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Officials: Lake of the Woods schools threatened financially

The high wages of five longtime employees are threatening the financial health of Lake of the Woods (Minn.) Community Schools, according to school officials involved in a controversial contract negotiation.

They say the Baudette, Minn., school district is already struggling and can’t afford a 2 percent pay raise and other benefits awarded to supervisory employees by a recent arbitration ruling, which both parties are treating as final.

One interpretation of the decision means those employees’ salaries and benefits could total about $4 million after a decade.

“That’s insane,” said School Board Chairman Tom Eaton. “We can’t afford that.”

The district has 464 students and a current operating budget of $6.5 million, according to board members.

As a result, the supervisory jobs may be eliminated instead of the teachers, who have taken drastic cuts over the years because of declining enrollment, board members said.

“Our first rule is to educate, so I think cutting teaching or classes would be our last resort,” Eaton said. “It may come off as retaliation, but that’s where we’re going to have to look first.”  

Nancy Olson, the only member of the supervisors’ union who agreed to comment, wrote in an email that the arbitrator wasn’t overly generous but fair. “If you look at what other same-sized school districts pay for these same jobs or what Polaris or Marvin’s (area manufacturers) would pay if we left, we are all underpaid,” she said.

“The School Board had a lot of opportunities to settle our contracts, but they wanted to go to arbitration,” she said. “Now they have to live with the arbitration award and so do we.”

Negotiations for the 2013-2015 contract continues as the union and School Board lock horns over other contract details decided by the arbitrator.

‘Unusual’ case

State officials and school board members said the case is strange, complicated and rare.

Until about 18 months ago, when they formed a union, each of the six supervisors had negotiated individual contracts with the school district, which is considered “very unusual” today, according to Richard Miller, the Maple Grove, Minn., -based arbitrator who handled the case.

School Board members say the alleged overcompensation began several years ago, when the employees were friends with a former superintendent.

None of the employees had a college education and the contracts were “rubber stamped” by the board at that time, they said.

In the 2003-2004 school year, the superintendent started adding new job duties and titles for five employees — Nancy Olson, Reed McFarlane, Cece Charlton, Lisa Beckstrand, and Brenda Wahl — and changed their wages from an hourly to salary rate. At this time, the school district had about 680 students, said Terry Waibel, treasurer for the School Board.

McFarlane, for instance, started in the district as a bus driver in 1995 and later added a role as a groundskeeper supervisor, according to Douglas Nosan, a school board member who had worked for the school district for years.

In five years, McFarlane’s salary increased by nearly $7,000, Nosan said. Today, the groundskeeper makes $47,128 and the district contributes $20,160 toward his family insurance plan. McFarlane negotiated to have most pay raises be applied to the insurance premiums.

Other employees also received moreduties and higher salaries. Olson became an administrative assistant and office manager, Charlton became a community education and lunch coordinator, and Beckstrand became a pool coordinator and lifeguard.

Beckstrand, who required a two-day training course for her certification that was paid for by the district, negotiated a more than $9,000 increase over an eight-year period, said Nosan. Today, she makes $43,307.

Wahl has maintained her title as head cook and makes $30,780. William Chambers, a technology coordinator who has been with the district for three years, was also mentioned in the arbitration but only for his role within the supervisory group.

Current board members were aware of the unusual contracts before but only had the power to act on them now, said Eaton, a board member for three years.

“It’s my hope that we can get those contracts on a level playing field,” he said.

Arbitration ruling

The arbitration ruling, released in December, granted several of the School Board’s requests but awarded the six employees a 2 percent pay increase and a roughly 10 percent increase in health benefits.

Miller, the arbitrator, said the supervisors hadn’t received a raise in four years, and the increase is comparable to the state School Employees Association union, which represents non-certified employees such as bus drivers.

During contract negotiations, supervisors requested a 3 percent pay increase, automatic pay increases, $60 per school board meeting “after regular hours” and higher longevity pay, according to the arbitration ruling.  

Board members requested no automatic pay increases and benefits that more closely align with that of teachers, such as no longevity pay and a smaller contribution by the district to their health insurance. Most supervisors currently receive about $1,000 to $3,000 more than teachers do with the same plan.

The arbitration awarded the employees the same pay as the state employees union — 10 cents additional per hour starting in the 11th year and 20 cents per hour starting the 16th year. The board and union still have to clarify the language for that, board members said.

Olson said the union didn’t go into arbitration because members wanted more money.

“We tried to settle a fair contract with the Lake of the Woods Board of Education, but the School Board was intent on trying to cut our pay and benefits, even though that pay and longevity is the same for other school employees,” she said.

Longevity pay

Longevity pay was a sticking point for board members and the union.

Board members say the supervisors are being paid thousands for years of non-supervisory service because of prior negotiations, and no similar-sized districts pay their employees longevity. Employees were supposed to receive $416 per year after 15 years of service, they said.

But the union interpreted the amounts would be stacked — $416 one year, $832 the next and so on, they said. Board members concluded that would mean paying $4 million in employee salaries and benefits to the six supervisors after a decade.

Miller recently noted the supervisors should be recognized for their longtime service to the district, similar to the way teachers receive more money as they advance in age and experience.

“It doesn’t really mean they’re being overpaid,” he said.

Miller left it up to the board and employees to hash out what peer districts they’ll compare Lake of the Woods Community Schools to and other contract details. It’s not his job to either rescind previous negotiations or establish contract details, which the two parties should have spent more time developing before turning to arbitration, he said.


The arbitration also has the potential to cost the district even more by setting a precedent. The district has yet to negotiate a new contract with the teachers’ union, which could ask for the same increases.

Mike Pepera, lead negotiator for the teacher’s union, said he’s uncertain the 41 employees would ask for the same increases because he doesn’t think the district can feasibly accommodate the request.

However, he said, “the percentage of money spent on the six versus the 41 isn’t proportional or fair.”

Jennifer Johnson

Jennifer Johnson is the K-12 education reporter for The Grand Forks Herald.  Contact her if you have any story ideas or tips and visit 

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