The St. Paul school board last week agreed to borrow another $85 million for school construction, but it’ll be months before they decide how to spend it all.

The district is one of four in Minnesota that have special permission under state law to borrow money and levy taxes for school facilities projects without voter approval or specific budgets.

In St. Paul’s case, that’s enabled $112 million in renovations to move forward each year since 2016 with relatively little scrutiny from board members or the public.

That’s beginning to change.

Following a Pioneer Press report in May on inaccurate cost estimates, the district hired Dallas-based Jacobs Engineering Group to improve processes in its facilities and finance departments.

More than half of the review team’s 52 recommendations either are being implemented or are in process, according to the district. And officials are starting over on a new five-year construction plan expected to go before the board in spring.

But the district is struggling with what to do with American Indian Magnet and other projects that have undergone significant design work but have not yet broken ground.

A renovation and expansion for the preK-8 school in Dayton’s Bluff was set to begin next year, but after cost estimates jumped to $53 million from $23 million, board members want a detailed explanation for why it’s still moving forward — and why they aren’t just building a new school.

MONEY FIRST

That discussion will come at a future board meeting.

On Tuesday, however, the board agreed to issue $70 million in special financing called certificates of participation to pay for part of AIM and four other schools.

Two board members objected to approving the funding mechanism before the underlying project.

“My preference would be to put the horse before the cart as soon as possible and starting using that process that will inform us to look at AIM in particular,” Jon Schumacher said in his final meeting on the board.

Admittedly “agitated” over unanswered questions, Steve Marchese was the only board member to vote against the $70 million in certificates late Tuesday night; he did vote for $15 million in general obligation bonds for other projects.

“We stand in the shoes of the voters. Whatever you provide to us should be equivalent to what you would provide to people in the community if you wanted them to vote yes. You haven’t provided that to us, so why should I vote for this right now?” he said.

District administrators said interest rates are good, and a significant delay in financing would require the AIM project, as well as Ramsey Middle School and Cherokee Heights Elementary, to be postponed till 2021. That would further raise costs and drag out the schedule for other schools.

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Administrators also said they’re confident that, despite concerns raised by their Texas consulting firm, a high-priced renovation is the right call for AIM.

“I think you will come to the conclusion that the due diligence has been done and we have thoroughly looked at renovate versus rebuild,” Chief Operating Officer Jackie Turner said.

‘ABILITY TO WORK FASTER’

St. Paul has flexibility with its facilities financing thanks to a legislative change made in the late-1980s.

The district’s lobbyist, Mary Gilbert, said in an interview that St. Paul at the time was looking to buy two buildings now known as the Rondo Complex and Expo Elementary.

Rather than waiting to get voter approval for a bond sale, they persuaded lawmakers to allow school districts to make a lease purchase by issuing certificates of participation, in which investors buy a share of the project’s lease revenue. The certificates come with higher interest rates than general obligation bonds but can be sold more quickly and without voter approval.

“We needed to act quickly or we would have lost them,” Gilbert said of Rondo and Expo.

Besides the need for speed, Gilbert said it can be difficult for a large school district to win voter approval for facilities improvements unless the plans include something for every corner of the city. That’s especially the case when much of the money is going toward hidden building infrastructure, such as ventilation systems.

Today, St. Paul, Minneapolis, Duluth and Rochester are the only school districts that can use that type of financing.

Instead of justifying their plans to voters, district officials have to persuade only the state education commissioner, who must certify that the project will somehow contribute to the district’s desegregation plan.

Although St. Paul won approval from then-Education Commissioner Brenda Cassellius, she scolded the district last December for failing to line up funds before starting construction and then spending certificate funds on unauthorized projects; Cassellius would agree to retroactively certify three projects for the special financing but warned the district had “undermine(d) the approval process.”

One of Jacobs’ key recommendations is that the district secure funding before awarding contracts so it isn’t “chasing cash flow.”

With Tuesday’s board vote, the certificate revenue should arrive by February, when the school board will be asked to release newly borrowed funds for specific projects, including the final phase of a renovation at Como Park Senior High and the start of a $17 million addition and remodel at the district service center.

Whether they’ll agree at that time to start spending real money on AIM and other upcoming projects is less certain.

$112M PER YEAR

The St. Paul district has issued certificates of participation on occasion over three decades, including for Arlington High School, which closed then later reopened as Washington Technology Magnet.

The certificates now are issued each year, accounting for most of the district’s $112 million in annual facilities spending since 2016. That’s when the district began what was to be a decade-long campaign to improve the look and function of nearly every building it owns, paid for by a series of $30 property tax increases for the average home owner.

Those plans now are being reconsidered after cost estimates soared by roughly 70 percent and student enrollment has steadily fallen.

St. Paul’s bungled facilities plan reminds Ted Kolderie of when Minneapolis Public Schools drew up its own school rehabilitation plans in 1962.

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Voters went on to defeat the referendum before approving a subsequent plan to build new schools instead of repairing old ones.

The requirement to get voter approval, Kolderie said, “forced the discussion about what’s the right thing to do into a community debate.”

Contrasting that with modern day St. Paul, he said, “The idea that the school board can’t find out what its own employees are doing is just hard to believe.”