As the Carlton and Wrenshall school boards continue to work toward an agreement to consolidate their districts, many families of students living in Carlton have only one thing directly affecting them.

Taxes.

More than 50% of the students living in Carlton open-enroll to another district — most of them to Cloquet. In the 2018-19 school year, 322 students transferred out of the district, but 18 transferred to Wrenshall, meaning they would be enrolled in a consolidated district if Carlton and Wrenshall chose to do so.

Of the remaining 304 students, 171 attended Cloquet Public Schools.

When a student leaves their resident district, the state and federal money allocated per student follows them to their new district. The enrolling district, however, can’t use the state and federal funding for capital expenses like building repairs — or in the case of Cloquet, the construction of a middle school that opened in 2018.

That means the money the school receives from the Minnesota and U.S. departments of education can be used only for education costs like educational materials and teacher salaries. Capital expenses like construction and building repairs fall squarely on the shoulders of local taxpayers.

The owner of a Carlton home valued at $150,000 is taxed a total of $559.20 annually, which includes the levy and referendums. A similarly valued home in Cloquet is taxed $855.86 — meaning Carlton residents are taxed about two-thirds of what Cloquet residents are taxed.

When separating out the school levy — since referendum taxes can expire over time — Cloquet residents are taxed nearly two and a half times what Carlton residents are taxed. The same $150,000 home in Carlton is taxed $260.04 for the school’s levy, while Cloquet residents are taxed $621.24.

During the Carlton School Board meeting Monday, Sept. 16, Superintendent Gwen Carman reported 18 resident students expected to start school in Carlton chose to open-enroll out of the district — 12 went to Cloquet and six enrolled in Esko. The number doesn't include students expected to leave the district before the year began, such as those with siblings in neighboring districts.

Open enrollment — begun in 1988 during Gov. Rudy Perpich’s administration — was originally intended to provide more opportunities by allowing students to choose districts and creating a marketplace for families to have more options for their education.

“When you look at open enrollment, which was to provide choice for parents, but also to drive districts and charters to improve their offerings and to compete,” Minnesota Rural Education Association Executive Director Fred Nolan said, "the idea was to take a bureaucracy and try to have it look more like a market.

“Districts that are right near a larger community, like Cloquet is to Duluth, tend to benefit the most.”

"You have to look back at that and say if that’s the intent — and it was with Gov. Perpich and Gov. (Arne) Carlson — then you look at the situation that you have there and it is playing out.”

The number of students who take advantage of open enrollment has risen in recent years. Approximately 16% — up from 10% in 2006 — of students statewide chose open enrollment in 2017, according to a report from the Center for Rural Policy and Development (CRPD).

In the report, researcher Kelly Asche describes a “cordial competition” between rural and regional center districts around the state. Many rural districts actually see an increase in students leaving larger districts for smaller class sizes and more individualized attention. In fact, 83 students left Cloquet for Carlton last year.

However, larger districts like Cloquet can also offer more advanced classes and a diverse array of electives to its students as well as a stable future, financial sustainability and better facilities.

“Typically, when they open-enroll out, it’s about opportunities for students,” Carman said.

Students leaving for more opportunities in another district take their funding with them and deprive their previous district of funding. Students left behind will have even fewer opportunities because of lower revenue, causing the district to lose even more students.

“When an open enrollment trend begins in a district, it perpetuates,” Nolan said. “That was one of (CRPD’s) major findings. One of the other findings was that districts that are right near a larger community, like Cloquet is near Duluth, those districts tend to benefit the most because they get open enrollments from both the larger community and from smaller, more rural communities.”

Last school year, 121 Duluth students open-enrolled at Wrenshall. (Pine Journal file)
Last school year, 121 Duluth students open-enrolled at Wrenshall. (Pine Journal file)

Just six students from Duluth open-enrolled to Cloquet in 2018-19 — a similar number to the two students that came to Carlton from the same district. However, 73 students left the larger St. Louis County school district to come to Cloquet.

Wrenshall, which also shares a border with Duluth, had 121 of its students open-enroll in 2018-19 from Duluth.

The additional revenue is good for the destination districts, but it also puts added pressure on the district when additional space or facilities are needed to accommodate the inflow of students.

Real estate choices

Open enrollment gives parents more options regarding where they live and purchase homes.

In some cases, parents choose schools that are conveniently located to their workplace. In some cases, others who purchase homes on the edge of a district have a school from a neighboring district closer to their home than the one in their home district. Other factors can come into the equation.

Cloquet Realtor Uriah Wilkinson said property taxes can influence where people purchase homes, particularly with the higher overall taxes in Cloquet. He said he gets more questions about property taxes from homebuyers than he ever has, especially with the rising real estate costs in the city.

Wilkinson just had a client who closed on a home in Sturgeon Lake where the parent worked in Cloquet and their child was open-enrolled in the district. When looking at houses, the family was unable to purchase a house in the Cloquet district that met their needs.

“It’s a testament to the quality of education in Cloquet,” Wilkinson said. “However, the affordability for a home that meets a family’s need may be more achievable outside the district.”

Another factor is the closing of grades to open enrollment in Cloquet. Since August, the district has closed open enrollment for kindergarten, first, third, fourth, sixth, seventh and eighth grades — a “driving factor” in home sales and rentals, Wilkinson said.

“The greater number of grades closed to open enrollment, the higher the demand for housing in Cloquet will become,” he said.

Failed referendums

A major concern for several Carlton School Board members in consolidation talks is their ability to sell residents on a referendum for facility upgrades and repairs — whether they consolidate with Wrenshall or not.

With more than half its eligible students enrolling in other districts, the Carlton district has found it difficult to convince its residents to agree to higher taxes.

In 2017, 72% of Carlton residents voted against a referendum that would have built a high school at the site of South Terrace Elementary School. Some board members are concerned there would be a similar result for the upgrades and repairs needed to convert the Wrenshall facility into a middle and high school in a consolidated district.

Wrenshall has had its own obstacles passing referendums, but has the opposite problem of Carlton. Nearly 50% of its students are open-enrolled from outside Wrenshall.

Since April 2017, Wrenshall residents have rejected three referendum proposals — the last one in May.

“Our job isn’t to convince voters,” Carman said.

South Terrace Elementary School, Carlton. (Katie Rohman / krohman@duluthnews.com)
South Terrace Elementary School, Carlton. (Katie Rohman / krohman@duluthnews.com)

Rather, it’s on board members and administrators from both districts to “educate” voters regarding the cost estimates, benefits and impacts a referendum would have.

“It’s very difficult with open enrollment to make an assumption that there will be 800 students (in a consolidated district),” Carman said. “It could be more or less — nobody has seen what a facility would look like or what programming would be in a consolidated district.”

Carlton and Wrenshall appear to be moving toward a consolidation and have scheduled a joint board meeting for Oct. 7 at South Terrace, as well as four public meetings from Oct. 21-29 regarding consolidation.

Representatives from Architectural Resources Inc. and Ehlers — the financial adviser for both districts — to discuss recommended plans, cost estimates and tax impacts for expansions at South Terrace and Wrenshall.

Following the flurry of meetings, both boards are currently planning to vote to pursue another referendum for renovations to facilities in each district at their separate meetings Nov. 11, according to Carman.

The referendum would have to garner 50% of the vote in each district to be approved. Carman said during the meeting Monday that all talks with Wrenshall have centered around consolidating with expanded facilities at South Terrace and Wrenshall. The boards haven't discussed consolidating without updating facilities.

Families with no children in either district will be a key voting block as the process proceeds.

“It will be interesting as this moves forward if those families speak up,” Carman said.

Upcoming Carlton-Wrenshall consolidation meetings

(All meetings 6 p.m.)

Monday, Sept. 23 — Carlton-Wrenshall Joint Facility and Administration Committee meets at Wrenshall School to discuss conceptual plans, cost estimates and tax impacts.

Monday, Sept. 30 — Carlton-Wrenshall Joint Facility and Administration Committee meets at Wrenshall School to discuss conceptual plans, cost estimates and tax impacts.

Monday, Oct. 7 — Carlton-Wrenshall Full Joint Board meets at South Terrace Elementary School in Carlton to present recommended plans, cost estimates and tax impacts.

Monday, Oct. 21 — Public meeting regarding consolidation and facility plans at Wrenshall School.

Thursday, Oct. 24 — Public meeting regarding consolidation and facility plans at South Terrace.

Monday. Oct. 28 — Public meeting regarding consolidation and facility plans at Sawyer Community Center.

Tuesday, Oct. 29 — Public meeting regarding consolidation and facility plans at Wrenshall School.