Financial problems at Fridley Schools
5 EYEWITNESS NEWS learned of a warning to a North Metro district over ongoing financial problems that could become taxpayer problems.
KSTP verified the letter with the Minnesota Department of Education (MDE). In it, MDE writes that it has serious concerns about the financial management of Fridley Public Schools, ISD 14.
MDE letter to Fridley Public SchoolsDownload
“There were warning signs … that they did not have proper financial controls,” said Richard Coleman.
Coleman says all three of his kids graduated from Fridley Public Schools, a district he’d like to see continue teaching the next generation.
“Our Moody’s rating was withdrawn,” Lori Andler, the district’s senior finance officer, told the school board at a meeting on Sept. 24. “This is due to the fact of our 25 audit not being completed, not because we were holding anything back.”
The lost Moody’s rating alone is already costing taxpayers and students, even if they haven’t noticed yet. It’s like losing your credit score entirely. It makes borrowing more difficult and, when loans do happen, they come with higher interest rates.
According to the letter from MDE, the district at least planned to take out new loans to be able to make payments on old debts, something MDE called a “debt spiral.”
Without a completed 2024-25 budget audit, an annual requirement for public schools, MDE says it’s not even sure exactly how much debt the district has, only that it’s too much and still growing.
“Whether it’s fraud or whether it’s malfeasance, mismanagement, doesn’t matter,” said Coleman, who ran for school board primarily because of this issue, but lost. “It still impacts the taxpayers.”
In a written statement, the district said it’s been working hard over the last few months to fix historical financial reporting issues. It added that transparency and accountability are central to its approach.
You can read the full statement below:
“Thank you for reaching out and for the opportunity to provide a comment.
“Fridley Public Schools recognizes the seriousness of our financial challenges and remains fully committed to working cooperatively with the Minnesota Department of Education. We welcome the opportunity for a thorough review of the district’s financial records and practices as we continue our work toward long-term financial stability.
“Over the past several months, our district has undertaken significant work to identify and correct historical financial reporting issues, strengthen financial oversight, and improve our internal processes. This work is ongoing, and we recognize that there is more to do.
“Transparency and accountability remain central to our approach. On October 20, we held a public financial presentation as part of our School Board work session, providing community members with detailed information about the district’s financial circumstances, contributing factors, corrective actions, and next steps. We also shared information and resources from that meeting in my October 24 superintendent update.
“We will continue to provide regular updates to our School Board, staff, families, and community as this important work progresses.
In its letter, MDE demanded the district hand over several different accounting documents by Nov. 6, saying “failing to complete these requirements risks withholding of aids and threatens Fridley’s ability to continue to effectively operate…”
Coleman is pessimistic about the district’s future.
“I expect that this could … I expect that this will probably lead to the closure of the district,” he said.
We had an interview scheduled with the superintendent for Monday afternoon, but it was canceled at the last moment due to a family emergency. We’ll work to reschedule that interview as soon as possible.
Below are other resources used for this report:
