It took about 40 minutes of sometimes heated exchanges between representatives of the Birch Grove Community School (BGCS) board, members of the public and two of the three Tofte supervisors before Birch Grove PTA member Sarena Nelson said the school would pay $10.50 per square foot to lease space in the Birch Grove Community Center, the school’s home since it became a public charter school in 2004.
The meeting took place at the regular Tofte town board monthly meeting August 11.
Tofte supervisors voted to raise the school’s lease from $8.50 to $10.50 per square foot at a special meeting held June 29. The township of Tofte owns the building.
The school board met the next day to set its 2016-2017 budget and voted to retain the $8.50 lease amount they had been charged the last two years.
School board members said the increase would result in a $10,000 increase in lease payments and the cash-strapped school couldn’t afford the increase.
Since that time both boards and the public have met, with the school reasserting that it can’t afford the rate hike and the town board saying it couldn’t afford to subsidize the school.
At the end of the last school year Tofte supervisors were surprised to learn there was a budget overage of $19,000 because of building expenses. At that time Tofte Board Chair Paul James said, “It’s time we protect the Tofte taxpayers.”
James opened the discussion on August 11 with an explanation. “Expenses at the school have gone up and the lease payments are not covering them because we have a below cost lease,” James said. “We need to increase the lease payments to recover those costs.”
James noted that Tofte sent only two to three kids to the charter school and he suggested the school find other revenue rather than relying on Tofte taxpayers when the school couldn’t meet its bills. He suggested the school board look at getting help from Lutsen and Schroeder townships and Lake County to help cover school expenses. Most of the 30 or so children that attend the K-5 school come from these locations.
There are also 20 children enrolled in the 3-5 year-old Saplings daycare program at the school, and those children also mostly come from outside Tofte.
Judy Motschenbacher, a Birch Grove school board member, argued that Lake County was already losing kids to Birch Grove—and was also losing the state and federal per pupil school aid dollars those kids would bring to Lake County schools if they attended there—and therefore it wasn’t reasonable to think Lake County would contribute to a program that was taking students and revenue from its own school system. She noted that each of the townships was already giving a substantial sum of money to the schools with their $20,000 levy contributions for 2016-2017.
Enrollment at Birch Grove went down to 19 kids in 2014, not enough to keep the doors open without financial help from the townships or some other funding source.
Since that time more children have attended the school, which for the second year in a row received the High Quality Charter School award for high student proficiency in math (100 percent in 2014) and reading.
Bluefin Bay owner Dennis Rysdahl asked James how the township could afford to pay for the building if it got rid of a tenant that paid 65 to 75 percent of the bills that keep the building open.
“From a business perspective if I had one tenant that was paying 65 to 75 percent of the bills on a building I would do everything I could to help keep them in the building. You might want to lower their lease. I think you are pushing market value here. Have you really looked at competitive value in local lease rates?”
Supervisor Jeanne Larsen said yes. She cited two local businesses, one in Lutsen and one in Tofte that were charging $12.50 per square foot, but Rysdahl said they were right on the highway, were much smaller, and he could see why the tenants could pay those rates.
“What are you going to do if you lose the school?” Rysdahl asked. “Won’t the taxpayers be put in a much worse position if that happens? What are you going to do if that happens?”
“If we can’t find someone to pick up the lease, we will have to sell the building,” James said.
“When the school district [I.S.D. 166] first announced it was closing Birch Grove and selling the building, there was a bidder who wanted to buy it,” James said. “That’s when the township got eminent domain and agreed to purchase the building from the school district. But we know there are people out there who would buy the building if it were for sale. But that’s not what’s going on here. We are trying to figure out how to keep the school here and how to pay the bills. We aren’t against the school.”
Clearly frustrated, James said no one in the room—with the exception maybe of Judy Motschenbacher—had spent more personal time and money over the years trying to help the school.
“I have spent hundreds and hundreds of hours and my own money to help the school. We need to stop finger pointing here. We need to figure out how to pay the bills at the school. We are not trying to shut it down, but we need to find a way to spread out the costs so we can keep it open,” James said.
At that juncture Nelson said the school would agree to pay the $10.50 increase. To receive its $1,300 per pupil lease aid, BGCS must have a lease signed and sent to the state. The aid is already late because the school hadn’t signed the lease and the school was making payments to Tofte from its high interest bank account.
Space available on Birch Grove billboards
With that all of the tenants, Birch Grove Foundation (W.E. Connect), Sawtooth Mountain Clinic, and the school agreed to pay the higher rate for the coming year. That only left the two billboards on the property to be discussed. James said the lease for the billboards brought in $7,200 per year, but it had expired and the township should look at increasing the rate because everything else had been raised, they needed to raise the rent on the billboards as well.
“Does that rent go to the school?” Rysdahl, who pays the rent on the billboards, asked.
James said not directly. “It goes to revenues and helps pay some of the building expenses.”
“I guess I never understood that. I should have asked that a long time ago. I am withdrawing my request to lease that space. It doesn’t really fit with our business plan. Instead, I will just donate the money that I would have spent on billboards directly to the school,” Rysdahl said.
School starts on Tuesday, September 6, but looming in the background is an impending ruling from the state auditor’s office, which could be a crippling blow to the school and the West End citizens who have long voted to support the school with levy dollars.
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