Not Eudora
By Harry Welty
Published May 23, 2008

This is the testimony Harry Welty gave to the Duluth School Board on Tuesday, May 20, 2008 at 6:30PM.

Who is looking out for Duluth?

I wish to read into the record a short summation of Johnson Controls business as they have been demonstrated in connection with the Red Plan.

Johnson Controls is a Fortune 100 company with over 140,000 employees almost twice as many as Duluth has residents. Its chief business is the manufacture of air quality equipment. It has almost no track record as a project manager. Yet it is rich in consultants, salesmen and lawyers and has used them effectively to sell the Red Plan.

According to retired school board member, Brad Bennett, since the Red Plan was just a gleam in our superintendent’s eye Dr. Dixon has been looking for a way to build it without a vote. Perhaps that explains why JCI only presented Duluth with quarter-billion-dollar building plans. It knew that so long as it had an agreeable majority on the School Board nothing could stop the Red Plan from being built and it could maximize its profits.

Just how much Johnson Controls might earn from this enterprise has been shrouded in secrecy. The school board never saw the contract it signed with JCI. Although it was a public document it might never have been seen by the public had it not been for another past school board member, Eileen Zeitz Hudelson, who hired an attorney to demand that it be surrendered under the authority of the Minnesota Data Practices Act.

Although our local newspaper has seen fit to repeat Dr. Dixon’s claim that JCI will only earn 2% of the Red Plan’s total cost the contract reveals much more to experienced eyes.

As early as last summer Duluth’s most eminent Landscape Architect, Kent Worley, surmised that the language in this contract, which lists many payments to JCI in excess of 2%, could earn the company as much as 10% of total costs. According to one of our newest School Board members, Gary Glass, this figure was supported by our Director of Facilities, Kerry Leider. However, ever since a headline trumpeted $33 million in earnings for JCI Dr. Dixon has repeatedly maintained in
print and in person that the contract specifies a 2% earnings for JCI despite the contract’s language to the contrary. The Duluth News Tribune which is reaping considerable advertising dollars from the District has not seen fit to pursue this story.

Rather than earning $33 million Dr. Dixon assures us that JCI will only earn about $6 million dollars. Of equal importance to JCI is the contract’s unusual surrender by the District of its oversight of sub contractors and the specifications for equipment to be purchased. Since as much as $35 million in JCI equipment may be purchased this is not inconsiderable.

Perhaps it is not important how much money JCI gets for its work as long as the Duluth School District gets wonderful schools. But this sentiment might not be shared by the taxpayers footing the bill. And it seems quite likely that the bill, our taxes, will continue to grow. Board Chair Nancy Nilsen has said that the Board has always understood that the full implementation of the Red Plan depends upon the successful passage of a fall operational levy which, unlike the Red Plan, must be offered to the voters. If she is right that the Red Plan can not be completed without more money and if it doesn’t come in the operational levy the Board has the authority to raise additional taxes to pay for the Red Plan.

Since so much depends on the outcome of the fall referendum the question of JCI’s compensation hangs in the air. It could be six million as the Dr. Dixon maintains. It could be the $33 million that Kent Worley estimated. But, it might turn out to be much more than this. An analysis by an expert in contract administration, Robert Aho, concludes that JCI stands to earn as much as $92 million for the Red Plan. That’s better than one third of its projected total cost.

Mr. Aho took his early misgivings about the relationship between JCI and its sub-contractors to the School Board and when that fell on deaf ears to the Duluth News Tribune. Neither organization bothered to investigate or report on Mr. Aho’s concerns. Instead they reprised the same inaction they had demonstrated months earlier when a professional engineer, Art Johnston, called into question JCI’s methodology and demonstrated that JCI had developed the Red Plan with unlicensed architects in violation of state law.

And the inaction continues.

A few weeks ago, the School Board was sent a letter from a contractor who outlined a possible case of bid rigging by Johnson Controls which awarded itself a major bid for services.

Although he sent the School Board members his complaint, like others before it it fell on deaf ears. Nothing happened except that JCI immediately contacted two witnesses who may now have difficulty remembering just what it was they witnessed. Such events are not all that surprising when a School Board surrenders its oversight.

I do have a copy of that letter and it will soon be forwarded to the State Attorney General who will be asked to conduct an investigation of possible bid rigging by Johnson Controls.

Sadly, we can not trust this Administration to turn this evidence over to the authorities. Two months ago we turned in a petition from 3,300 citizens demanding a smaller building proposal. Ten days later the District’s lawyers sent back their recommendation that the State Attorney General be consulted. That was six weeks ago and the District has only just now forwarded our petition to the Attorney General. The School District seems intent on running out the clock on criticism.

Considering the School District’s disdain for voters and considering Johnson Controls greed it is not surprising that JCI hired a former Republican Revenue Commissioner to lobby the Governor and ask him to defend the School Board from the voters.

I have an interesting post script to share with the School Board.

Someone has commissioned another survey of Duluth’s attitude toward public education. However, only parents who have children between the ages of 4 and 14 are being allowed to participate. I know this because a City Councilor told me that he was asked to participate until he told the pollster that his youngest child was 15.

Who is watching out for the citizens of Duluth? Not the School Board. Not the Legislature. Not the Governor. Not the Department of Education. Not the Duluth News Tribune. If none of their elected representatives will look out for the voters they will simply have to do it themselves at the ballot box this fall.