDE no later than Aug. 31. Plan C must be approved by MDE no later than Dec. 31. The district must send its plans at least three weeks before the deadline.

Once Duffy finished presenting the SOD facts, MDE's Audrey Bomstad explained how a district decides to reorganize (Plan C) and what options are available, from partnering with another school district to consolidation to simply dissolving the district and leaving it to the Carlton County Board to decide where students go.

After Bomstad finished, board chair Randy Schmitz opened the meeting to the public, asking that people restrict their questions to the facts presented by Duffy and Bomstad.

Not a chance. The first audience member to stand up was Julianne Emerson, a para-professional in the district, attorney and mother to three children, who wrote an opinion piece in the Duluth News Tribune June 8 calling for the resignation of most of the board as well as Haapala, who officially started his job with the district June 7.

Emerson objected to Schmitz's request, then peppered the board with questions about past decision making, Haapala's qualifications, the district's failure to post enough details about discussions since the June 8 meeting and, above all, the community's lack of trust in the board.

"What do you want us to do, tweet you every time we talk to someone?" responded board member Tim Hagenah. "Be a little realistic."

After several minutes, Caryl Kunze, a teacher at the district's elementary school, stood up and pointed out the direction Emerson and others were taking with their questions wasn't helpful.


"If you want them to resign, what happens to the SOD plan and the schools?" Kunze asked. "As far as the superintendent, who wants to be captain of the Titanic?"

After a few more comments, Schmitz adjourned the meeting due to "a lack of decorum" and because Hagenah had left the meeting and the board no longer had a quorum.

"Resign, just resign," Emerson said.

Despite being adjourned, the back-and-forth banter didn't end for some time, nor did the highly critical tone, with board members taking heat for not doing more previously to get the district out of SOD. While they acknowledged the problem was ongoing, Schmitz said the board had trusted the previous administration and were unaware the problem was as serious as it is.

"I've gotten more information from Pete [Haapala] since he started than I got in five years," Schmitz said, defending the new superintendent after Emerson called for him to step down because of lack of administrative experience. The previous superintendent, Scott Hoch, who retired at the end of the school year, has not attended any of the recent meetings. In addition to Hoch, the district's business manager and high school principal also recently retired.

Eventually, Haapala said in a follow-up call, the meeting did get back on track and people started talking about how the district should move forward.

"We're hoping we can turn some of that energy into positive energy to help the school district survive," Haapala said, adding that he hopes the board will schedule twice-weekly meetings for the next month to work on the SOD plans with community members. He has placed that request on the school board's regular Monday meeting agenda.

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